Exhibit 10.3

 

English-Language Summary(1)

 

of

 

Preliminary Lease Agreement for Property at Leningradsky Prospect 31A, Building
1, Moscow, Russia, by and between Closed Joint Stock Company “CTC Network” (the
“Lessee”), and Open Joint Stock Company “MonArch” and an individual (together,
the “Lessor”) dated as of July 12, 2010.

 

Property subject to lease

 

Approximately 6,500 square meters in a class “A” office building at Leningradsky
Prospect 31A, Building 1, Moscow, Russia

 

 

 

Initial term

 

10 years from the date of the definitive lease agreement to be entered into
between the parties, which is to be signed no later than July 12, 2011.

 

 

 

Extension term

 

Lessee has a right to extend for a further 10-year term, at the then current
market rates

 

 

 

Annual rent

 

Approximately US$3.5 million, plus VAT, including technical costs arising from
maintenance of the premises and certain supplementary municipal services.

 

 

 

Annual rental adjustment:

 

Rent is subject to adjustment annually in line with inflation, not to exceed 4%
of the then-applicable annual rent. In the event that the average Russian ruble
/ US dollar exchange rate fluctuates by more than 15% during any three-month
period during the term of the lease, each party is entitled to begin
negotiations to adjust the basic rent amount.

 

 

 

Lease of parking space

 

Available at additional cost

 

 

 

Expansion option / right of first offer

 

Lessee has an expansion option / right of first offer on any additional space in
the building at the then-current market rent.

 

 

 

Termination by Lessee:

 

During the first 5 years, Lessee has the right to terminate the lease upon 12
months prior written notice to Lessor and payment of a penalty fee in the amount
of 6 months’ rent.

 

 

 

 

 

After the first 5 years, Lessee has the right to terminate the lease upon 12
months prior written notice to Lessor without paying any penalties.

 

 

 

Termination by Lessor:

 

Lessor may terminate the lease following the seventh anniversary of the lease,
upon two years’ prior notice and subject to a penalty payment equal to 12
months’ rent.

 

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

(1)  Pursuant to Rule 12b-12(d)(3) under the US Securities Exchange Act of 1934,
as amended, the Registrant is filing as an exhibit to its Quarterly Report on
Form 10-Q this summary in the English language of a preliminary lease prepared
in the Russian language in respect of the Registrant’s new headquarters facility
in Moscow, Russia.  The Registrant will provide a copy of the Preliminary Lease
to the Securities and Exchange Commission upon request.

 

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

 

Security deposit:

 

Lessee must pay a deposit to secure its performance under the Preliminary Lease
equal to two months’ lease expense

 

 

 

Build-out of facility:

 

Lessor has certain obligations with respect to construction related to the
internal build-out of the facility prior to occupancy by the Lessee.

 

 

 

Terms omitted:

 

This summary in the English language provides a fair and accurate summary of the
terms of each material provision of the Preliminary Lease. The terms of the
Preliminary Lease that have been omitted from this summary consist of mechanical
legal provisions, 11 exhibits and schedules setting out detailed property plans
and technical specifications, as well as non-material, ancillary obligations of
Lessor and Lessee and other non-material matters.

 

 

 

Nature of “preliminary” lease

 

Note: So-called “preliminary” leases are standard practice in the Moscow market;
Lessee anticipates that the parties will execute a definitive final lease
agreement, on the same material terms as the Preliminary Lease Agreement, in due
course and in any event by no later than July 12, 2011.

 

2

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