Exhibit 10.1

 

SUBSCRIPTION AGREEMENT

 

BY AND BETWEEN

 

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

 

AND

 

TIME WARNER MEDIA HOLDINGS B.V.

 

DATED AS OF APRIL 29, 2013

 

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SUBSCRIPTION AGREEMENT

 

SUBSCRIPTION AGREEMENT (this “Agreement”), dated as of April 29, 2013, by and
between Time Warner Media Holdings B.V., a besloten vennootschap met beperkte
aansprakelijkheid, or private limited company, organized under the laws of the
Netherlands (“Investor”), and Central European Media Enterprises Ltd., a Bermuda
company (the “Company”).  Capitalized terms used in this Agreement have the
meaning set forth in Section 7.1, unless defined elsewhere herein.

 

RECITALS

 

WHEREAS, the Company intends to undertake a public offering under its shelf
registration statement on Form S-3 (File No. 333-181057) (the “Registration
Statement”), including a form of prospectus and a preliminary prospectus
supplement to be filed by the Company with the Securities and Exchange
Commission (the “SEC”) on the date hereof in conformity with the requirements of
the Securities Act of 1933, as amended (the  “Securities Act”), and the
rules and regulations of the SEC thereunder (the “Prospectus Supplement”), to
offer and sell shares of the Company’s Class A Common Stock, par value $0.08 per
share (“Class A Common Stock”), producing Gross Proceeds to the Company in an
amount equal to the Offered Amount (the “Base Offering”);

 

WHEREAS, in connection with such public offering, the Company may grant the
underwriters an option (the “Option”) to purchase a number of shares of Class A
Common Stock equal to not more than 15% of the number of shares of Class A
Common Stock offered and sold in the Base Offering (the “Option Shares”);

 

WHEREAS, the Company has delivered to Investor a written notice (the “Preemptive
Rights Side Letter”) of such public offering pursuant to Section 7.3 of the
Investor Rights Agreement in order to permit Investor to exercise its preemptive
purchase right thereunder (the “Preemptive Purchase Right”), which notice
constitutes an offer to sell to Investor the number of shares of Class A Common
Stock that would allow Investor to maintain its 49.9% economic interest in the
equity securities of the Company (including after giving effect to the exercise
of the Option) at the price at which such shares are offered and sold to the
public (the “Investor Allocated Shares”);

 

WHEREAS, Investor has indicated to the Company in writing in the Preemptive
Rights Side Letter its intention to exercise its Preemptive Purchase Right by
committing on the date of the pricing of such public offering to purchase the
Investor Allocated Shares from the underwriters in such public offering;

 

WHEREAS, in the event that pursuant to the exercise of the Preemptive Purchase
Right, Investor would be required to purchase Class A Common Stock in excess of
$100,000,000 (such amount, the “Excess Amount”), Investor has waived its
Preemptive Purchase Right with respect to any shares of Class A Common Stock
underlying such Excess Amount and, in lieu thereof, shall subscribe for and
purchase from the Company a number of Series B Convertible Redeemable Preferred
Shares equal to the quotient of such Excess Amount and the Stated Value in a
private placement transaction under Section 4(2) of the Securities Act (the
“Option Series B

 

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Convertible Redeemable Preferred Shares”) and the number of Option Shares that
may be purchased by the underwriters pursuant to the Option shall be reduced
correspondingly;

 

WHEREAS, in the event that the aggregate Gross Proceeds to the Company from the
Public Offering are less than $200,000,000, Investor may subscribe for and
purchase from the Company additional Series B Convertible Redeemable Preferred
Shares producing Gross Proceeds to the Company up to the amount by which
(i) $200,000,000 exceeds (ii) the aggregate Gross Proceeds to the Company from
the Public Offering (the “Additional Series B Convertible Redeemable Preferred
Shares”);

 

WHEREAS, in addition to any Option Series B Convertible Redeemable Preferred
Shares or any Additional Series B Convertible Redeemable Preferred Shares that
may be purchased by Investor, Investor wishes to subscribe for and purchase, and
the Company wishes to issue and sell to Investor, additional Series B
Convertible Redeemable Preferred Shares pursuant to this Agreement;

 

WHEREAS, on the date hereof, the Company, Ronald S. Lauder, RSL Savannah LLC,
RSL Capital LLC, RSL Investments Corporation and Investor have executed the
Letter Agreement; and

 

WHEREAS, on the date hereof, a special committee of the Company’s Board of
Directors comprising directors independent from Investor and Ronald S. Lauder
have received from Houlihan Lokey (Europe) Limited (i) an opinion with respect
to the fairness to the Company of the terms of the transactions contemplated by
this Agreement to such special committee’s satisfaction (the “Fairness Opinion”)
and (ii) an opinion in conformity with the indentures governing the Company’s
indebtedness (the “Indenture Opinion”), and copies thereof have been delivered
to Investor on a non-reliance, information-only basis.

 

NOW, THEREFORE, in consideration of the mutual covenants and promises contained
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties agree as follows:

 

ARTICLE I
PURCHASE OF SERIES B CONVERTIBLE REDEEMABLE PREFERRED SHARES

 

1.1.                            Purchase of Initial Series B Shares.  Upon the
terms and subject to the conditions set forth herein, Investor hereby subscribes
for and agrees to purchase, and the Company agrees to issue and sell to
Investor, 200,000 Series B Convertible Redeemable Preferred Shares (the “Initial
Series B Convertible Redeemable Preferred Shares”) at a price per share (the
“Stated Value”) equal to $1,000, for an aggregate purchase price of $200,000,000
(the “Initial Series B Investment”).

 

1.2.                            Purchase of Option Series B Shares.

 

(a)                                 Investor shall subscribe for and purchase
from the Company a number of the Option Series B Convertible Redeemable
Preferred Shares, if any, equal to the quotient of the Excess Amount, if any,
and the Stated Value (the “Option Series B Purchase”); provided that no
fractional shares of such Option Series B Convertible

 

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Redeemable Preferred Shares shall be issued as part of the Option Series B
Purchase, and any such fractional shares shall be aggregated and rounded
downward to the next whole Option Series B Convertible Redeemable Preferred
Share.

 

(b)                                 Promptly upon its receipt from the
underwriters in the Base Offering of a notice notifying the Company of the
Option Exercise, if any, the Company shall notify Investor in writing promptly
thereof (the “Option Purchase Notice”).

 

1.3.                            Purchase of Additional Series B Shares.

 

(a)                                 In the event that the aggregate Gross
Proceeds to the Company from the Public Offering are less than $200,000,000,
upon the terms and subject to the conditions set forth herein, Investor shall
have the right but not the obligation, in its sole discretion (the “Additional
Series B Purchase Right”), to subscribe for and purchase the Additional Series B
Convertible Redeemable Preferred Shares at a price per share equal to the Stated
Value (the “Additional Series B Purchase”); provided that no fractional shares
of such Additional Series B Convertible Redeemable Preferred Shares shall be
issued as part of the Additional Series B Purchase, and any such fractional
shares shall be aggregated and rounded downward to the next whole Additional
Series B Convertible Redeemable Preferred Share.

 

(b)                                 Promptly upon the earlier of (i) its receipt
from the underwriters in the Base Offering of a notice notifying the Company of
the Option Exercise and (ii) the expiration of the exercise period for the
Option, the Company shall notify Investor in writing of whether and to what
extent the Additional Series B Purchase Right is exercisable.  The Additional
Series B Purchase Right shall only be exercisable by Investor by giving
irrevocable notice in writing to the Company (the “Additional Purchase Notice”),
no later than two (2) Business Days following Investor’s receipt of such notice
from the Company, of its exercise of the Additional Series B Purchase Right,
which Additional Purchase Notice shall specify the number of Additional Series B
Convertible Redeemable Preferred Shares that Investor wishes to purchase.

 

1.4.                            Initial Series B Shares Closing.

 

(a)                                 Subject to the satisfaction or waiver of
each of the conditions set forth in ARTICLE IV, unless this Agreement shall have
been terminated pursuant to its terms, the closing of the purchase and sale of
the Initial Series B Convertible Redeemable Preferred Shares (the “Initial
Closing”) shall take place at the offices of DLA Piper LLP (US), 1251 Avenue of
the Americas, New York, New York 10020 no later than the second Business Day
after the satisfaction or waiver of the conditions set forth in ARTICLE IV
(excluding conditions that, by their nature, cannot be satisfied until the
Initial Closing, but subject to the satisfaction or waiver of such conditions at
the Initial Closing) or at such date and time as the parties may agree to in
writing (the “Initial Closing Date”).

 

(b)                                 On the Initial Closing Date, (i) the Company
shall deliver to Investor (A) a certificate representing the Initial Series B
Convertible Redeemable Preferred Shares, registered in Investor’s name and
bearing legends substantially in the form set forth

 

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herein against payment by or on behalf of Investor of all amounts payable for
the purchase of the Initial Series B Convertible Redeemable Preferred Shares
(the “Initial Series B Purchase Price”) and shall register Investor in its
register of shareholders as the holder of the Initial Series B Convertible
Redeemable Preferred Shares, and (B) all other documents and certificates
required to be delivered to Investor pursuant to Section 4.2, and (ii) Investor
shall deliver to the Company (A) the Initial Series B Purchase Price by wire
transfer in immediately available funds to the account designated by the
Company, and (B) all documents and certificates required to be delivered to the
Company pursuant to Section 4.3.

 

1.5.                            Option Series B Shares or Additional Purchase
Series B Shares Closing.

 

(a)                                 Subject to the satisfaction or waiver of
each of the conditions set forth in ARTICLE IV, unless this Agreement shall have
been terminated pursuant to its terms, (i) the closing of the purchase and sale
of the Option Series B Convertible Redeemable Preferred Shares, if any (the
“Option Series B Closing”), or (ii) the closing of the purchase and sale of the
Additional Series B Convertible Redeemable Preferred Shares, if any (the
“Additional Series B Closing”), shall take place at the offices of DLA Piper LLP
(US), 1251 Avenue of the Americas, New York, New York 10020 no later than the
second Business Day following the delivery by the Company to Investor of the
Option Purchase Notice or the delivery by Investor to the Company of the
Additional Purchase Notice, as applicable, after the satisfaction or waiver of
the conditions set forth in ARTICLE IV (excluding conditions that, by their
nature, cannot be satisfied until the Second Closing, but subject to the
satisfaction or waiver of such conditions at the Second Closing) or at such date
and time as the parties may agree to in writing (the “Second Closing Date,” and
each of the Initial Closing Date and the Second Closing Date, a “Closing
Date”).  As used herein, the term “Second Closing” means either the Option
Series B Closing or the Additional Series B Closing, and the term “Closings”
means, collectively, the Initial Closing and the Second Closing.

 

(b)                                 On the Second Closing Date, (i) the Company
shall deliver to Investor (A)(1) if there are any Option Series B Convertible
Redeemable Preferred Shares being purchased, a certificate representing such
Option Series B Convertible Redeemable Preferred Shares, registered in
Investor’s name and bearing legends substantially in the form set forth herein
against payment by or on behalf of Investor of all amounts payable for the
purchase of the Option Series B Convertible Redeemable Preferred Shares (the
“Option Series B Purchase Price”), and shall register Investor in its register
of shareholders as the holder of the Option Series B Convertible Redeemable
Preferred Shares, or (2) if there are any Additional Series B Convertible
Redeemable Preferred Shares being purchased, a certificate representing such
Additional Series B Convertible Redeemable Preferred Shares, registered in
Investor’s name and bearing legends substantially in the form set forth herein
against payment by or on behalf of Investor of all amounts payable for the
purchase of the Additional Series B Convertible Redeemable Preferred Shares (the
“Additional Series B Purchase Price”) and shall register Investor in its
register of shareholders as the holder of the Additional Series B Convertible
Redeemable Preferred Shares, and (B) all other documents and certificates
required to be delivered to Investor pursuant to Section 4.2, and (ii) Investor
shall deliver to the

 

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Company (X) the Option Series B Purchase Price or the Additional Series B
Purchase Price, as applicable, by wire transfer in immediately available funds
to the account designated by the Company and (Y) all documents and certificates
required to be delivered to the Company pursuant to Section 4.3.

 

(c)                                  The Company and Investor will reasonably
cooperate to schedule the Initial Closing and the Second Closing on the same
date to the extent practicable, but subject to the satisfaction or waiver of the
conditions set forth in ARTICLE IV.

 

1.6.                            Adjustments.  (a) The number of Series B
Convertible Redeemable Preferred Shares to be purchased by Investor at a Closing
and/or (b) the Stated Value shall be proportionately adjusted for any
subdivision or combination (by stock split, reverse stock split, dividend,
reorganization, recapitalization or otherwise) of the Class A Common Stock that
occurs during the period beginning on the date hereof and ending on the
applicable Closing Date.

 

ARTICLE II
REPRESENTATIONS AND WARRANTIES

 

2.1.                            Representations and Warranties of the Company. 
As of the date of this Agreement, the Initial Closing Date and the Second
Closing Date, as applicable, the Company represents and warrants to Investor as
follows:

 

(a)                                 Organization and Standing.  The Company is
duly organized as an exempted company, limited by shares, validly existing and
in good standing under the laws of Bermuda.  The Company has all requisite power
and authority to conduct its business as presently conducted and as disclosed in
the Company Reports.  Each of the Company’s Subsidiaries is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, with full power and authority to conduct its business as currently
conducted, except where the failure of any Subsidiary to be duly organized,
validly existing and in good standing, individually or in the aggregate, would
not have a Material Adverse Effect.  The Company’s Memorandum of Association, as
in effect on the date hereof, and the Company’s Bye-laws, as in effect on the
date hereof, are each filed as exhibits to the Company Reports.

 

(b)                                 Shares.  When the certificates evidencing
the Series B Convertible Redeemable Preferred Shares have been delivered to
Investor against payment therefor as provided in this Agreement, the Series B
Convertible Redeemable Preferred Shares will be validly issued, fully paid and
non-assessable shares of the Company, free and clear of any and all security
interests, pledges, liens, charges, claims, options, restrictions on transfer,
preemptive or similar rights, proxies and voting or other agreements, or other
encumbrances of any nature whatsoever, other than restrictions on transfer
imposed by federal or state securities Laws and the Company’s Bye-laws and the
rights and restrictions contemplated by this Agreement and the Investor Rights
Agreement.  Assuming the accuracy of all representations and warranties of
Investor set forth in Section 2.2, the offer and sale by the Company to Investor
of the Series B Convertible Redeemable Preferred Shares is exempt from
registration under all applicable securities Laws, including the Securities Act
and “blue sky” laws.

 

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(c)                                  Authorization, Execution and Delivery and
Enforceability.  The Company has all requisite corporate power and corporate
authority to enter into and to perform its obligations under the Company
Agreements, to consummate the transactions contemplated hereby and thereby and
to issue the Series B Convertible Redeemable Preferred Shares in accordance with
the terms thereof.  The execution and delivery of the Company Agreements by the
Company, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary action on the part of the
Company including, without limitation, a special committee of the Company’s
Board of Directors comprising directors independent from Investor and Ronald S.
Lauder.  Each of the Company Agreements has been duly executed and delivered by
the Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by (a) applicable bankruptcy, insolvency,
moratorium, reorganization, fraudulent conveyance or similar Laws in effect
which affect the enforcement of creditor’s rights generally or (b) general
principles of equity, whether considered in a proceeding at Law or in equity.

 

(d)                                 Capitalization.  As of the date of this
Agreement, the authorized capital stock of the Company consists of
(i) 200,000,000 shares of Class A Common Stock, of which 77,185,129 shares are
issued and outstanding and 30,472,914 shares have been reserved for issuance,
(ii) 15,000,000 shares of Class B Common Stock, par value $0.08 per share, of
which no shares are issued and outstanding, and (iii) 5,000,000 shares of
preferred stock, par value $0.08 per share (the “Preferred Stock”), of which one
share of Series A Preferred Share is issued and outstanding.  At or prior to the
Initial Closing or the Second Closing, as applicable, the Company will reserve
for issuance the aggregate number of shares of Class A Common Stock into which
the Series B Convertible Redeemable Preferred Shares are convertible, and such
reservation has been duly authorized.  All of the issued and outstanding shares
of the Company’s capital stock are duly and validly authorized and issued and
are fully paid and nonassessable.  Except as disclosed in the Company Reports
filed prior to the date hereof or as contemplated by the Company Agreements and
the Investor Rights Agreement, no stockholder of the Company is entitled to any
preemptive or similar rights to subscribe for shares of the Company and no
stockholder of the Company has any rights, contractual or otherwise, to
designate members of the Company’s Board of Directors.  Except as disclosed in
the Company Reports filed prior to the date hereof or as contemplated by the
Company Agreements, the Investor Rights Agreement, the TW Registration Rights
Agreement and the RSL Registration Rights Agreement, the Company is not a party
to any stockholder, voting or other agreements relating to the rights and
obligations of the Company’s stockholders.  Except as disclosed in the Company
Reports filed prior to the date hereof or as contemplated by the Company
Agreements, the TW Registration Rights Agreement and the RSL Registration Rights
Agreement, no Person has the right to require the Company to register any
securities for sale under the Securities Act.

 

(e)                                  Subsidiaries.  Except as disclosed in the
Company Reports, none of the Company or any of its Subsidiaries (i) has issued
or is bound by any outstanding subscriptions, options, warrants, calls,
convertible or exchangeable securities, rights, commitments or agreements of any
character providing for the issuance or disposition of

 

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any shares of capital stock, voting securities or equity interests of any
Subsidiary of the Company, and (ii) there are no outstanding obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any shares of capital stock, voting securities or equity interests (or any
options, warrants or other rights to acquire any shares of capital stock, voting
securities or equity interests) of any Subsidiary of the Company (other than any
such obligation to the Company or any Subsidiary of the Company arising from
time to time in connection with any internal restructuring or reorganizations of
the Company’s Subsidiaries).

 

(f)                                   No Conflicts. Neither the execution and
delivery by the Company of the Company Agreements nor the performance by the
Company of any of its obligations under the Company Agreements and the Investor
Rights Agreement, nor the consummation of the transactions contemplated hereby
and thereby, will violate, conflict with, result in a breach, or constitute a
default (with or without notice or lapse of time or both) under, give to others
any rights of consent, termination, redemption, repurchase, amendment,
acceleration or cancellation of, (i) any provision of the governing documents of
the Company or its Subsidiaries, (ii) the material broadcast licenses or
franchises to which the Company or any of its Subsidiaries is a party or by
which any of their properties or assets are bound, (iii) any trust agreement,
loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, contract, instrument, permit or concession to which the Company or
any of its Subsidiaries is a party or by which any of their properties or assets
are bound, (iv) any Law applicable to the Company or its Subsidiaries or to
their properties or assets, except, with respect to clauses (iii) and
(iv) above, to the extent that any of the foregoing would not have a Material
Adverse Effect.

 

(g)                                  Consents and Approvals.  Except for such
Consents and Governmental Approvals that have been previously received and the
Requisite Vote, no Consent or Governmental Approval is required on the part of
the Company in connection with the execution and delivery of the Company
Agreements or the consummation of the transactions contemplated hereby and
thereby.

 

(h)                                 Company Reports.  The Company has timely
filed all Company Reports.  As of their respective dates, the Company Reports
complied in all material respects with the requirements of the Exchange Act, or
the Securities Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder, and none of the Company Reports, including any financial
statements or schedules included or incorporated by reference therein (the
“Financial Statements”), at the time filed or, if amended or superseded by a
subsequent filing, as of the date of the last such amendment or superseding
filing made at least two (2) Business Days prior to the date hereof, 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.  The Financial Statements and the related notes have been prepared
in accordance with accounting principles generally accepted in the United
States, consistently applied, during the periods involved (except (i) as may be
otherwise indicated in the Financial Statements or the notes thereto, or (ii) in
the case of unaudited interim statements, to the extent they may not include
footnotes, may be condensed or summary statements or may conform to the SEC’s
rules

 

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and instructions for Quarterly Reports on Form 10-Q) and fairly present in all
material respects the consolidated financial position of the Company and its
Subsidiaries as of the dates thereof and the consolidated results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).

 

(i)                                     Brokers, Finders, etc.  All negotiations
relating to this Agreement and the transactions contemplated by this Agreement
have been carried on in such manner as to not give rise to any valid claim
against Investor for any brokerage or finder’s commission, fee or similar
compensation based upon arrangements made by or on behalf of the Company.

 

(j)                                    Regulation D.  Neither the Company nor
any Person acting on its behalf has offered to sell, or sold, the Series B
Convertible Redeemable Preferred Shares by any form of general solicitation or
general advertising (as those terms are used within the meaning of Regulation D
(“Regulation D”) under the Securities Act).  Neither the Company nor any Person
acting on its behalf has, directly or indirectly, made any offers or sales of
any security or solicited any offers to buy any security, under circumstances
that would cause the offering of the Series B Convertible Redeemable Preferred
Shares to be integrated with any prior offering by the Company in a manner that
could require the registration of the Series B Convertible Redeemable Preferred
Shares under the Securities Act.

 

(k)                                 NASDAQ.  Shares of Class A Common Stock are
registered pursuant to Section 12(b) of the Exchange Act, and are listed on the
NASDAQ Global Select Market (“NASDAQ”), and trading in Class A Common Stock has
not been suspended and the Company has taken no action designed to terminate the
registration of the Class A Common Stock under the Exchange Act or to delist the
Class A Common Stock from NASDAQ.

 

(l)                                     No Litigation.  There are no actions,
suits, investigations or proceedings at law or in equity or by or on behalf of
any Governmental Entity or in arbitration now pending against, or to the
knowledge of the Company threatened against, the Company or any of its
Subsidiaries or any business, property, officers, directors or rights of any
such Person relating to the issuance by the Company of the Series B Convertible
Redeemable Preferred Shares or the other transactions contemplated by the
Company Agreements, or that would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.

 

(m)                             Compliance with Law.  The Company and its
Subsidiaries are in compliance in all material respects with all applicable
Laws, including, as applicable, in compliance with the U.S. Foreign Corrupt
Practices Act of 1977, as amended.  The Company represents and warrants that
since (i) April 1, 2008, the Company has not, (ii) since the later of April 1,
2008 and the time a Subsidiary became a Subsidiary, each Subsidiary has not, and
(iii) to the Company’s knowledge, each director, officer, agent, employee or
other Person authorized to act on behalf of the Company or any of its
Subsidiaries, in the course of its actions for, or on behalf of, the Company or
any of its

 

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Subsidiaries has not used or promised to use, directly or indirectly, any funds
for any unlawful contribution, gift, entertainment or other unlawful payment to
any foreign or domestic government official or employee, or any political party,
party official, political candidate or official of any public international
organization.  No director, officer, agent, or senior manager of the Company is,
to the knowledge of the Company after reasonable due diligence, a foreign or
domestic government official or employee, except for such an official or
employee in a governmental position that has no relevance to the business of the
Company.  The Company makes no representation in this paragraph with respect to
the directors of the Company who are employees of Time Warner Inc. or one of its
Subsidiaries.

 

2.2.                            Representations and Warranties of Investor.  As
of the date of this Agreement, the Initial Closing Date and the Second Closing
Date, as applicable, Investor represents and warrants to the Company as follows:

 

(a)                                 Organization and Standing.  Investor is duly
organized, validly existing and in good standing under the laws of the
Netherlands.  Investor has all requisite power and authority to enter into the
Company Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby.

 

(b)                                 Authorization, Execution and Delivery and
Enforceability.  The execution and delivery by Investor of the Company
Agreements to which it is a party and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
action on the part of Investor.  Each of the Company Agreements to which it is a
party has been duly executed and delivered by Investor and constitutes a valid
and binding obligation of Investor, enforceable against Investor in accordance
with its terms, except as such enforceability may be limited by (a) applicable
bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or
similar Laws in effect which affect the enforcement of creditor’s rights
generally or (b) general principles of equity, whether considered in a
proceeding at Law or in equity.

 

(c)                                  No Conflicts.  Neither the execution and
delivery of the Company Agreements to which it is a party by Investor, nor the
performance by Investor of any of its obligations hereunder or thereunder, nor
the consummation of the transactions contemplated hereby or thereby, will
violate, conflict with, result in a breach, or constitute a default (with or
without notice or lapse of time or both) under, give to others any rights of
consent, termination, amendment, acceleration or cancellation of  any provision
of (i) the governing documents of Investor, (ii) any trust agreement, loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
contract, instrument, permit, concession, franchise, license to which Investor
or any of its Affiliates is a party or by which any of its properties or assets
are bound, or (iii) any Law applicable to Investor or to its properties or
assets which, in each case, would materially impair or delay the ability of
Investor to consummate the transactions contemplated in the Company Agreements
to which it is a party.

 

(d)                                 Financial Capability.  Investor will have
available funds necessary to consummate the Closings on the terms and conditions
contemplated by this Agreement.

 

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(e)                                  Consents and Approvals.  Except for
amendments to its Schedule 13D and Forms 4, the Consents and Governmental
Approvals that have previously been received, no Consent or Governmental
Approval is required on the part of Investor or its Affiliates in connection
with the execution and delivery of the Company Agreements to which it is a party
or the consummation of the transactions contemplated hereby or thereby.  Except
as publicly disclosed, none of Investor or any of its Affiliates is a party to
any stockholder, voting or other agreements relating to the rights and
obligations of the Company’s stockholders.

 

(f)                                   EU Approval.  As of the date
hereof, Investor believes the EU Approval will be obtained by June 30, 2013.

 

(g)                                  Brokers, Finders, etc.  All negotiations
relating to this Agreement and the transactions contemplated by this Agreement
have been carried on in such manner as to not give rise to any valid claim
against the Company for any brokerage or finder’s commission, fee or similar
compensation based upon arrangements made by or on behalf of Investor.

 

(h)                                 Purchase for Investment.  Investor
acknowledges its understanding that the offering and sale of the Series B
Convertible Redeemable Preferred Shares to be purchased pursuant hereto by
Investor are intended to be exempt from registration under the Securities Act
and that the Company is relying upon the truth and accuracy of Investor’s
representations and warranties contained herein and Investor’s compliance with
this Agreement in order to determine the availability of such exemptions and the
eligibility of Investor to acquire the Series B Convertible Redeemable Preferred
Shares in accordance with the terms and provisions of this Agreement.  In
furtherance thereof, Investor represents and warrants to the Company that:

 

(i)                                     Investor is an accredited investor
within the meaning of Regulation D promulgated under the Securities Act and, if
there should be any change in such status prior to any Closing Date, Investor
will immediately inform the Company of such change;

 

(ii)                                  Investor (A) has the financial ability to
bear the economic risk of its investment in the Series B Convertible Redeemable
Preferred Shares to be purchased pursuant hereto, (B) can bear a total loss of
its investment therein at this time, (C) has no need for liquidity with respect
to its investment therein, (D) has adequate means for providing for its current
needs and contingencies, and (E) has such knowledge, experience and skill in
evaluating and investing in issues of equity securities, including securities of
new and speculative issuers, based on actual participation in financial,
investment and business matters, such that it is capable of evaluating the
merits and risks of an investment in the Company and the suitability of the
Series B Convertible Redeemable Preferred Shares as an investment for itself;
and

 

(iii)                               Investor has been given the opportunity to
conduct a due diligence review of the Company concerning the terms and
conditions of the offering of the

 

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Series B Convertible Redeemable Preferred Shares to be purchased by Investor and
other matters pertaining to an investment in the Series B Convertible Redeemable
Preferred Shares, in order for Investor to evaluate the merits and risks of an
investment in the Series B Convertible Redeemable Preferred Shares to be
purchased by Investor to the extent the Company possesses such information or
can acquire it without unreasonable effort or expense.

 

(i)                                     No Registration.  Investor has been
advised that the Series B Convertible Redeemable Preferred Shares and the shares
of Class A Common Stock into which the Series B Convertible Redeemable Preferred
Shares are convertible have not been registered under the Securities Act, or any
non-U.S. securities, state securities or blue sky laws, and therefore cannot be
resold unless they are registered under such laws or unless an exemption from
registration thereunder is available.  Investor is purchasing the Series B
Convertible Redeemable Preferred Shares for its own account for investment, and
not with a view to, or for resale in connection with, the distribution thereof,
and has no present intention of distributing or reselling any thereof.  In
making the foregoing representations, Investor is aware that it must bear, and
represents that Investor is able to bear, the economic risk of such investment
for an indefinite period of time.

 

(j)                                    Restrictions on Shares.  Investor is
aware of and familiar with the restrictions imposed on the transfer of any
Series B Convertible Redeemable Preferred Shares, including, without limitation,
the restrictions contained herein or in the Company’s Bye-laws and the Investor
Rights Agreement.

 

ARTICLE III
COVENANTS

 

3.1.                            Restrictive Legends.

 

(a)                                 Investor acknowledges and agrees that the
Series B Convertible Redeemable Preferred Shares and any securities issued or
issuable with respect to such Series B Convertible Redeemable Preferred Shares
by way of stock dividend or stock split or in connection with a combination of
shares, conversion of Series B Convertible Redeemable Preferred Shares,
recapitalization, merger, consolidation, going private, tender offer,
amalgamation, change of control, other reorganization or otherwise, shall bear
restrictive legends in substantially the following form:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED.  THEY MAY NOT BE OFFERED,
SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OTHER THAN PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR PURSUANT
TO AN EXEMPTION FROM REGISTRATION SPECIFIED IN AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO CENTRAL EUROPEAN MEDIA ENTERPRISES LTD. (THE “COMPANY”) OR
OTHERWISE AS PERMITTED BY LAW.

 

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The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any such shares upon which it
is stamped, if such shares are registered for sale under an effective
registration statement filed under the Securities Act or if such shares are
proposed to be sold pursuant to an exemption from registration and the Company
receives an opinion of counsel reasonably satisfactory to it with respect to
compliance with such exemption.

 

(b)                                 The Series B Convertible Redeemable
Preferred Shares and any securities issued or issuable with respect to such
Series B Convertible Redeemable Preferred Shares by way of stock dividend or
stock split or in connection with a combination of shares, conversion of
Series B Convertible Redeemable Preferred Shares, recapitalization, merger,
consolidation, going private, tender offer, amalgamation, change of control,
other reorganization or otherwise, shall bear an additional restrictive legend
in substantially the following form until the earlier of (i) such time as the TW
Registration Rights Agreement shall have been terminated or (ii) such time as
such shares (or the holder thereof) shall no longer be subject to the terms of
the TW Registration Rights Agreement:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE RESTRICTIONS
CONTAINED IN A REGISTRATION RIGHTS AGREEMENT, DATED AS OF MAY 18, 2009, BY AND
BETWEEN THE COMPANY AND TIME WARNER MEDIA HOLDINGS B.V., AS MODIFIED OR
SUPPLEMENTED FROM TIME TO TIME (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
THE COMPANY). ANY TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
THAT CONTRAVENE SUCH RESTRICTIONS SHALL BE NULL AND VOID.

 

(c)                                  If required by Law, Investor agrees to
comply with applicable prospectus delivery requirements in connection with any
sale or transfer of the Series B Convertible Redeemable Preferred Shares,
including those represented by a certificate(s) from which the legend has been
removed.

 

3.2.                            Consents and Approvals.

 

(a)                                 From and after the date hereof, the Company
shall use its commercially reasonable efforts to obtain, as promptly as
practicable, any Consents and Governmental Approvals required on the part of the
Company in connection with the transactions contemplated by the Company
Agreements.  The fees and expenses related to obtaining such Consents and
Governmental Approvals on the part of the Company shall be paid by the Company.

 

(b)                                 From and after the date hereof, Investor
shall use its commercially reasonable efforts to obtain, as promptly as
practicable, the EU Approval and any Consents and Governmental Approvals
required on the part of Investor in connection with the transactions
contemplated by the Company Agreements to which it is a party, in respect of
which commercially reasonable efforts shall not include, without limitation,
agreeing to or effecting, by undertaking, consent decree, hold separate order or
otherwise, (1) the sale, divestiture or disposition of businesses or assets of
Investor or any of its

 

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Affiliates, or (2) the taking of any action that would limit the freedom of
action of Investor or any of its Affiliates; provided that Investor shall
accept, and comply with, such reasonable conditions and/or restrictions in
jurisdictions in which the Company conducts business as of the date hereof as
may be required by the European Commission in order to obtain the EU Approval,
conditioned on obtaining such approval.  The fees and expenses related to
obtaining the EU Approval and such Consents and Governmental Approvals on the
part of Investor shall be paid by Investor.

 

(c)                                  Each of the Company and Investor shall, and
shall cause its respective Affiliates to, use commercially reasonable efforts to
assist and cooperate with the other party in securing any such Consents and
Governmental Approvals.

 

3.3.                            Securities Laws.  The Company shall timely make
all filings and reports relating to the offer and sale of the Series B
Convertible Redeemable Preferred Shares required under applicable securities
Laws, including any “blue sky” laws of the states of the United States.  The
Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section 3.3.  Neither the Company nor any of its
Subsidiaries shall sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any “security” (as defined in the Securities Act) that
could be integrated with the sale of the Series B Convertible Redeemable
Preferred Shares in a manner that could require the registration of the Series B
Convertible Redeemable Preferred Shares under the Securities Act.

 

3.4.                            Proxy Material; General Meeting.  The Company
shall (a) as promptly as reasonably practicable (but in any event no later than
four Business Days after the closing of the Base Offering), file with the SEC a
preliminary proxy statement (as amended and supplemented, the “Company Proxy
Statement”) relating to the General Meeting including the proposals which
require a Requisite Vote (provided that the Company Proxy Statement shall not
contain a proposal to increase the number of shares of Class A Common Stock that
the Company is authorized to issue in excess of the Increased Authorized Share
Number, (b) respond as promptly as reasonably practicable to any comments
received from the SEC with respect to such filing and shall provide copies of
such comments to Investor promptly upon receipt, (c) as promptly as reasonably
practicable prepare and file any amendments or supplements necessary to be filed
in response to any SEC comments or as required by Law, (d) use all reasonable
efforts to have cleared by the SEC and thereafter mail to its stockholders as
promptly as reasonably practicable, the Company Proxy Statement and all other
customary proxy or other materials for meetings such as the General Meeting,
(e) to the extent required by applicable Law, as promptly as reasonably
practicable prepare, file and distribute to the Company stockholders (in the
case of the Company Proxy Statement) any supplement or amendment to the Company
Proxy Statement if any event shall occur which requires such action at any time
prior to the General Meeting, and (f) otherwise use all reasonable efforts to
comply with all requirements of Law applicable to the General Meeting.  The
Company shall provide Investor a reasonable opportunity to review any material
amendments to the portions of the Company Proxy Statement that refer to Investor
or describe the transactions contemplated by this Agreement or the Company
Agreements prior to filing the Company Proxy Statement with the SEC.  The
Company’s Board of Directors shall take all reasonable lawful action to solicit
the Requisite Vote.

 

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3.5.                            Public Announcements.  The parties agree that no
public release or announcement concerning this Agreement or the transactions
contemplated hereby shall be issued or made by or on behalf of any party or
their respective Affiliates without the prior written consent of the other party
(which consent shall not be unreasonably withheld, delayed or conditioned),
except as such announcement may, in the reasonable judgment of the releasing
party, be required by Law, or any rule or regulation of any securities exchange
on which securities of the releasing party are listed, in which case the party
required to make the release or announcement shall allow the other party
reasonable time to comment on such release or announcement in advance of such
issuance. For the avoidance of doubt, any press release(s) to be issued
announcing the execution of this Agreement, the Preemptive Rights Side Letter
and/or the Public Offering shall be mutually agreed by the parties prior to
release.

 

3.6.                            Use of Proceeds. The Company will hold no less
than $100,000,000 of the Net Proceeds of the Public Offering and the lesser of
(a) $200,000,000 and (b) all of the Net Proceeds of the Series B Private
Placement, in a restricted account (the “Restricted Proceeds”) to be used solely
to repurchase and/or redeem outstanding 2016 Notes at the Company’s discretion
from time to time; provided that (i) the Company shall apply all of such Net
Proceeds to repurchase and/or redeem outstanding 2016 Notes (X) on September 15,
2013 if the Initial Closing occurs on or prior to August 5, 2013 or (Y) as soon
as practicable if the Initial Closing occurs after August 5, 2013, (ii) pending
such use, the Restricted Proceeds will be invested in U.S. government
securities, mutual and money market funds and/or bank certificates of deposit,
and (iii) any remaining Aggregate Net Proceeds may be used by the Company for
general corporate purposes.

 

3.7.                            TW Undertaking.  In the event that the General
Meeting is scheduled to be held after the termination of the Voting
Agreement, Investor shall deliver, or cause to be delivered, to the Company the
TW Undertaking no later than five Business Days prior to the date of the General
Meeting.

 

3.8.                            Amendments.  Prior to the filing by the Company
with the SEC, in connection with the Public Offering, of (i) the Prospectus
Supplement, (ii) any material amendment or supplement to the Registration
Statement or the Prospectus Supplement or (iii) any free writing prospectus, the
Company shall provide Investor a reasonable opportunity to review any document
to be so filed.  The Company shall notify Investor in advance of any filings to
be made by the Company with the SEC pursuant to the Exchange Act prior to the
consummation of the Public Offering that contain any reference to Investor and
the Company shall deliver a copy of any such document a reasonable amount of
time prior to such proposed filing, and will not use or file any such document
to which Investor reasonably objects.

 

3.9.                            Public Offering.  The Company shall cause the
underwriters in the Base Offering to allocate to Investor (a) 49.9% of the
shares of Class A Common Stock included in the Base Offering and (b) 49.9% of
the Option Shares, and all such shares shall be sold by the Company to the
underwriters without any discount or commission.  The Gross Proceeds to the
Company from the Base Offering (excluding shares sold to Investor) shall not be
less than $75,000,000 or more than $100,000,000.  The Option Shares shall not
exceed 15% of the number of shares of Class A Common Stock offered and sold in
the Base Offering and shall be reduced to the extent Investor waives its
Preemptive Purchase Right with respect thereto and, in lieu thereof,

 

14

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purchases Option Series B Convertible Redeemable Preferred Shares in accordance
with this Agreement and the Preemptive Rights Side Letter.

 

ARTICLE IV
CONDITIONS TO CLOSINGS

 

4.1.                            Conditions to the Obligations of the Company and
Investor. The obligations of the Company and Investor to consummate the
transactions contemplated by this Agreement shall be subject to the fulfillment
or waiver on or prior to each Closing Date (unless otherwise specified) of the
following conditions:

 

(a)                                 No Injunction, etc.  Consummation of the
transactions contemplated hereby shall not have been restrained, enjoined or
otherwise prohibited or made illegal by any applicable Law.

 

(b)                                 Consents and Governmental Approvals.  The
parties shall have received all necessary Consents and Governmental Approvals.

 

(c)                                  Shareholder Approval.  The Requisite Vote
shall have been obtained.

 

(d)                                 Consummation of Public Offering.  The Public
Offering (excluding shares sold to Investor) shall have been consummated, and
the aggregate Gross Proceeds from the Base Offering (excluding shares sold to
Investor) shall have been no less than $75,000,000 or more than $100,000,000.

 

(e)                                  Opinions of the Company’s Financial
Advisor.  Neither the Fairness Opinion nor the Indenture Opinion shall have been
revoked, amended or otherwise modified.

 

4.2.                            Conditions to the Obligations of Investor.  The
obligation of Investor to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or waiver by Investor on or prior
to each Closing Date (unless otherwise specified) of the following conditions:

 

(a)                                 Representations and Warranties.  (i) The
representations and warranties of the Company contained in Section 2.1(d) of
this Agreement and the representations and warranties of the Company contained
in this Agreement that are qualified as to materiality or Material Adverse
Effect shall be true at and as of the date hereof and at and as of the
applicable Closing Date as if made at and as of such date (except, in each case,
as to such representations and warranties made as of a specific date, which
shall have been true at and as of such date) and (ii) the other representations
and warranties of the Company contained in this Agreement and in any certificate
or other writing delivered by the Company pursuant hereto shall be true in all
material respects at and as of the date hereof and at and as of the applicable
Closing Date as if made at and as of such date (except, in each case, as to such
representations and warranties made as of a specific date, which shall have been
true at and as of such date), and Investor shall have received a certificate
signed by an officer of the Company to the foregoing effect.

 

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(b)                                 Material Adverse Change.  There shall not
have been a Material Adverse Change from the date hereof to the applicable
Closing Date, and Investor shall have received a certificate signed by an
officer of the Company to the foregoing effect.

 

(c)                                  Performance of Obligations.  The Company
shall have performed and complied with, in all material respects, all of the
obligations and conditions in this Agreement and the Preemptive Rights Side
Letter required to be performed or complied with by it on or prior to the
applicable Closing Date, and Investor shall have received a certificate signed
by an officer of the Company to the foregoing effect.

 

(d)                                 Issuance of Shares.  (i) In the case of the
Initial Closing, the Company shall issue the Initial Series B Convertible
Redeemable Preferred Shares to Investor and (ii) in the case of the Second
Closing, the Company shall issue the Option Series B Convertible Redeemable
Preferred Shares, if any, or the Additional Series B Convertible Redeemable
Preferred Shares, if any, to Investor.

 

(e)                                  NASDAQ Qualification.  The Class A Common
Stock offered and sold in the Public Offering shall have been approved for
listing on NASDAQ, and the Class A Common Stock shall not have been delisted on
NASDAQ.

 

(f)                                   Outstanding Options.  The Company shall
have no outstanding equity securities or voting securities, or securities
convertible, exercisable or exchangeable into equity securities or voting
securities, other than Class A Common Stock or securities convertible,
exercisable or exchangeable into shares of Class A Common Stock other than
options to purchase 64,000 shares of Class B Common Stock held by Ronald S.
Lauder.

 

(g)                                  EU Approval.  Investor shall have received
the EU Approval.

 

4.3.                            Conditions to the Obligations of the Company. 
The obligation of the Company to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment or waiver by the Company on
or prior to each Closing Date (unless otherwise specified) of the following
conditions:

 

(a)                                 Representations and Warranties.  (i) The
representations and warranties of Investor contained in this Agreement that are
qualified as to materiality shall be true at and as of the date hereof and at
and as of the applicable Closing Date as if made at and as of such date (except,
in each case, as to such representations and warranties made as of a specific
date, which shall have been true at and as of such date) and (ii) the other
representations and warranties of Investor contained in this Agreement and in
any certificate or other writing delivered by Investor pursuant hereto shall be
true in all material respects at and as of the date hereof and at and as of the
applicable Closing Date as if made at and as of such date (except, in each case,
as to such representations and warranties made as of a specific date, which
shall have been true at and as of such date), and the Company shall have
received a certificate signed by an authorized officer of Investor to the
foregoing effect.

 

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(b)                                 Performance of Obligations.  Investor shall
have performed and complied with, in all material respects, all of the
obligations and conditions in this Agreement and the Preemptive Rights Side
Letter required to be performed or complied with by it on or prior to the
applicable Closing Date, and the Company shall have received a certificate
signed by an authorized officer of Investor to the foregoing effect.

 

(c)                                  Payment of Purchase Price.  (i) In the case
of the Initial Closing, Investor shall have paid the Initial Series B Purchase
Price to the Company and (ii) in the case of the Second Closing, Investor shall
have paid the Option Series B Purchase Price, if any, or the Additional Series B
Purchase Price, if any, to the Company.

 

ARTICLE V
INDEMNIFICATION

 

5.1.                            Survival of Representations and Warranties.  All
representations and warranties under this Agreement shall survive the Closings
until the expiration of one (1) year following the Initial Closing Date.  All
agreements and covenants contained in this Agreement shall survive the Closings
indefinitely (except to the extent expressly provided in this Agreement).

 

5.2.                            Indemnification.

 

(a)                                 Notwithstanding any investigation at any
time made by or on behalf of Investor or any Investor Indemnified Persons or any
knowledge (other than the actual knowledge (as demonstrated by the Company) of
any directors of the Company that are employees of Time Warner Inc. or one of
its subsidiaries based on information contained in written materials provided to
all similarly situated directors of the Company in the context of their role as
directors) or information that Investor or any Investor Indemnified Person may
now have or hereafter obtain, from and after the Initial Closing Date, the
Company shall indemnify, defend and hold harmless Investor and Investor’s
members, officers, directors, employees, agents, Affiliates and representatives
(collectively with Investor, the “Investor Indemnified Persons”) against, and
shall compensate and reimburse such Investor Indemnified Persons for, any and
all losses, liabilities, damages, diminution in value of the Series B
Convertible Redeemable Preferred Shares or the Class A Common Stock into which
such shares are convertible (other than diminution in value of the Series B
Convertible Redeemable Preferred Shares or the Class A Common Stock into which
such shares are convertible suffered or sustained in the case of any indemnity
obligations solely pursuant to clause (iii) of this Section 5.2(a)) and
expenses, including all reasonable costs and expenses related thereto or
incurred in enforcing this ARTICLE V (“Losses”) that any Investor Indemnified
Person has suffered or sustained (regardless of whether or not such Losses
relate to a third party claim) (i) arising directly from the breach of any of
the representations or warranties of the Company contained in this Agreement,
(ii) arising directly from the breach of any covenant or agreement of the
Company contained in this Agreement, or (iii) arising directly from any action,
suit, claim, proceeding or investigation instituted against such Investor
Indemnified Person by any Governmental Entity, any holder of equity securities
of the Company who is not an Affiliate of such Investor Indemnified Person, or
any other Person (other than the Company) who is not an Affiliate of such
Investor Indemnified Person relating to this

 

17

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Agreement or the transactions contemplated by the Company Agreements (unless
such action resulted from a breach of such Investor Indemnified Person’s
representations, warranties or agreements contained in any Company Agreement or
any violations by such Investor Indemnified Person of state or federal
securities laws or any conduct by such Investor Indemnified Person which
constitutes fraud).

 

(b)                                 From and after the Initial Closing Date, and
notwithstanding any investigation at any time made by or on behalf of the
Company or any Company Indemnified Persons or any knowledge or information that
the Company or any Company Indemnified Person may now have or hereafter
obtain, Investor shall indemnify, defend and hold harmless the Company and its
officers, directors, employees, agents and representatives (collectively, the
“Company Indemnified Persons” and together with the Investor Indemnified
Persons, the “Indemnified Persons”) against, and will compensate and reimburse
such Company Indemnified Persons for, any and all Losses that any Company
Indemnified Person has suffered or sustained (regardless of whether or not such
Losses relate to a third party claim) (i) arising from the breach of any of the
representations or warranties of Investor contained in this Agreement or
(ii) arising from the breach of any covenant or agreement of Investor contained
in this Agreement and none of the Company Indemnified Persons shall be liable to
Investor or any holder of equity securities of Investor for or with respect to
any such Loss.

 

(c)                                  The parties hereto hereby acknowledge and
agree that for purposes of this ARTICLE V, in determining whether any
representation or warranty has been breached and for purposes of determining the
amount of Losses resulting therefrom, any and all “Material Adverse Effect,”
“material adverse effect,” “materiality” and similar exceptions and qualifiers
set forth in any such representations and warranties shall be disregarded.  The
parties hereto hereby further acknowledge and agree that any claim for
indemnification made in writing in accordance with the terms of this ARTICLE V
on or prior to the applicable expiration date with respect to any such claim as
set forth herein shall survive the Closings and any such applicable expiration
date until the final resolution thereof.

 

(d)                                 In the case of any claim asserted by an
Indemnified Person under this Agreement, notice shall be given by such
Indemnified Person to the party required to provide indemnification (the
“Indemnifying Party”) promptly after such Indemnified Person has actual
knowledge of any claim as to which indemnity may be sought, and the Indemnified
Person shall permit the Indemnifying Party (at the expense of such Indemnifying
Party) to assume the defense of any claim or any litigation resulting therefrom,
provided that (i) counsel for the Indemnifying Party who shall conduct the
defense of such claim or litigation shall be reasonably satisfactory to the
Indemnified Person, and the Indemnified Person may participate in such defense
at such Indemnified Person’s expense and (ii) the failure of any Indemnified
Person to give notice as provided herein shall not relieve the Indemnifying
Party of its indemnification obligation under this Agreement, except to the
extent that such failure results in a lack of actual notice to the Indemnifying
Party and such Indemnifying Party is materially prejudiced as a result of such
failure to give notice.  Any settlement or compromise of such asserted claim by
the Indemnifying Party shall require the prior written consent of the
Indemnified Person,

 

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which consent shall not be unreasonably withheld, conditioned or delayed,
provided that no such consent shall be required as long as it is solely a
monetary settlement (that will be paid entirely by or on behalf of the
Indemnifying Party) that provides a full release of the Indemnified Person with
respect to such matter and does not contain an admission of liability on the
part of the Indemnified Person and will not have an ongoing adverse effect on
the business or operations of the Indemnified Person.

 

(e)                                  Absent fraud, willful misconduct or gross
negligence by the party against whom a remedy is sought, from and after the
Initial Closing, the sole and exclusive remedies with respect to any and all
claims relating to the subject matter of this Agreement shall be (a) monetary
damages in accordance with the indemnification provisions set forth in this
ARTICLE V and (b) the remedies set forth in Section 7.7.

 

(f)                                   Notwithstanding any provision herein to
the contrary, the maximum liability of the Company with respect to the Losses
suffered by Investor Indemnified Person as a result of any breach of any
representation or warranty shall be an aggregate amount equal to the Series B
Subscription Proceeds; provided that the Company will be required to indemnify
any Investor Indemnified Person for any breaches of representations and
warranties only if such Losses in the aggregate exceed $500,000 and then only to
the extent such Losses exceed such amount.

 

(g)                                  Notwithstanding any other provision of this
Agreement, the liability for indemnification of any Indemnifying Party under
this Agreement shall not include consequential, indirect, punitive or exemplary
damages.  The foregoing shall not limit in any respect any claim based on
diminution of value of the Series B Convertible Redeemable Preferred Shares or
the Class A Common Stock into which the Series B Convertible Redeemable
Preferred Shares are convertible.

 

(h)                                 Any indemnification of an Indemnified Person
by an Indemnifying Party pursuant to this ARTICLE V shall be effected by wire
transfer of immediately available funds from the Indemnifying Party to an
account designated by the Indemnified Person within fifteen (15) Business Days
after the determination thereof.

 

ARTICLE VI
TERMINATION

 

6.1.                            Termination.  This Agreement may be terminated
at any time:

 

(a)                                 by the mutual written consent of the Company
and Investor;

 

(b)                                 by either the Company or Investor if any
Governmental Entity shall have issued an injunction or other ruling prohibiting
the consummation of any of the transactions contemplated by this Agreement and
the Company Agreements and such injunction or other ruling shall not be subject
to appeal or shall have become final and unappealable;

 

(c)                                  by either the Company or Investor if the
Public Offering has not been consummated on or before May 30, 2013, provided
that the right to terminate this

 

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Agreement under this clause (c) will not be available to any party whose failure
to fulfill in any material respect any of its obligations with respect to the
Public Offering has been the cause of, or resulted in, the failure of the Public
Offering to close on or before such date;

 

(d)                                 by either the Company or Investor if the
Initial Closing has not been consummated on or before September 30, 2013,
provided that if, on and as of September 30, 2013, the EU Approval has not been
obtained but each other condition set forth in ARTICLE IV shall have been
satisfied (other than those conditions that by their terms are to be satisfied
or waived at the Initial Closing itself), Investor shall have the right to
extend such date to January 31, 2014 upon written notice to the Company,
provided further that the right to terminate this Agreement under this clause
(d) will not be available to any party whose failure to fulfill in any material
respect any of its obligations with respect to the Initial Closing has been the
cause of, or resulted in, the failure of the Initial Closing to close on or
before such date;

 

(e)                                  by Investor if the Company shall have
materially breached the terms of this Agreement and such breach is not cured
within twenty (20) Business Days after receiving notice thereof; or

 

(f)                                   by the Company if Investor shall have
materially breached the terms of this Agreement and such breach is not cured
within twenty (20) Business Days after receiving notice thereof.

 

6.2.                            Effect of Termination.  In the event that this
Agreement is terminated under Section 6.1, all further obligations of the
parties under this Agreement, other than pursuant to Section 3.5 and this
Section 6.2 and ARTICLE V, will be terminated without further liability of any
party to any other party, provided that such termination will not relieve any
party from liability for its breach of this Agreement prior to such termination.

 

ARTICLE VII
DEFINITIONS AND MISCELLANEOUS

 

7.1.                            Definitions.  As used in this Agreement, the
following capitalized terms have the respective meanings set forth below:

 

(a)                                 “2016 Notes” means the 11.625% Senior Notes
due 2016 issued by the Company under the 2016 Notes Indenture.

 

(b)                                 “2016 Notes Indenture” means the Indenture
dated as of September 17, 2009, between the Company, as Issuer, the subsidiary
guarantors party thereto and The Bank of New York Mellon (London Branch), as
Trustee, governing the 2016 Notes.

 

(c)                                  “Additional Purchase Notice” shall have the
meaning set forth in Section 1.3(b) of this Agreement.

 

(d)                                 “Additional Series B Closing” shall have the
meaning set forth in Section 1.5(a) of this Agreement.

 

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(e)                                  “Additional Series B Convertible Redeemable
Preferred Shares” shall have the meaning set forth in the recitals of this
Agreement.

 

(f)                                   “Additional Series B Purchase” shall have
the meaning set forth in Section 1.3(a) of this Agreement.

 

(g)                                  “Additional Series B Purchase Price” shall
have the meaning set forth in Section 1.5(b) of this Agreement.

 

(h)                                 “Additional Series B Purchase Right” shall
have the meaning set forth in Section 1.3(a) of this Agreement.

 

(i)                                     “Affiliate” of any Person, means any
other Person that, directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, such first
Person; provided, that Time Warner Inc. shall not be an Affiliate of the Company
for purposes of this definition.  As used in this definition, the term
“control,” including the correlative terms “controlling,” “controlled by” and
“under common control with,” means the possession, directly or indirectly, of
the power to direct or cause the direction of management or policies (whether
through ownership of securities or any partnership or other ownership interest,
by contract or otherwise).

 

(j)                                    “Aggregate Net Proceeds” means,
collectively, all Net Proceeds to the Company from the Public Offering and the
Series B Private Placement.

 

(k)                                 “Agreement” shall have the meaning set forth
in the preamble of this Agreement.

 

(l)                                     “Base Offering” shall have the meaning
set forth in the recitals to this Agreement.

 

(m)                             “Business Day” means any day that is not a
Saturday, Sunday or other day on which banking institutions in New York City,
London, Prague, Frankfurt or Amsterdam are authorized or required by law to
remain closed.

 

(n)                                 “Bye-laws” means the Amended and Restated
Bye-Laws of the Company, dated as of June 13, 2012.

 

(o)                                 “Class A Common Stock” shall have the
meaning set forth in the recitals of this Agreement.

 

(p)                                 “Closing Date” shall have the meaning set
forth in Section 1.5(a) of this Agreement.

 

(q)                                 “Closings” shall have the meaning set forth
in Section 1.5(a) of this Agreement.

 

(r)                                    “Company” shall have the meaning set
forth in the preamble of this Agreement.

 

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(s)                                   “Company Agreements” means, collectively,
this Agreement, the Preemptive Rights Side Letter and the Letter Agreement.

 

(t)                                    “Company Indemnified Persons” shall have
the meaning set forth in Section 5.2(b) of this Agreement.

 

(u)                                 “Company Proxy Statement” shall have the
meaning set forth in Section 3.4 of this Agreement.

 

(v)                                 “Company Reports” means (i) the reports,
schedules, forms, statements and other documents required to be filed by the
Company under the Securities Act and the Exchange Act after January 1, 2012 and
(ii) the Registration Statement and the Prospectus Supplement.

 

(w)                               “Consents” means any consent, approval,
authorization, waiver, permit, grant, franchise, concession, agreement, license,
certificate, exemption, order, registration, declaration, filing, report or
notice of, with or to any Person.

 

(x)                                 “EU Approval” means, in respect of Case
No. COMP/M.6866, either a declaration or decision by the European Commission
that the notified transaction does not constitute a concentration within the
meaning of Council Regulation 139/2004 (as amended) or a decision that the
notified transaction constitutes a concentration which is compatible with the
common market subject, as the case may be, to compliance by Investor with
specified commitments.

 

(y)                                 “Excess Amount” shall have the meaning set
forth in the recitals of this Agreement.

 

(z)                                  “Exchange Act” means the Securities
Exchange Act of 1934, as amended.

 

(aa)                          “Fairness Opinion” shall have the meaning set
forth in the recitals of this Agreement.

 

(bb)                          “Financial Statements” shall have the meaning set
forth in Section 2.1(h) of this Agreement.

 

(cc)                            “First Investor Rights Amendment” means that
certain First Amendment to Investor Rights Agreement, dated as of April 30,
2012, by and among the Company, Investor, Ronald S. Lauder, RSL Savannah LLC,
RSL Capital LLC and RSL Investments Corporation.

 

(dd)                          “General Meeting” means the 2013 annual general
meeting of the shareholders of the Company currently scheduled to take place on
the date and time provided in the Company Proxy Statement at Citco (Bermuda)
Limited, O’Hara House, 3 Bermudiana Road, Hamilton, HM 08 Bermuda, or any
postponement or adjournment thereof.

 

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(ee)                            “Governmental Approvals” means any Consent of,
made with or obtained from, any Governmental Entity.

 

(ff)                              “Governmental Entity” means any nation or
government or multinational body, any state, agency, commission, or other
political subdivision thereof or any entity (including a court) exercising
executive, legislative, judicial or administration functions of or pertaining to
government, any stock exchange or self-regulatory entity supervising, organizing
and supporting any stock exchange.

 

(gg)                            “Gross Proceeds” means the gross cash proceeds
received in a financing transaction, before commissions, discounts, advisor
fees, filing fees and other reasonable transaction fees and expenses.

 

(hh)                          “Increased Authorized Share Number” means a number
of shares of Class A Common Stock equal to the sum of (i) the number of shares
of Class A Common Stock outstanding immediately following the closing of the
Base Offering, (ii) the maximum number of Option Shares issuable assuming the
full exercise of the Option (or, if the Option has been exercised, the number of
Option Shares for which the Option has been exercised), (iii) the number of
shares of Class A Common Stock reserved for issuance as of the date hereof,
(iv) the number of shares of Class A Common Stock to be reserved for issuance
upon the conversion of the Series B Convertible Redeemable Preferred Shares,
assuming conversion on the fourth anniversary of the date of issuance, and
(v) 50,000,000.

 

(ii)                                  “Indemnified Persons” shall have the
meaning set forth in Section 5.2(b) of this Agreement.

 

(jj)                                “Indemnifying Party” shall have the meaning
set forth in Section 5.2(d) of this Agreement.

 

(kk)                          “Indenture Opinion” shall have the meaning set
forth in the recitals of this Agreement.

 

(ll)                                  “Initial Closing” shall have the meaning
set forth in Section 1.4(a) of this Agreement.

 

(mm)                  “Initial Closing Date” shall have the meaning set forth in
Section 1.4(a) of this Agreement.

 

(nn)                          “Initial Series B Convertible Redeemable Preferred
Shares” shall have the meaning set forth in Section 1.1 of this Agreement.

 

(oo)                          “Initial Series B Investment” shall have the
meaning set forth in Section 1.1 of this Agreement.

 

(pp)                          “Initial Series B Purchase Price” shall have the
meaning set forth in Section 1.4(b) of this Agreement.

 

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(qq)                          “Investor” shall have the meaning set forth in the
preamble of this Agreement.

 

(rr)                                “Investor Allocated Shares” shall have the
meaning set forth in the recitals of this Agreement.

 

(ss)                              “Investor Indemnified Persons” shall have the
meaning set forth in Section 5.2(a) of this Agreement.

 

(tt)                                “Investor Rights Agreement” means that
certain Investor Rights Agreement, by and among the Company, Ronald S. Lauder,
RSL Savannah LLC, RSL Investment LLC, RSL Investments Corporation, and Investor,
dated as of May 18, 2009, as amended by the First Investor Rights Amendment and
as may be further amended from time to time.

 

(uu)                          “Laws” means all laws, statutes, ordinances,
rules, regulations, judgments, injunctions, orders and decrees.

 

(vv)                          “Letter Agreement” means the Letter Agreement
attached hereto as Exhibit I.

 

(ww)                      “Losses” shall have the meaning set forth in
Section 5.2(a) of this Agreement.

 

(xx)                          “Material Adverse Effect” or “Material Adverse
Change” means, with respect to the Company, any effect, event, development or
change that, individually or together with any other event, development or
change, is or is reasonably expected to (A) be materially adverse to the
business, assets, results of operations or financial condition of the Company
and the Company’s Subsidiaries, taken as a whole or (B) prevent or materially
impair or materially delay the ability of the Company to consummate the
transactions contemplated by the Company Agreements or to otherwise perform its
obligations under the Company Agreements; provided, however, that in no event
shall any of the following, alone or in combination, be deemed to constitute,
nor shall any of the following be taken into account in determining whether
there has been, a Material Adverse Effect or a Material Adverse Change:  (a) a
change in the market price or trading volume of the Class A Common Stock
(provided that the underlying changes, events, occurrences, state of facts or
developments that caused or contributed to any such change may otherwise be
taken into consideration in determining whether a Material Adverse Effect or
Material Adverse Change has occurred); (b)(i) changes in conditions in the
global economy, the economies of the countries in which the Company and the
Company’s Subsidiaries operate or the capital or financial markets generally,
including changes in exchange rates; (ii) changes in applicable Laws (provided
that such changes in Laws do not result in the cancellation of any broadcast
license(s) or franchise(s) to which the Company or any of its Subsidiaries is a
party or by which any of their properties or assets are bound, the cancellation
of which would be material as indicated therein) or national or international
political conditions (including hostilities or terrorist attack); or
(iii) changes generally affecting the industry in which the Company and the
Company’s

 

24

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Subsidiaries operate; in each case with respect to clauses (i), (ii) and (iii),
to the extent such changes or developments referred to therein do not have a
disproportionate impact on the Company and its Subsidiaries, taken as a whole,
relative to other industry participants; (c) changes in United States generally
accepted accounting principles or other accounting principles after the date
hereof; (d) the negotiation, execution, announcement or pendency of this
Agreement or the transactions contemplated hereby or the consummation of the
transactions contemplated by this Agreement, including the impact thereof on
relationships, contractual or otherwise, with customers, suppliers, vendors,
lenders, mortgage brokers, investors, venture partners or employees, to the
extent such changes or developments can be directly attributed to the
announcement or performance of the Company Agreements and the transactions
contemplated thereby; (e) natural disasters; (f) any affirmative action
knowingly taken by Investor that could reasonably be expected to give rise to a
Material Adverse Effect (without giving effect to this clause (f) in the
definition thereof); (g) any action taken by the Company at the request or with
the express consent of Investor; and (h) with respect to Section 4.2(b) only,
any adverse effect, event, development or change to the business, results of
operations or financial condition of the Company or the Company’s Subsidiaries
that is cured before the applicable Closing Date.

 

(yy)                          “NASDAQ” shall have the meaning set forth in
Section 2.1(k) of this Agreement.

 

(zz)                            “Net Proceeds” means Gross Proceeds less
commissions, discounts, advisor fees, filing fees and other reasonable
transaction fees and expenses.

 

(aaa)                   “Offered Amount” means Gross Proceeds to the Company in
an amount of no less than $150,000,000 and no more than $200,000,000, which
amount shall not include any Option Exercise or the exercise by Investor of the
Preemptive Purchase Right with respect to any Option Shares.

 

(bbb)                   “Option” shall have the meaning set forth in the
recitals of this Agreement.

 

(ccc)                      “Option Exercise” means the exercise of the Option by
the underwriters in the Public Offering.

 

(ddd)                   “Option Purchase Notice” shall have the meaning set
forth in Section 1.2(a) of this Agreement.

 

(eee)                      “Option Series B Closing” shall have the meaning set
forth in Section 1.5(a) of this Agreement.

 

(fff)                         “Option Series B Convertible Redeemable Preferred
Shares” shall have the meaning set forth in the recitals of this Agreement.

 

(ggg)                      “Option Series B Purchase” shall have the meaning set
forth in Section 1.2(a) of this Agreement.

 

25

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(hhh)                   “Option Series B Purchase Price” shall have the meaning
set forth in Section 1.5(b) of this Agreement.

 

(iii)                               “Option Shares” shall have the meaning set
forth in the recitals of this Agreement.

 

(jjj)                            “Person” means any individual, corporation,
partnership, limited liability company, association or trust or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.

 

(kkk)                   “Preemptive Purchase Right” shall have the meaning set
forth in the recitals of this Agreement.

 

(lll)                               “Preemptive Rights Side Letter” shall have
the meaning set forth in the recitals of this Agreement.

 

(mmm)       “Preferred Stock” shall have the meaning set forth in
Section 2.1(d) of this Agreement.

 

(nnn)                   “Prospectus Supplement” shall have the meaning set forth
in the recitals of this Agreement.

 

(ooo)                   “Public Offering” means (i) the Base Offering and
(ii) the offer and sale of the Option Shares (if any).

 

(ppp)                   “Registration Statement” shall have the meaning set
forth in the recitals of this Agreement.

 

(qqq)                   “Regulation D” shall have the meaning set forth in
Section 2.1(j) of this Agreement.

 

(rrr)                            “Requisite Vote” means the approval at the
General Meeting of (i) an increase in the number of shares of Class A Common
Stock which the Company is authorized to issue to the Increased Authorized Share
Number and (ii) the transactions contemplated hereby, by a majority of the votes
cast by the holders of the Class A Common Stock and the Series A Preferred Share
entitled to vote thereon, voting together as a single class.

 

(sss)                         “Restricted Proceeds” shall have the meaning set
forth in Section 3.6 of this Agreement.

 

(ttt)                            “RSL Registration Rights Agreement” means that
certain Registration Rights Agreement, by and between the Company, RSL Capital
LLC and Ronald S. Lauder, dated as of April 30, 2012.

 

(uuu)                   “SEC” shall have the meaning set forth in the recitals
of this Agreement.

 

26

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(vvv)                   “Second Closing Date” shall have the meaning set forth
in Section 1.5(a) of this Agreement.

 

(www)             “Securities Act” shall have the meaning set forth in the
recitals of this Agreement.

 

(xxx)                   “Series A Preferred Share” means the outstanding share
of the Company’s Series A Convertible Preferred Stock, par value $0.08 per
share.

 

(yyy)                   “Series B Convertible Redeemable Preferred Shares” means
the shares of the Preferred Stock of the Company that are designated and issued
pursuant to Section 1.1, 1.2 and/or 1.3 hereof, a form certificate of
designation for which stock is set forth on Exhibit II attached hereto.

 

(zzz)                      “Series B Private Placement” means, collectively,
(i) the Initial Series B Investment and (ii) the Option Series B Purchase or the
Additional Series B Purchase, as applicable.

 

(aaaa)            “Series B Subscription Proceeds” means the Gross Proceeds to
the Company from the issuance and sale of the Series B Convertible Redeemable
Preferred Shares to Investor.

 

(bbbb)            “Stated Value” shall have the meaning set forth in Section 1.1
of this Agreement.

 

(cccc)                “Subsidiary” means, with respect to any Person, another
Person of which 50% or more of the voting power of the equity securities or
equity interests is owned, directly or indirectly, by such Person.

 

(dddd)            “TW Registration Rights Agreement” means that certain
Registration Rights Agreement, by and between the Company and an Affiliate of
Investor, dated as of May 18, 2009.

 

(eeee)                “TW Undertaking” means a written undertaking by Investor
to vote at the General Meeting all shares of Class A Common Stock, Series A
Preferred Share and any other voting equity interests of the Company over which
Investor has voting power in favor of the proposals that require the Requisite
Vote.

 

(ffff)                    “Voting Agreement” means that certain Irrevocable
Voting Deed and Corporate Representative Appointment, by and among RSL Savannah
LLC, Ronald S. Lauder, Investor and the Company, dated as of May 18, 2009, as
amended.

 

7.2.                            Notices.  All notices, consents, requests,
instructions, approvals and other communications provided for in this Agreement
shall be in writing and shall be deemed validly given upon personal delivery or
one (1) day after being sent by overnight courier service or if sent by
facsimile, to the extent transmitted by 3:00 pm (local time of recipient) on a
Business Day, will be deemed to have been received on that Business Day, and if
transmitted by facsimile after 3:00 pm (local time of the recipient) on a
Business Day or any other day, then on the

 

27

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Business Day next following the day of transmittal (so long as for notices or
other communications sent by facsimile, the transmitting facsimile machine
records electronic conformation of the due transmission of the notice), at the
following address or facsimile number, or at such other address or facsimile
number as a party may designate to the other parties:

 

if to the Company, to:

 

Central European Media Enterprises Ltd.
c/o CME Media Services Ltd.
Kříženeckého náměstí 1078/5
152 00  Prague 5 - Barrandov
Czech Republic
Facsimile:                             +420-242-464-483
Attention:                             Legal Counsel

 

with a copy to (which shall not constitute notice):

 

DLA Piper  LLP (US)
1251 Avenue of the Americas
New York, NY 10020
Attention:                             Jeffrey A. Potash
                                                                                   
Jack I. Kantrowitz
Facsimile:                             (212) 335-4510

 

if to Investor, to:

 

Time Warner Media Holdings B.V.

c/o Time Warner Inc.

One Time Warner Center

New York, NY 10019

Attention:                                         General Counsel

Facsimile:                                         (212) 484-7167

 

with copies to (which shall not constitute notice):

 

Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, NY 10019

Attention:                                         William H. Gump

Thomas Mark

Facsimile:                                         (212) 728-8111

 

7.3.                            Amendment.  This Agreement may be amended,
modified or supplemented only by a written instrument executed by each of the
parties hereto.

 

7.4.                            Assignment.  Except as permitted herein, neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assignable or otherwise transferable by either

 

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party hereto (whether by operation of Law or otherwise) without the prior
written consent of the other party hereto; provided, however, that Investor
shall be entitled to assign its rights and obligations hereunder to an
Affiliate, provided such Affiliate agrees to be bound by the terms hereof and
those of the TW Registration Rights Agreement and the Investor Rights Agreement.

 

7.5.                            Applicable Law; Consent to Jurisdiction.

 

(a)                                 THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE PRINCIPLES OF
CONFLICTS OF LAWS (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).

 

(b)                                 ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THIS AGREEMENT SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW
YORK LOCATED IN NEW YORK, NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK (EACH, A “NEW YORK COURT”), AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF
THE AFORESAID COURTS AND APPELLATE COURTS FROM ANY THEREOF.  EACH PARTY HERETO
HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF TO SUCH PARTY BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, RETURN
RECEIPT REQUESTED, TO SUCH PARTY AT ITS ADDRESS SPECIFIED IN SECTION 7.2.  THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.

 

7.6.                            Waiver of Jury Trial.  EACH PARTY ACKNOWLEDGES
AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF THE FOREGOING WAIVER, (II) IT
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (III) IT MAKES
SUCH WAIVER VOLUNTARILY, AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS

 

29

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AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER IN THIS SECTION 7.6.

 

7.7.         Specific Performance.  The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms of were otherwise breached. 
It is accordingly agreed that the parties shall be entitled to, in addition to
the other remedies provided herein, specific performance of this Agreement and
to enforce specifically the terms and provisions of this Agreement in any New
York Court in addition to the other remedies to which such parties are entitled.

 

7.8.         Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.  This Agreement,
once executed by a party, may be delivered to the other parties hereto by
facsimile or electronic transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.

 

7.9.         Expenses.  Each party will be responsible for its own fees and
expenses related to this Agreement and the transactions contemplated hereby.

 

7.10.       Successors and Assigns.  This Agreement shall inure to the benefit
of the parties, and shall be binding upon the parties and their respective
successors, permitted assigns, heirs and legal representatives.

 

7.11.       No Third Party Beneficiaries.  Nothing in this Agreement will confer
any rights upon any person, other than Indemnified Persons with respect to
ARTICLE V, that is not a party or a successor or permitted assignee of a party
to this Agreement.

 

7.12.       Entire Agreement.  This Agreement, together with the other Company
Agreements, contain the entire agreement of the parties with respect to the
subject matter hereof and supersede all other prior agreements, understandings,
statements, representations and warranties, oral or written, express or implied,
between the parties and their respective Affiliates, representatives and agents
in respect of such subject matter.

 

7.13.       Construction.  Whenever the context requires, the gender of all
words used in this Agreement includes the masculine, feminine, and neuter.  All
references to Articles and Sections refer to articles and sections of this
Agreement, and all references to Exhibits and Annexes are to exhibits and
annexes attached hereto, each of which is made a part hereof for all purposes. 
Where any provision in this Agreement refers to action to be taken by any
Person, or which such Person is prohibited from taking, such provision will be
applicable whether such action is taken directly or indirectly by such Person,
including actions taken by or on behalf of any Affiliate of such Person.  All
accounting terms used herein and not otherwise defined herein will have the
meanings accorded them in accordance with U.S. generally accepted accounting
principles and, except as expressly provided herein, all accounting
determinations will be made in accordance with such accounting principles in
effect from time to time.  Unless the context otherwise requires: (i) a
reference to a document includes all amendments, restatements or supplements to,
or replacements or novations of, that document; (ii) the use of the terms
“include” and “including” mean “include, without limitation” and “including,
without limitation”, respectively;

 

30

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(iii) the word “or” shall be disjunctive but not exclusive; (iv) unless
expressly provided otherwise, the measure of a period of one (1) month or year
for purposes of this Agreement shall be that date of the following month or year
corresponding to the starting date; provided, that if no corresponding date
exists, the measure shall be that date of the following month or year
corresponding to the next day following the starting date (for example, one
month following February 18 is March 18, and one month following March 31 is
May 1); and (v) a reference to a statute, regulation, proclamation, ordinance or
by-law includes all statutes, regulations, proclamations, ordinances or by-laws
amending, consolidating or replacing it, whether passed by the same or another
Governmental Entity with legal power to do so, and a reference to a statute
includes all regulations, proclamations, ordinances and by-laws issued under the
statute.  The language used in this Agreement shall be deemed to be the language
chosen by the parties hereto to express their mutual intent, and no rule of
strict construction shall be applied against any party.

 

7.14.       Descriptive Headings.  The headings of the articles, sections and
subsections of this Agreement are inserted for convenience of reference only and
shall not be deemed to constitute a part hereof or affect the interpretation
hereof.

 

7.15.       Severability.  Every term and provision of this Agreement is
intended to be severable.  If any term or provision hereof is illegal or invalid
for any reason whatsoever, such term or provision will be enforced to the
maximum extent permitted by law and, in any event, such illegality or invalidity
shall not affect the validity of the remainder of this Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

31

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

 

 

CENTRAL EUROPEAN MEDIA

 

ENTERPRISES LTD.

 

 

 

 

 

 

 

 

 

By:

/s/ Adrian Sarbu

 

 

Name:

Adrian Sarbu

 

 

Title:

President and Chief Executive Officer

 

[Subscription Agreement — Signature Page]

 

--------------------------------------------------------------------------------

 

 

TIME WARNER MEDIA HOLDINGS B.V.

 

 

 

 

 

 

 

 

 

By:

/s/ Stephen Kapner

 

 

Name:

Stephen Kapner

 

 

Title:

Managing Director

 

[Subscription Agreement — Signature Page (cont.)]

 

--------------------------------------------------------------------------------

 

EXHIBIT I

 

Letter Agreement

 

LETTER AGREEMENT

 

This Letter Agreement (this “Letter Agreement”), is made as of April 29, 2013,
by and among Central European Media Enterprises Ltd., a Bermuda company (the
“Company”), Ronald S. Lauder (“RSL”), RSL Savannah LLC, a Delaware limited
liability company (“RSL Savannah”), RSL Capital LLC, a New York limited
liability company (“RSL Capital”), RSL Investments Corporation, a Delaware
corporation, and Time Warner Media Holdings B.V., a besloten vennootschap met
beperkte aansprakelijkheid organized under the laws of the Netherlands (“TW”). 
All capitalized terms used in this Letter Agreement which are not herein defined
shall have the same meanings ascribed to them in the Agreement (as defined
below).

 

WHEREAS, the Company and TW are parties to that certain Subscription Agreement,
dated as of April 29, 2013 (as it may be amended from time to time, the
“Subscription Agreement”), pursuant to which the Company has agreed, among other
things, to sell to TW shares of the Company’s Series B Convertible Redeemable
Preferred Stock, par value $0.08 per share (the “Series B Convertible Redeemable
Preferred Shares”);

 

WHEREAS, the Company intends to undertake a public offering of shares of the
Company’s Class A Common Stock, par value $0.08 per share (the “Public
Offering”), under its Registration Statement on Form S-3 (Reg. No. 333-181057)
(the “Registration Statement”);

 

WHEREAS, the undersigned are parties to that certain Investor Rights Agreement,
dated as of May 18, 2009 (as amended, the “Agreement”);

 

WHEREAS, the undersigned desire to amend certain provisions of the Agreement;

 

WHEREAS, the Company, RSL and RSL Capital are parties to that certain
Registration Rights Agreement, dated as of April 30, 2012 (the “RR Agreement”);

 

WHEREAS, RSL and RSL Capital desire to waive their rights under the RR Agreement
to include equity securities owned by them in the Registration Statement and in
the Public Offering;

 

WHEREAS, each of TW and RSL Savannah desires to consent to the Company’s
issuance to TW of the Series B Convertible Redeemable Preferred Shares pursuant
to the terms of the Subscription Agreement;

 

WHEREAS, RSL Savannah, RSL, TW and the Company are parties to that certain
Irrevocable Voting Deed and Corporate Representative Appointment, dated as of
May 18, 2009 (the “Voting Agreement”); and

 

WHEREAS, RSL Savannah, RSL, TW and the Company desire to amend the Voting
Agreement to extend its term.

 

NOW, THEREFORE, in consideration of the premises and the covenants and
agreements hereinafter set forth, the parties hereto hereby agree as follows:

 

--------------------------------------------------------------------------------

 

1.             Definitions.  Section 2 of the Agreement shall be amended,
effective as of the date of this Letter Agreement, by adding the term “TW
Series B Subscription Agreement” with the following meaning:

 

“TW Series B Subscription Agreement” means the Subscription Agreement dated as
of April 29, 2013 by and between the Company and TW.”

 

2.             Section 3.3(c) of the Agreement.  Section 3.3(c) of the Agreement
shall be amended, effective as of the date of this Letter Agreement, by deleting
the last sentence from Section 3.3(c) so that Section 3.3(c) reads in its
entirety as follows:

 

“(c)         In the event that at any time the Board of Directors of the Company
(the “Board”) has determined to approve and/or recommend to the shareholders of
the Company an offer or proposal from any Person with respect to a Change of
Control Transaction (a “Takeover  Proposal”), and at such time the TW Investors
beneficially own, directly or indirectly, not less than 25% of the TW Shares (as
adjusted for splits, combination of shares, reclassification, recapitalization
or like changes in capitalization and whether such TW Shares are in the form of
Class A Common Shares or Class B Common Shares), the Company shall: (i) give
each TW Investor prompt written notice of (A) such determination by the Board
with respect to such Takeover Proposal and (B) the material terms and conditions
of the Takeover Proposal, including the identity of the party making such
Takeover Proposal (the “Potential Acquiror”), subject to any agreements between
the Company and the Potential Acquiror with respect to an obligation of the
Company to maintain the confidentiality of the identity of the Potential
Acquiror, and, if available, a copy of the relevant proposed transaction
agreements with such party and any other material information necessary for the
TW Investor to understand the terms and conditions of the Takeover Proposal
(including any relevant non-public information provided to the Potential
Acquiror or its Affiliates or representatives), (ii) give each TW Investor ten
(10) days after delivery of such notice (the “Negotiation Period”) to propose to
the Company an alternate transaction constituting a Change of Control
Transaction involving such TW Investor or its Affiliates and (iii) negotiate in
good faith with such TW Investor or its Affiliates with respect to such
alternate proposal. If such alternate proposal is more favorable to the
shareholders of the Company from a financial point of view than the Takeover
Proposal, (I) the Board shall approve and recommend to the shareholders of the
Company the transaction that is the subject of such alternate proposal made by a
TW Investor or an Affiliate thereof and (II) each RSL Investor shall, and shall
cause its Affiliates to, accept such alternate proposal made by a TW Investor or
Affiliate thereof (whether by vote or tender) in respect of all Equity
Securities that are beneficially owned by such RSL Investor; provided that, the
Board and each RSL Investor shall be under no obligation to approve, recommend
to shareholders or accept, as the case may be, any alternate proposal to the
extent that a Person has offered a subsequent Takeover Proposal that is more
favorable to the shareholders of the Company from a financial point of view than
such alternate proposal; provided, however, in the event of such subsequent
Takeover Proposal, the Company shall comply with clauses (i), (ii) and (iii) of
this Section 3.3(c) with respect thereto and the Negotiation Period shall
recommence.  Subject to the foregoing sentence, the good faith determination of
the majority of the disinterested

 

35

--------------------------------------------------------------------------------

 

directors of the Board as to whether any alternate proposal is more favorable to
the shareholders of the Company from a financial point of view, compared to the
most recent Takeover Proposal, shall be conclusive.”

 

3.             Section 3.3(d) of the Agreement.  Notwithstanding Section 7 of
this Letter Agreement, the agreements contained in Section 3.3(d) of the
Agreement shall terminate as of May 18, 2013.

 

4.             Section 6.2 of the Agreement.  Section 6.2 of the Agreement shall
be amended, effective as of the closing of the issuance and sale to TW of the
Series B Convertible Redeemable Preferred Shares, by being replaced in its
entirety with the following:

 

“6.2            Issuance of New Securities.  For so long as the TW Investors and
their Affiliates beneficially own, directly or indirectly, at least 25% of the
TW Shares (as adjusted for splits, combination of shares, reclassification,
recapitalization or like changes in capitalization and whether such TW Shares
are in the form of Class A Common Shares or Class B Common Shares), the Company
shall not, without the consent of TW (which consent shall not be subject to the
TW Voting Agreement), issue any Equity Securities (including, for the avoidance
of doubt, any options, warrants, securities or other instruments that are
directly or indirectly convertible into, or exercisable or exchangeable for,
shares or other equity interests of the Company) other than (i) Class A Common
Shares, (ii) options, warrants, restricted stock units and other similar
securities exercisable for or convertible into Class A Common Shares which are
issued to employees, officers, directors and consultants of the Company or any
of its subsidiaries pursuant to employee benefit, stock option, stock option
exchange and stock purchase plans maintained by the Company up to such amounts
under such plans as are approved by the Board or (iii) to TW pursuant to the TW
Subscription Agreement or the TW Series B Subscription Agreement.”

 

5.             Waiver of Registration Rights.  RSL and RSL Capital hereby waive
any rights that they have pursuant to the RR Agreement with respect to and in
connection with the registrations contemplated by the Registration Statement,
including the right to include any securities beneficially owned by them in the
Registration Statement and the Public Offering.

 

6.             Consent to Issuance.  Pursuant to the Agreement, each of TW and
RSL Savannah hereby consents to the Company’s issuance of the Series B
Convertible Redeemable Preferred Shares pursuant to the terms of the
Subscription Agreement.

 

7.             Section 8 of the Voting Agreement.  Section 8 of the Voting
Agreement shall be amended, effective as of the date of this Letter Agreement,
by being replaced in its entirety with the following:

 

“8 Term.  This Deed (and the appointments and Proxies hereunder) shall terminate
and be of no further force and effect on the date that is the earlier of (a) one
day after TW provides written notice to RSL Savannah, RSL and the Company of
TW’s election to terminate this Deed (provided that such notice may not be
delivered before May 18, 2013) and (b) June 30, 2013.”

 

36

--------------------------------------------------------------------------------

 

8.             Irrevocable Proxy.  RSL, on behalf of TW and RSL’s Affiliates (as
defined in the Agreement) who own voting securities of the Company shall vote at
the Company’s General Meeting (as defined in the Subscription Agreement) for
proposals (the “Proposals”) for (a) the amendment of the Company’s Bye-laws to
increase the number of authorized shares of Class A Common Stock from
200,000,000 shares to the Increased Authorized Share Number (as defined in the
Subscription Agreement) and (b) the issuance of the Series B Convertible
Redeemable Preferred Shares in connection with the Subscription Agreement,
including by executing and delivering, or causing to be executed and delivered,
to the Company an irrevocable proxy (the “Irrevocable Proxy”) in respect of all
voting securities of the Company held by each of RAJ Family Partners, L.P., RSL
Investments Corporation and RSL and by TW to vote in favor of the Proposals;
provided that if the General Meeting, and the vote on such Proposals, has not
taken place prior to the termination of the Voting Agreement, the Irrevocable
Proxy with respect to voting securities held by TW shall be terminated and shall
no longer be of any force or effect.

 

9.             Headings; Counterparts.  Section headings used herein are for
convenience of reference only, are not part of this Letter Agreement and shall
not affect the construction of or be taken into consideration in interpreting
this Letter Agreement.  This Letter Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same instrument, and may be delivered by facsimile.

 

10.          Governing Law; Jurisdiction.  THIS LETTER AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL
BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE
PRINCIPLES OF CONFLICTS OF LAWS (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE
NEW YORK GENERAL OBLIGATIONS LAW).

 

11.          SUBMISSION TO JURISDICTION.  ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS LETTER AGREEMENT SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF
THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY, NEW YORK OR OF THE UNITED
STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (EACH, A “NEW YORK
COURT”), AND, BY EXECUTION AND DELIVERY OF THIS LETTER AGREEMENT, EACH PARTY
HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
APPELLATE COURTS FROM ANY THEREOF.  EACH PARTY HERETO HEREBY IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF TO SUCH PARTY BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, RETURN RECEIPT REQUESTED, TO SUCH
PARTY AT ITS ADDRESS SPECIFIED IN SECTION 10.2 OF THE AGREEMENT.  THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVE TRIAL BY JURY, AND EACH OF THE PARTIES HEREBY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER

 

37

--------------------------------------------------------------------------------

 

HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS.

 

12.          Continued Effectiveness.  It is the express intention of the
parties hereto to ratify and reaffirm the terms and conditions of the Agreement
and the Voting Agreement, as amended pursuant to the terms of this Letter
Agreement.  Except as expressly amended hereby, the Agreement and the Voting
Agreement shall remain unmodified and in full force and effect.  In the event of
any inconsistency between the provisions of the Agreement and the Voting
Agreement and the provisions of this Letter Agreement, the provisions of this
Letter Agreement shall prevail.

 

(signature page follows)

 

38

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Letter Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.

 

 

RSL SAVANNAH LLC

 

 

 

 

 

By:

 

 

 

Name: Ronald S. Lauder

 

 

Title: Sole Member

 

 

 

 

 

RSL CAPITAL LLC

 

 

 

 

 

By:

 

 

 

Name: Ronald Lauder

 

 

Title: Sole Member and President

 

 

 

 

 

RSL INVESTMENTS CORPORATION

 

 

 

 

 

By:

 

 

 

Name: Ronald S. Lauder

 

 

Title: Chairman

 

 

 

 

 

 

 

Ronald S. Lauder

 

--------------------------------------------------------------------------------

 

 

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

 

 

 

 

 

By:

 

 

 

Name: Adrian Sarbu

 

 

Title: President and Chief Executive Officer

 

 

 

TIME WARNER MEDIA HOLDINGS B.V.

 

 

 

 

 

By:

 

 

 

Name: Stephen N. Kapner

 

 

Title: Managing Director

 

--------------------------------------------------------------------------------

 

Exhibit II

 

Form Certificate of Designation
Series B Convertible Redeemable Preferred Shares

 

CERTIFICATE OF DESIGNATION
OF THE
SERIES B CONVERTIBLE REDEEMABLE PREFERRED STOCK
OF
CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.

 

The terms of the authorized Series B Convertible Redeemable Preferred Stock of
Central European Media Enterprises Ltd., a company incorporated under the laws
of Bermuda (the “Company”), shall be as set forth below in this Certificate of
Designation of the Company (this “Certificate of Designation”) pursuant to
Bye-Law 3(7) of the Bye-Laws of the Company, as such Certificate of Designation
has been approved by a duly constituted committee of the Board of Directors of
the Company (the “Board of Directors”) on [·], 2013.

 

(a)                                 DESIGNATION.

 

(1)           There is hereby created from the authorized and unissued preferred
stock of the Company, par value $0.08 per share (the “Preferred Stock”), one
series of Preferred Stock consisting of up to [250,000] convertible redeemable
preferred shares that are hereby designated by the Board of Directors as the
Company’s Series B Convertible Redeemable Preferred Stock (the “Series B
Convertible Redeemable Preferred Shares”).  The number of Series B Convertible
Redeemable Preferred Shares may be increased or decreased by resolution of the
Board of Directors and the approval by the holders of a majority of the
then-outstanding Series B Convertible Redeemable Preferred Shares voting
together as a separate class; provided that no decrease shall reduce the number
of the Series B Convertible Redeemable Preferred Shares to a number less than
the number of Series B Convertible Redeemable Preferred Shares then outstanding.

 

(2)           The Series B Convertible Redeemable Preferred Shares, when
exchanged, converted, redeemed or otherwise acquired by the Company, shall be
cancelled and shall be restored to the status of authorized but unissued
Preferred Stock of the Company, without designation as to series, and may
thereafter be reissued.

 

(b)           CURRENCY.  The Series B Convertible Redeemable Preferred Shares
shall be denominated in United States currency, and all payments and
distributions thereon or with respect thereto shall be made in United States
currency.  All references herein to “$” or “dollars” refer to United States
currency.

 

(c)           RANKING.  The Series B Convertible Redeemable Preferred Shares
shall, with respect to dividend rights and rights upon any voluntary or
involuntary liquidation, dissolution or winding up of the Company (a
“Liquidation Event”) or Change of Control Event (as defined

 

--------------------------------------------------------------------------------

 

below), rank prior to the Class A Common Stock of the Company, par value $0.08
per share (the “Class A Common Stock”), the Class B Common Stock of the Company,
par value $0.08 per share (the “Class B Common Stock,” and together with the
Class A Common Stock, the “Common Stock”), and any other series or class of
common or capital stock of the Company established after the date of issuance of
the Series B Convertible Redeemable Preferred Shares (the “Issue Date”), the
terms of which do not expressly provide that such class or series ranks senior
to or on parity with the Series B Convertible Redeemable Preferred Shares as to
dividend rights and/or rights upon a Liquidation Event or Change of Control
Event (together with the Common Stock, the “Junior Stock”) and shall rank
equally among themselves and the Company’s Series A convertible preferred stock,
par value $0.08 per share (the “Series A Preferred Share”), and any other series
or class of capital or preferred stock of the Company established after the
Issue Date, the terms of which expressly provide that such class or series will
rank on parity with the Series B Convertible Redeemable Preferred Shares as to
dividend rights and/or rights upon a Liquidation Event or Change of Control
Event (together with the Series A Preferred Share, the “Parity Stock”)).

 

(d)                                 ACCRETED VALUE; DIVIDENDS.

 

(1)           The stated value of each Series B Convertible Redeemable Preferred
Share (the “Stated Value”) initially shall be equal to ONE THOUSAND DOLLARS
($1,000.00) and shall accrete (i) at an annual rate of 7.5%, compounded
quarterly, from and including the Issue Date up to but excluding the third
anniversary of the Issue Date and (ii) subject to Section (d)(2) hereof, at an
annual rate of 3.75% (the “Third Anniversary Accretion Rate”), compounded
quarterly, from and including the third anniversary of the Issue Date up to but
excluding the fifth anniversary of the Issue Date (the Stated Value as accreted
as of any date of determination, the “Accreted Stated Value,” subject to
appropriate adjustment in the event of any stock dividend, stock split, stock
distribution or combination, consolidation, subdivision, reclassification or
other corporate action having the similar effect with respect to the Series B
Convertible Redeemable Preferred Shares).  The Accreted Stated Value shall not
accrete further from and after the fifth anniversary of the Issue Date.  The
Accreted Stated Value shall be computed on the basis of a 365-day year.

 

(2)           The other provisions of this Section (d) notwithstanding, at any
time from and including the third anniversary of the Issue Date, the Company
may, at its option, but only if and to the extent funds are legally available
for such purpose and as is permitted by any credit agreement, indenture or
similar agreement governing the then-outstanding indebtedness of the Company or
its subsidiaries (including the Notes (as defined below)), elect, in lieu of any
further accretion described in Section (d)(1)(ii) hereof, to pay in cash a
dividend in an amount equal to the Third Anniversary Accretion Rate on the then
Accreted Stated Value by delivering prior written notice to each holder of
Series B Convertible Redeemable Preferred Shares of such election (a “Cash
Payment Election”).  If the Company makes a Cash Payment Election, the Board of
Directors or a duly authorized committee thereof shall declare such cash
dividends out of funds legally available for such purpose and such payment (a
“Cash Payment”) shall be made in cash quarterly in arrears on the last day of
each fiscal quarter for which such Cash Payment Election is made, or if such day
is not a business day then the next business day.

 

--------------------------------------------------------------------------------

 

Notwithstanding an election by the Company to make Cash Payments in lieu of
accretion, if the Company fails to make any such Cash Payment on the date that
it is due, then the Accreted Stated Value shall be deemed to have further
accreted as if such Cash Payment Election was not made as to only the quarterly
period for which the Company failed to make such Cash Payment.

 

(3)           No dividends or other distributions may be declared, made or paid,
or any sum set apart for the payment of dividends upon, any outstanding share of
Parity Stock or Junior Stock with respect to any dividend period, nor may any
Parity Stock or Junior Stock be redeemed, purchased  or otherwise acquired for
any consideration by or on behalf of the Company or any of its subsidiaries,
unless all dividends to be paid in cash pursuant to Section (d)(2) hereof for
all preceding dividend periods for which a Cash Payment Election has been made
have been declared and paid or accreted pursuant to the last sentence of
Section (d)(2) hereof.

 

(4)           Each holder of Series B Convertible Redeemable Preferred Shares
shall be entitled to receive, from funds legally available therefor, dividends
payable when, as and if dividends (including, without limitation, any dividend
consisting of stock or other securities or property or rights of the Company),
are declared by the Board of Directors with respect to any shares of Common
Stock.  Dividends shall be payable on the outstanding Series B Convertible
Redeemable Preferred Shares in an amount equal to the amount of such dividends
as would be payable with respect to the number of shares of Class A Common Stock
into which such Series B Convertible Redeemable Preferred Shares are convertible
pursuant to Section (g) hereof.  Such dividends shall be non-cumulative.

 

(e)                                  LIQUIDATION PREFERENCE.

 

(1)           Upon any Liquidation Event, prior to any distributions to holders
of any Junior Stock, holders of Series B Convertible Redeemable Preferred Shares
shall be entitled to be paid out of the available assets of the Company on a
ratable basis until each such holder has received a liquidation preference per
Series B Convertible Redeemable Preferred Share equal to the greater of (x) the
Accreted Stated Value per Series B Convertible Redeemable Preferred Share plus
all accrued and unpaid dividends on such Series B Convertible Redeemable
Preferred Share through and including the date of such Liquidation Event and
(y) the amount per share that such holder would be entitled to receive had such
holder, immediately prior to the Liquidation Event, converted such Series B
Convertible Redeemable Preferred Share into the shares of Class A Common Stock
into which it is then convertible.  Without limiting any rights and remedies of
the holders of Series B Convertible Redeemable Preferred Shares, if upon any
such Liquidation Event, the remaining assets and funds of the Company available
for distribution to its shareholders are not sufficient to pay in full the
liquidation payments payable to the holders of Series B Convertible Redeemable
Preferred Shares and the holders of Parity Stock, then the holders of Series B
Convertible Redeemable Preferred Shares and the holders of such shares of Parity
Stock shall share ratably in such distribution of the available assets and funds
of the Company in accordance with the amount which would otherwise be payable on
such distribution if the amounts to which

 

--------------------------------------------------------------------------------

 

the holders of Series B Convertible Redeemable Preferred Shares and the holders
of outstanding shares of such Parity Stock are entitled were paid in full.

 

(2)           After the payment of all preferential amounts required to be paid
to holders of the Series B Convertible Redeemable Preferred Shares and holders
of Parity Stock, the holders of shares of Junior Stock then outstanding shall be
entitled to receive the remaining assets and funds of the Company available for
distribution to its shareholders.

 

(3)           A Change of Control Event (as defined below) of the Company shall
be deemed to be a Liquidation Event for purposes of Section (e)(1) hereof.  For
purposes hereof, a “Change of Control Event” means (in each case, in one
transaction or a series of related transactions):  (i) any merger,
consolidation, amalgamation, tender offer, recapitalization, reorganization,
scheme of arrangement or any other transaction resulting in the shareholders of
the Company immediately before such transaction owning, directly or indirectly,
less than a majority of the aggregate voting power of the resultant entity or
(ii) any sale, transfer or exclusive license of all or substantially all of the
assets of the Company.  The Company shall not have the power to effect a Change
of Control Event unless the agreement for such transaction provides that the
consideration payable to the shareholders of the Company in such transaction
shall be allocated among the holders of capital stock of the Company in
accordance with this Section (e).  In the event of a Change of Control Event,
unless the holders of at least a majority of the outstanding shares of Series B
Convertible Redeemable Preferred Shares elect otherwise in writing, if any
portion of the consideration payable to the shareholders of the Company is
placed into escrow and/or is payable to the shareholders of the Company subject
to contingencies, the agreement for such transaction shall provide that (a) the
portion of such consideration that is not placed in escrow and not subject to
any contingencies (the “Initial Consideration”) shall be allocated among the
holders of capital stock of the Company in accordance with Sections (e)(1) and
(2) hereof as if the Initial Consideration were the only consideration payable
in connection with such Change of Control Event and (b) any additional
consideration that becomes payable to the shareholders of the Company upon
release from escrow or satisfaction of contingencies shall be allocated among
the holders of capital stock of the Company in accordance with Sections
(e)(1) and (2) after taking into account the previous payment of the Initial
Consideration as part of the same transaction.

 

(f)            VOTING RIGHTS.  Except as set forth in this Section (f) or
Section (j) hereof, the Series B Convertible Redeemable Preferred Shares shall
have no voting rights with respect to any matter presented to holders of any
class of the capital stock of the Company.  The previous sentence
notwithstanding, the holder of each Series B Convertible Redeemable Preferred
Share shall be entitled to vote with the holders of Class A Common Stock
(i) with respect to a Change of Control Event or (ii) as provided by the Amended
and Restated Bye-Laws of the Company or applicable Bermuda law.  The number of
votes attributable to each Series B Convertible Redeemable Preferred Share shall
be equal to the number of shares of Class A Common Stock into which such
Series B Convertible Redeemable Preferred Share is then convertible at the time
of the related record date using the Accreted Stated Value of such Series B
Convertible Redeemable Preferred Share plus accrued and unpaid dividends at such
date and the then-

 

--------------------------------------------------------------------------------

 

applicable Conversion Price (as defined below).  Notice of all shareholders’
meetings (or action pursuant to written consent) shall be delivered to the
holder of such Series B Convertible Redeemable Preferred Shares at which it
shall have the right to vote pursuant to the terms of this Section (f) in
accordance with the Memorandum of Association and Amended and Restated Bye-Laws
of the Company as if such holder were a holder of Class A Common Stock.  Except
as provided by the Amended and Restated Bye-Laws of the Company or applicable
Bermuda law, the holders of each Series B Convertible Redeemable Preferred Share
shall vote together with the holders of the Common Stock as a single class.

 

(g)                                  CONVERSION.

 

(1)           Optional Conversion.  At any time and from time to time from and
after the third anniversary of the Issue Date, each holder of a Series B
Convertible Redeemable Preferred Share may, at its option, convert such Series B
Convertible Redeemable Preferred Share into the number of shares of Class A
Common Stock determined by dividing (x) the Accreted Stated Value thereof plus
any accrued but unpaid dividends, if any, thereon, in each case as of the
Conversion Date (as defined below), by (y) the Conversion Price, as adjusted
from time to time pursuant to the terms of this Certificate of Designation. 
Notwithstanding anything herein to the contrary, the Series B Convertible
Redeemable Preferred Shares shall not be convertible and the holders thereof
shall not have the rights to acquire any Class A Common Stock issuable upon
conversion of such Series B Convertible Redeemable Preferred Shares until the
date that is 61 days after the earlier of (A) the date on which the number of
outstanding shares of Class A Common Stock owned by the holder of the Series B
Convertible Redeemable Preferred Shares (assuming the conversion of the Series B
Convertible Redeemable Preferred Shares into shares of Class A Common Stock
pursuant hereto and the conversion of the Series A Preferred Share into shares
of Class A Common Stock in accordance with its terms), when aggregated with the
outstanding shares of Class A Common Stock of any group (as this term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) that includes the holder and any of the holder’s Affiliates (as
defined below), would not result in the holder of the Series B Convertible
Redeemable Preferred Shares being a beneficial owner (as this term is used in
Section 13(d)(3) of the Exchange Act) of more than 49.9% of the outstanding
shares of Class A Common Stock and (B) the date on which such beneficial
ownership would not give to any person or entity any right of redemption,
repurchase or acceleration under any indenture or other document governing any
of the Company’s indebtedness that is outstanding as of the Issue Date. For
purposes hereof, “Affiliate” means any other person or entity that, directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, such first person or entity.  As used in this
definition, the term “control” including the correlative terms “controlling”,
“controlled by” and “under common control with”, means the possession, directly
or indirectly, of the power to direct or cause the direction of management or
policies (whether through ownership of securities or any partnership or other
ownership interest, by contract or otherwise).

 

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(2)           Conversion Price.  The initial conversion price of each Series B
Convertible Redeemable Preferred Share shall be equal to $[·](1) (subject to
adjustment as provided herein, the “Conversion Price”).  The Conversion Price
from time to time in effect is subject to adjustment as hereinafter provided.

 

(3)           Mechanics of Conversion.  Each holder of Series B Convertible
Redeemable Preferred Shares may exercise its conversion rights under
Section (g)(1) hereof by surrendering the certificate(s) of the Series B
Convertible Redeemable Preferred Shares to be converted, duly endorsed, or
delivering an appropriate indemnity agreement in the event of such holder’s loss
of such certificate(s), at the principal place of business of the Company or its
transfer agent for the Series B Convertible Redeemable Preferred Shares,
accompanied by written notice to the Company that such holder elects to convert
all or a portion of the Series B Convertible Redeemable Preferred Shares
represented by such certificate(s) and specifying the name or names in which the
certificate or certificates for the shares of Class A Common Stock are to be
issued (the close of business on the date of the delivery of such notice, the
“Conversion Date”).  The Company shall, as soon as practicable and no later than
five business days thereafter, issue and deliver to such holder of Series B
Convertible Redeemable Preferred Shares, or to the nominee or nominees of such
holder, (i) a certificate or certificates for the number of shares of Class A
Common Stock to which such holder shall be entitled as aforesaid, (ii) if less
than the full number of Series B Convertible Redeemable Preferred Shares
represented by the surrendered certificate(s) is being converted, a new
certificate for the number of Series B Convertible Redeemable Preferred Shares
evidenced by the surrendered certificate(s) less the number of Series B
Convertible Redeemable Preferred Shares being converted, (iii) an amount in cash
equal to all accrued and unpaid dividends thereon through the Conversion Date as
provided in Section (g)(4) hereof and (iv) cash for any fractional interest in
respect of a share of Class A Common Stock arising upon such conversion as
provided in Section (g)(5) hereof.  Such shares of Class A Common Stock shall
bear such legends as may be required, including those set forth in the
Subscription Agreement between the Company and Time Warner Media Holdings B.V.
dated as of April 29, 2013.  Following the Conversion Date, the rights of the
holder of the Series B Convertible Redeemable Preferred Shares so converted
shall cease with respect to such Series B Convertible Redeemable Preferred
Shares except for the right to receive the Class A Common Stock issuable
hereunder (and accrued and unpaid dividends and cash in lieu of fractional
shares), and such holder, or its nominee or nominees, shall be treated for all
purposes with respect to such Series B Convertible Redeemable Preferred Shares
as having become the record holder of the Class A Common Stock as of the
Conversion Date.

 

(4)           Accrued and Unpaid Dividends.  If a Conversion Date is on or after
a dividend record date but on or prior to the related dividend payment date,
then accrued dividends will be payable to the holders of Series B Convertible
Redeemable Preferred Shares in the manner set forth in Section (g)(3) hereof
with respect to the exercise of a

 

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(1)         The lesser of (x) the product of (i) the price per share in the
Public Offering (as defined in the Series B Subscription Agreement) multiplied
by (ii) 1.15, and (y) FIVE DOLLARS ($5.00).

 

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conversion right pursuant to Section (g)(1) hereof, concurrent with delivery by
the Company of the shares of Class A Common Stock issuable upon such conversion.

 

(5)           Fractional Shares.  No fractional shares of Class A Common Stock
shall be issued upon the conversion of any Series B Convertible Redeemable
Preferred Shares.  If the conversion of any Series B Convertible Redeemable
Preferred Share(s) results in a fractional share of Class A Common Stock
issuable, the Company shall pay a cash amount in lieu of issuing such fractional
share in an amount equal to such fractional interest multiplied by the Closing
Price on the Trading Day immediately prior to the Conversion Date.  For purposes
hereof, “Closing Price” shall mean on any date of determination, the closing
sale price or, if no closing sale price is reported, the last reported sale
price of the shares of Class A Common Stock on the NASDAQ Global Select Market
(or such national securities exchange on which the Class A Common Stock is then
listed) on such date.  For purposes hereof, “Trading Day” means a day during
which the trading of securities generally occurs on the NASDAQ Global Select
Market (or such national securities exchange on which the Class A Common Stock
is then listed).

 

(6)           Taxes.  Issuances of certificates for shares of Class A Common
Stock upon conversion of Series B Convertible Redeemable Preferred Shares shall
be made without charge to the holder of such Series B Convertible Redeemable
Preferred Shares for any issue or transfer tax (other than taxes in respect of
any transfer occurring contemporaneously therewith or as a result of the holder
being a non-U.S. person) or other incidental expense in respect of the issuance
of such certificates, all of which taxes and expenses shall be paid by the
Company; provided, however, that if the holder of Series B Convertible
Redeemable Preferred Shares specifies under Section (g)(3) hereof that the
Class A Common Stock to be issued on conversion is to be issued in a name or
names other than the name or names in which such surrendered certificates
representing such Series B Convertible Redeemable Preferred Share stands, the
Company shall not be required to pay any transfer or other taxes incurred by
reason of the issuance of such shares of Class A Common Stock to the name of
another.

 

(7)           Reservation of Shares.  The Company shall, at all times when the
Series B Convertible Redeemable Preferred Shares may be converted, reserve and
keep available, free from preemptive rights, for issuance upon the conversion of
the Series B Convertible Redeemable Preferred Shares, such number of its
authorized but unissued shares of Class A Common Stock as will be sufficient to
permit the conversion of all Series B Convertible Redeemable Preferred Shares. 
Prior to the delivery of any securities which the Company shall be obligated to
deliver upon conversion of the Series B Convertible Redeemable Preferred Shares,
the Company shall comply with all applicable laws and regulations, and any
applicable requirement of the NASDAQ Global Select Market.  All shares of
Class A Common Stock delivered upon conversion of Series B Convertible
Redeemable Preferred Shares will upon delivery be duly and validly issued and
fully paid and nonassessable, free of all liens and charges and not subject to
any preemptive rights.  The Company will procure, at its sole expense, the
listing of the shares of Class A Common Stock into which the Series B
Convertible Redeemable Preferred Shares are being converted pursuant to the
terms hereof, subject to issuance or notice of issuance on the NASDAQ Global
Select Market.

 

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(h)                                 ADJUSTMENTS.

 

(1)           Stock Dividends, Stock Splits, Subdivisions, Reclassifications or
Combinations.  If the Company shall (i) declare a dividend or make a
distribution in shares of Class A Common Stock, (ii) subdivide or reclassify the
outstanding shares of Class A Common Stock into a greater number of shares or
(iii) combine or reclassify the outstanding Class A Common Stock into a smaller
number of shares, the Conversion Price in effect at the record date for such
dividend or distribution, or the effective date of such subdivision, combination
or reclassification, shall be adjusted to the number obtained by multiplying the
then-applicable Conversion Price by a fraction, the numerator of which shall be
the number of shares of Class A Common Stock outstanding immediately prior to
such action, and the denominator of which shall be the number of shares of
Class A Common Stock outstanding immediately following such action.

 

(2)           Reorganizations, Reclassifications, Etc.  If any capital
reorganization or reclassification of the capital stock of the Company, or
consolidation, amalgamation or merger of the Company with another corporation,
or the sale of all or substantially all of its assets to another corporation
shall be effected (other than a Change of Control Event) in such a way that
holders of Common Stock shall be entitled to receive stock, securities, cash or
other property with respect to or in exchange for Common Stock, then, as a
condition of such reorganization, reclassification, consolidation, amalgamation,
merger or sale, lawful and adequate provision shall be made whereby the holders
of the Series B Convertible Redeemable Preferred Shares shall have the right to
acquire and receive upon conversion of the Series B Convertible Redeemable
Preferred Shares such shares of stock, securities, cash or other property
issuable or payable (as part of the reorganization, reclassification,
consolidation, amalgamation, merger or sale) with respect to or in exchange for
such number of outstanding shares of Class A Common Stock as would have been
received upon conversion of the Series B Convertible Redeemable Preferred Shares
at the Conversion Price then in effect as if optional conversion had been
permitted at such date.  The Company or the entity formed by the consolidation
or amalgamation or resulting from the merger or which acquires or leases such
assets or which acquires the Company’s capital stock, as the case may be, shall
make any required provisions in its certificate or articles of incorporation or
other constituent documents to establish such rights and to ensure that the
dividend, liquidation preference, voting and other rights of the holders of the
Series B Convertible Redeemable Preferred Shares established herein are
unchanged, except as permitted herein or as required by applicable law, rule or
regulation.  To the extent required, the certificate or articles of
incorporation or other constituent documents shall provide for adjustments,
which, for events subsequent to the effective date of the certificate or
articles of incorporation or other constituent documents, shall be as nearly
equivalent as may be practicable to the adjustments provided for herein.

 

(3)           Common Stock Issued or Sold at Less than Conversion Price.  If the
Company issues or sells Common Stock or debt securities or shares of capital
stock of the Company convertible into or exchangeable, directly or indirectly,
for Common Stock (other than securities issued at or above fair market value
under employee benefit plans or director compensation plans of the Company in
effect on the Issue Date or thereafter

 

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adopted by the Board of Directors) (“Convertible Securities”), at a price per
share below the Conversion Price in effect at the time of such issuance or sale,
the Conversion Price in effect immediately prior to each such issuance or sale
will immediately be reduced to the price determined by multiplying (i) the
Conversion Price at which Series B Convertible Redeemable Preferred Shares were
theretofore convertible by (ii) a fraction, the numerator of which shall be the
sum of (a) the number of shares of Common Stock outstanding on a fully diluted
basis (including all options, warrants and securities convertible into or
exchangeable for shares of Common Stock other than the shares of Class A Common
Stock into which the outstanding 2015 Notes (as defined below) are convertible)
immediately prior to such issuance or sale plus (b) the number of additional
shares of Common Stock that the aggregate consideration received by the Company
for the issuance of such Common Stock or Convertible Securities so issued or
sold would purchase at the Conversion Price in effect immediately prior to such
issuance or sale, and the denominator of which shall be the sum of (x) the
number of shares of Common Stock outstanding on a fully diluted basis (including
all options, warrants and securities convertible into or exchangeable for shares
of Common Stock other than the shares of Class A Common Stock into which the
outstanding 2015 Notes are convertible) immediately prior to such issuance or
sale plus (y) the number of additional shares of Common Stock so issued or sold
or into which such Convertible Securities issued or sold are convertible on the
applicable issue date (whether or not then convertible).

 

(4)           In the case of the issuance or sale of Common Stock or Convertible
Securities for a consideration in whole or in part other than cash, including
securities acquired in exchange therefor (other than securities by their terms
so exchangeable), the consideration other than cash shall be deemed to be the
fair value thereof on the applicable issue date.

 

(5)           In the case of the issuance of options, warrants or other rights
to purchase or acquire Common Stock (whether or not at the time exercisable) or
Convertible Securities (whether or not at the time so convertible or
exchangeable) or options, warrants or rights to purchase such Convertible
Securities (whether or not at the time exercisable) (other than securities
issued at or above fair market value under employee benefit plans or director
compensation plans of the Company in effect on the Issue Date or thereafter
adopted by the Board of Directors): (A) the aggregate maximum number of shares
of Common Stock deliverable upon exercise of such options, warrants or other
rights to purchase or acquire Common Stock shall be deemed to have been issued
at the time such options, warrants or rights are issued and for a consideration
equal to the consideration, if any, received by the Company upon the issuance of
such options, warrants or rights plus the minimum purchase price provided in
such options, warrants or rights for the Common Stock covered thereby; (B) the
aggregate maximum number of shares of Common Stock deliverable upon conversion
of or in exchange for any such Convertible Securities, or upon the exercise of
options, warrants or other rights to purchase or acquire such Convertible
Securities and the subsequent conversion or exchange thereof, shall be deemed to
have been issued at the time such securities were issued or such options,
warrants or rights were issued and for a consideration equal to the
consideration, if any, received by the Company for any such securities and
related options, warrants or rights (excluding any cash received on account of
accrued interest or

 

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accrued dividends), plus the additional consideration, if any, to be received by
the Company upon the conversion or exchange of such securities, or upon the
exercise of any related options, warrants or rights to purchase or acquire such
Convertible Securities and the subsequent conversion or exchange thereof; (C) on
any change in the number of shares of Common Stock deliverable upon exercise of
any such options, warrants or rights or conversion or exchange of such
Convertible Securities or any change in the consideration to be received by the
Company upon such exercise, conversion or exchange, the Conversion Price as then
in effect shall forthwith be readjusted to such Conversion Price as would have
been obtained had an adjustment been made upon the issuance of such options,
warrants or rights not exercised prior to such change, or of such Convertible
Securities not converted or exchanged prior to such change, upon the basis of
such change; (D) on the expiration or cancellation of any such options, warrants
or rights (without exercise), or the termination of the right to convert or
exchange such Convertible Securities (without exercise), if the Conversion Price
shall have been adjusted upon the issuance thereof, the Conversion Price shall
forthwith be readjusted to such Conversion Price as would have been obtained had
an adjustment been made upon the issuance of such options, warrants, rights or
such convertible or exchangeable securities on the basis of the issuance of only
the number of shares of Common Stock actually issued upon the exercise of such
options, warrants or rights, or upon the conversion or exchange of such
Convertible Securities; and (E) if the Conversion Price shall have been adjusted
upon the issuance of any such options, warrants, rights or Convertible
Securities, no further adjustment of the Conversion Price shall be made for the
actual issuance of Common Stock upon the exercise, conversion or exchange
thereof.

 

(6)                                 Statement Regarding Adjustment.  Whenever
the Conversion Price shall be adjusted as provided herein, the Company shall
forthwith file, at each office designated for the conversion of the Series B
Convertible Redeemable Preferred Shares, a statement, signed by the Chief
Executive Officer or the Chief Financial Officer of the Company, showing in
reasonable detail the facts requiring such adjustment and the Conversion Price
that shall be in effect after such adjustment and the Company shall also cause a
copy of such statement to be sent by mail, first class postage prepaid, to each
holder of Series B Convertible Redeemable Preferred Shares at the address
appearing in the Company’s records.

 

(i)                                     REDEMPTION.

 

(1)  Unless prohibited by any credit agreement, indenture or similar agreement
governing the then-outstanding indebtedness of the Company or its subsidiaries
(including the Notes (as defined below)), the Series B Convertible Redeemable
Preferred Shares may be redeemed by the Company for cash out of funds lawfully
available therefor, at the Company’s option, in whole, or from time to time in
part, on not less than 30 calendar days’ written notice (a “Redemption Notice”)
to the holders thereof (the date specified therein, the “Redemption Date”),
which Redemption Notice may be given at any time after twenty (20) calendar days
prior to the third anniversary of the Issue Date, at a price per Series B
Convertible Redeemable Preferred Share equal to the Accreted Stated Value
thereof plus any accrued but unpaid dividends, if any, as of the Redemption Date
(the “Redemption Price”).  Such Redemption Notice shall state the

 

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number of Series B Convertible Redeemable Preferred Shares to be redeemed, the
Redemption Date and the Redemption Price and the date upon which the holder’s
right to convert such Series B Convertible Redeemable Preferred Shares
terminates in accordance with Section (i)(2) hereof.  On the Redemption Date,
the Company shall redeem, on a pro rata basis based upon the number of Series B
Convertible Redeemable Preferred Shares owned by each holder, the number of
outstanding Series B Convertible Redeemable Preferred Shares set forth in such
notice of redemption.

 

(2)  From and after delivery of a Redemption Notice pursuant to
Section (i)(1) hereof, each holder of Series B Convertible Redeemable Preferred
Shares shall have the right, terminating at the close of business in New York
City on the day preceding the Redemption Date, to convert all or part of such
Series B Convertible Redeemable Preferred Shares to be redeemed by the Company
into Class A Common Stock in accordance with and subject to the terms governing
conversion set forth in Section (g) hereof.

 

(3)  Any Series B Convertible Redeemable Preferred Shares that are redeemed or
otherwise acquired by the Company shall be automatically and immediately
cancelled as set forth in Section(a)(2) hereof.  Neither the Company nor any of
its subsidiaries may exercise any voting or other rights granted to the holders
of Series B Convertible Redeemable Preferred Shares following the redemption or
any other acquisition of Series B Convertible Redeemable Preferred Shares.

 

(j)                                    COVENANTS.  In addition to any other
rights provided by law or the Memorandum of Association or Amended and Restated
Bye-Laws of the Company, so long as Time Warner Media Holdings B.V. (together
with its Affiliates) owns more than 50.0% of the Series B Convertible Redeemable
Preferred Shares and does not have more than 50.0% of the voting power of the
outstanding voting securities of the Company, the Company shall not, and shall
not permit any of its subsidiaries to, without the prior written consent of Time
Warner Media Holdings B.V., whether by reclassification, reorganization, merger,
consolidation, acquisition, operation of law or otherwise:

 

(i)  amend or modify the organizational documents of the Company in a manner
adverse to the Series B Convertible Redeemable Preferred Shares;

 

(ii)  authorize, designate, create or issue any equity securities of the Company
that are senior to or pari passu with the Series B Convertible Redeemable
Preferred Shares in respect of the right to receive dividends or to receive
distributions of assets of the Company upon a Liquidation Event or a Change of
Control Event;

 

(iii)  authorize, designate, create or issue any equity securities of the
Company that are senior to the Class A Common Stock with respect to voting
power;

 

(iv)  declare or pay any dividend or distribution in respect of any equity
securities (other than dividends payable to the Company or any of its
subsidiaries or to the holders of Series B Convertible Redeemable Preferred
Shares);

 

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(v)  issue any equity securities of any subsidiary of the Company to any person
or entity (other than the Company or any of its wholly owned subsidiaries);

 

(vi)  authorize or effect a Liquidation Event or adopt any plan for the same,
restructure any material indebtedness or effect any reorganization,
recapitalization or reclassification or consent to any of the foregoing;

 

(vii)  effect any sale, transfer or other disposition of any material assets
(other than to the Company or any of its subsidiaries), in each case, in one
transaction or in a series of related transactions;

 

(viii)  incur or suffer to exist any lien or encumbrance on material assets of
the Company or any of its subsidiaries other than Permitted Liens (as defined in
the indenture governing the 2017 Notes (as defined below));

 

(ix)  redeem any securities other than the Series B Convertible Redeemable
Preferred Shares (other than the Company’s 5.0% senior convertible notes due
2015 (the “2015 Notes”), the Company’s 11.625% senior notes due 2016 (the “2016
Notes”) or CET 21 spol. s r.o.’s 9.0% senior notes due 2017 (the “2017 Notes,”
and together with the 2015 Notes and the 2016 Notes, the “Notes”) in accordance
with their terms);

 

(x)  enter into or effect any transaction or series of transactions between any
Affiliate of the Company and the Company or any of its subsidiaries having a
value greater than $100,000 (other than transactions solely between or among the
Company and/or any of its wholly owned subsidiaries or any such transactions
between Time Warner Inc. or its subsidiaries and the Company or any of its
subsidiaries);

 

(xi)  engage in any business other than a Permitted Business (as defined in the
indenture governing the 2017 Notes);

 

(xii)  invest in or acquire any material business or entity, other than
investments in or acquisitions or restructurings of any of the Company’s
subsidiaries; or

 

(xiii)  agree or commit to do any of the actions set forth in clauses (i) —
(xii) of this Section (j).

 

(k)                                 TRANSFERABILITY.  Subject to applicable law
and regulation, including, without limitation, the Securities Act of 1933, as
amended, and the rules and regulations thereunder, and blue sky or state
securities laws, the Series B Convertible Redeemable Preferred Shares shall be
freely transferable by the holders thereof; provided that to register the
transfer on the books and records of the Company, so long as the offer and
resale or other transfer thereof shall not have been registered under a
registration statement declared effective by the Securities Exchange Commission,
the Company, in its sole discretion, may require delivery of an opinion of
counsel, in form and substance reasonably acceptable to the Company, setting
forth the exemption from registration applicable to such transfer.

 

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(l)                                     HEADINGS.  The headings of the Sections
of this Certificate of Designation are for convenience of reference only and
shall not define, limit or affect any of the provisions hereof.

 

(m)                             WAIVER.  Any waiver or amendment of the rights
of the holders of the Series B Convertible Redeemable Preferred Shares set forth
herein shall require the affirmative consent or vote of holders of at least a
majority of the Series B Convertible Redeemable Preferred Shares then
outstanding, voting as a separate class, and such waiver or amendment shall be
binding on all holders of Series B Convertible Redeemable Preferred Shares.

 

*  *  *  *  *

 

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