Exhibit 10.6


 


CTC MEDIA, INC.


 


Amended And Restated Stock Option Agreement


 


THIS
AMENDED AND RESTATED STOCK OPTION AGREEMENT (this “Agreement”)
made as of August 24, 2009, is entered into between CTC Media, Inc.,
a Delaware corporation (the “Company”), and
Anton Kudryashov (“Optionee”), and
amends and restates in its entirety the Stock Option Agreement, dated as of November 7,
2008 (the “Prior Agreement”), between the
Company and the Optionee.


 


Preliminary
Statements:


 


A.                                    The Company has
entered into the Prior Agreement and this Agreement because it desires to
retain the services of Optionee by providing him with this incentive to
contribute to the financial success of the Company and its subsidiaries.


 


B.                                    The Company and
the Optionee desire to amend and restate in its entirety the Prior Agreement as
set forth herein.


 


C.                                    The Company and
the Optionee desire, among other things, to amend (i) the Exercise Price
applicable to all Option Shares that may be acquired hereunder, as set forth
herein (the “Exercise Price Amendment”), and (ii) the
schedule pursuant to which the A Option Shares shall become exercisable, as set
forth in Section 4(a) below (the “Vesting
Schedule Amendment”).  The
parties acknowledge and agree that such Exercise Price Amendment is subject to
the approval of the stockholders of the Company, which approval the Company
will seek at the Company’s 2010 annual meeting of stockholders.  In the event that the stockholders of the
Company do not approve such Exercise Price Amendment, (1) the “A Exercise
Price” and “B/C Exercise Price” set forth in the Prior Agreement and (2) the
schedule pursuant to which the A Option Shares shall become exercisable as set
forth in Section 4(a) of the Prior Agreement, will continue to apply.


 


D.                                    All capitalized
terms in this Agreement shall have the meaning assigned to them in the attached
Appendix.


 


NOW, THEREFORE, it is hereby agreed as
follows:


 


1.    Grant of Option.  The Company hereby confirms the grant to
Optionee, pursuant to the Prior Agreement and as of the Grant Date, an option
(the “Option”) to purchase up to 3,042,482
shares of Common Stock (the “Option Shares”).  The first 1,521,241 Option Shares shall be
hereinafter referred to as the “A Option Shares”,
the next 760,621 Option Shares shall be hereinafter referred to as the “B Option Shares” and the remaining 760,620 Option
Shares shall be hereinafter referred to as the “C Option
Shares”.


 


Of
the 760,621 B Option Shares, 253,541 B Option Shares shall be referred to as
the “B-1 Option Shares”, 253,540 B Option
Shares shall be referred to as the “B-2 Option Shares”
and 253,540 B Option Shares shall be referred to as the “B-3 Option
Shares”.


 


1

















 


Of
the 760,620 C Option Shares, 253,540 C Option Shares shall be referred to as
the “C-1 Option Shares”,  253,540
C Option Shares shall be referred to as the “C-2 Option
Shares” and 253,540 C Option Shares shall be referred to as the “C-3 Option Shares”.


 


Subject
to the terms and conditions set out in this Agreement, the Option shall be
exercisable at the Exercise Price.


 


2.    Option Term.  The Option shall have a term of ten (10) years
measured from the Grant Date and, except as provided in Paragraph 5(e), shall
accordingly expire at the close of business on the Expiration Date, unless
sooner terminated in accordance with Paragraph 5 or 6.


 


3.    Limited Transferability.   During Optionee’s lifetime, the Option shall
be exercisable only by Optionee (or his permitted transferee, including a
trustee of a trust set forth below) and shall not be assignable or transferable
other than by will or by the laws of descent and distribution following
Optionee’s death; provided, however, that Optionee may transfer the Option to a
trustee of a trust solely for his benefit and/or the benefit of his immediate
family members so long as such transfer does not result in the Company
incurring any additional stock-based compensation expense under US generally
accepted accounting principles.  For this purpose, “immediate family
members” shall include Optionee’s spouse, children, parents and/or
parents-in-law.


 


2

















 


4.    Conditions to, and Dates of, Exercise.


 


(a)                                 A Option Shares.  The Option shall become exercisable for the A
Option Shares in accordance with the following schedule:


 


	
  Date:

  	
   

  	
  Aggregate number of A Option Shares for

  which the Option is then exercisable:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  On or after August 4, 2009

  	
   

  	
  507,081

  	
   

  
	
  On or after September 30, 2009

  	
   

  	
  591,594

  	
   

  
	
  On or after December 31, 2009

  	
   

  	
  676,108

  	
   

  
	
  On or after March 31, 2010

  	
   

  	
  760,621

  	
   

  
	
  On or after June 30, 2010

  	
   

  	
  845,134

  	
   

  
	
  On or after September 30, 2010

  	
   

  	
  929,648

  	
   

  
	
  On or after December 31, 2010

  	
   

  	
  1,014,161

  	
   

  
	
  On or after March 31, 2011

  	
   

  	
  1,098,674

  	
   

  
	
  On or after June 30, 2011

  	
   

  	
  1,183,188

  	
   

  
	
  On or after September 30, 2011

  	
   

  	
  1,267,701

  	
   

  
	
  On or after December 31, 2011

  	
   

  	
  1,352,214

  	
   

  
	
  On or after March 31, 2012

  	
   

  	
  1,436,728

  	
   

  
	
  On or after June 30, 2012

  	
   

  	
  1,521,241

  	
   

  



 


(b)                                 B-1 Option Shares.  (i) Except as set forth in Paragraphs
4(b)(ii) and 4(b)(iii) below, the Option shall only become
exercisable with respect to the B-1 Option Shares if the Revenue Objective for
2009 is achieved.  Subject to the
achievement of such Revenue Objective, the Option shall become exercisable for
the B-1 Option Shares in accordance with the following schedule:


 


3

















 


	
  Date:

  	
   

  	
  Aggregate number of B-1 Option Shares for

  which the Option is then exercisable:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  On or after the Determination Date for 2009

  	
   

  	
  84,514

  	
   

  
	
  On or after January 1, 2011

  	
   

  	
  169,028

  	
   

  
	
  On or after January 1, 2012

  	
   

  	
  253,541

  	
   

  



 


(ii)                                  Notwithstanding
the fact that the Revenue Objective for 2009 is not achieved, if the Cumulative
Revenue Objective for 2010 is achieved, the Option shall become exercisable for
the B-1 Option Shares in accordance with the following schedule:


 


	
  Date:

  	
   

  	
  Aggregate number of B-1 Option Shares for

  which the Option is then exercisable:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  On or after the Determination Date for 2010

  	
   

  	
  84,514

  	
   

  
	
  On or after January 1, 2012

  	
   

  	
  169,028

  	
   

  
	
  On or after January 1, 2013

  	
   

  	
  253,541

  	
   

  



 


(iii)                               Notwithstanding
the fact that neither the Revenue Objective for 2009 nor the Cumulative Revenue
Objective for 2010 is achieved, if the Cumulative Revenue Objective for 2011 is
achieved, the Option shall become exercisable for the B-1 Option Shares in
accordance with the following schedule:


 


	
  Date:

  	
   

  	
  Aggregate number of B-1 Option Shares for

  which the Option is then exercisable:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  On or after the Determination Date for 2011

  	
   

  	
  84,514

  	
   

  
	
  On or after January 1, 2013

  	
   

  	
  169,028

  	
   

  
	
  On or after January 1, 2014

  	
   

  	
  253,541

  	
   

  



 


(c)                                  B-2 Option Shares. (i) Except
as set forth in Paragraphs 4(c)(ii) and 4(c)(iii) below, the Option
shall only become exercisable with respect to the B-2 Option Shares if the
Revenue Objective for 2010 is achieved. 
Subject to the achievement of such Revenue Objective, the Option shall
become exercisable for the B-2 Option Shares in accordance with the following
schedule:


 


	
  Date:

  	
   

  	
  Aggregate number of B-2 Option Shares for

  which the Option is then exercisable:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  On or after the Determination Date for 2010

  	
   

  	
  84,514

  	
   

  
	
  On or after January 1, 2012

  	
   

  	
  169,028

  	
   

  
	
  On or after January 1, 2013

  	
   

  	
  253,540

  	
   

  



 


4

















 


(ii)                                  Notwithstanding
the fact that the Revenue Objective for 2010 is not achieved, if the Cumulative
Revenue Objective for 2010 is achieved, the Option shall become exercisable for
the B-2 Option Shares in accordance with the following schedule:


 


	
  Date:

  	
   

  	
  Aggregate number of B-2 Option Shares for

  which the Option is then exercisable:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  On or after the Determination Date for 2010

  	
   

  	
  84,514

  	
   

  
	
  On or after January 1, 2012

  	
   

  	
  169,028

  	
   

  
	
  On or after January 1, 2013

  	
   

  	
  253,540

  	
   

  



 


(iii)                               Notwithstanding
the fact that neither the Revenue Objective for 2010 nor the Cumulative Revenue
Objective for 2010 is achieved, if the Cumulative Revenue Objective for 2011 is
achieved, the Option shall become exercisable for the B-2 Option Shares in
accordance with the following schedule:


 


	
  Date:

  	
   

  	
  Aggregate number of B-2 Option Shares for

  which the Option is then exercisable:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  On or after the Determination Date for 2011

  	
   

  	
  84,514

  	
   

  
	
  On or after January 1, 2013

  	
   

  	
  169,028

  	
   

  
	
  On or after January 1, 2014

  	
   

  	
  253,540

  	
   

  



 


(d)                                 B-3 Option Shares. The Option
shall only become exercisable with respect to the B-3 Option Shares if the
Revenue Objective for 2011 is achieved and/or the Cumulative Revenue Objective
for 2011 is achieved.  Subject to the
achievement of such Objective(s), the Option shall become exercisable for the
B-3 Option Shares in accordance with the following schedule:


 


	
  Date:

  	
   

  	
  Aggregate number of B-3 Option Shares for

  which the Option is then exercisable:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  On or after the Determination Date for 2011

  	
   

  	
  84,514

  	
   

  
	
  On or after January 1, 2013

  	
   

  	
  169,028

  	
   

  
	
  On or after January 1, 2014

  	
   

  	
  253,540

  	
   

  



 


(e)                                  C-1 Option Shares.  (i) Except as set forth in Paragraphs
4(e)(ii) and 4(e)(iii) below, the Option shall only become
exercisable with respect to the C-1 Option Shares if both the Cost Objective
for 2009 and the Reorganization Objective for 2009 are achieved.  Subject to the achievement of such Objectives,
the Option shall become exercisable for the C-1 Option Shares in accordance
with the following schedule:


 


5

















 


	
  Date:

  	
   

  	
  Aggregate number of C-1 Option Shares for

  which the Option is then exercisable:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  On or after the Determination Date for 2009

  	
   

  	
  105,642

  	
   

  
	
  On of after June 30, 2010

  	
   

  	
  126,770

  	
   

  
	
  On or after September 30, 2010

  	
   

  	
  147,898

  	
   

  
	
  On or after December 31, 2010

  	
   

  	
  169,026

  	
   

  
	
  On or after March 31, 2011

  	
   

  	
  190,155

  	
   

  
	
  On of after June 30, 2011

  	
   

  	
  211,283

  	
   

  
	
  On or after September 30, 2011

  	
   

  	
  232,412

  	
   

  
	
  On or after December 31, 2011

  	
   

  	
  253,540

  	
   

  



 


(ii)                                  Notwithstanding
the fact that the Cost Objective for 2009 is not achieved, if each of the
Reorganization Objectives for 2009 and 2010 and the Cost Objective for 2010 is
achieved, the Option shall become exercisable for the C-1 Option Shares in
accordance with the following schedule:


 


	
  Date:

  	
   

  	
  Aggregate number of C-1 Option Shares for

  which the Option is then exercisable:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  On or after the Determination Date for 2010

  	
   

  	
  190,155

  	
   

  
	
  On of after June 30, 2011

  	
   

  	
  211,283

  	
   

  
	
  On or after September 30, 2011

  	
   

  	
  232,412

  	
   

  
	
  On or after December 31, 2011

  	
   

  	
  253,540

  	
   

  



 


(iii)                               Notwithstanding
the fact that neither the Cost Objective for 2009 nor the Cost Objective for
2010 is achieved, if each of the Reorganization Objectives for 2009, 2010 and
2011 and the Cost Objective for 2011 is achieved, the Option shall become
exercisable for all of the C-1 Option Shares on the Determination Date for
2011.


 


(f)                                   C-2 Option Shares. (i) Except
as set forth in Paragraph 4(f)(ii) below, the Option shall only become
exercisable with respect to the C-2 Option Shares if both the Cost Objective
for 2010 and the Reorganization Objective for 2010 are achieved.  Subject to the achievement of such Objectives,
the Option shall become exercisable for the C-2 Option Shares in accordance
with the following schedule:


 


	
  Date:

  	
   

  	
  Aggregate number of C-2 Option Shares for

  which the Option is then exercisable:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  On or after the Determination Date for 2010

  	
   

  	
  190,155

  	
   

  
	
  On of after June 30, 2011

  	
   

  	
  211,283

  	
   

  
	
  On or after September 30, 2011

  	
   

  	
  232,412

  	
   

  
	
  On or after December 31, 2011

  	
   

  	
  253,540

  	
   

  



 


6














 


(ii)                                  Notwithstanding
the fact that the Cost Objective for 2010 is not achieved, if each of the
Reorganization Objectives for 2009 and 2010 and the Cost Objective for 2011 is
achieved, the Option shall become exercisable for all of the C-2 Option Shares
on the Determination Date for 2011.


 


(g)                                  C-3 Option Shares. The Option
shall only become exercisable with respect to the C-3 Option Shares if both the
Cost Objective for 2011 and the Reorganization Objective for 2011 are
achieved.  Subject to the achievement of
such Objectives, the Option shall become exercisable for all of the C-3 Option
Shares on the Determination Date for 2011.


 


Whether
or not any Objective is achieved shall be determined in good faith by the Board
or a committee thereof in its sole discretion.


 


5.    Cessation of Service.  The option term specified in Paragraph 2
shall terminate (and the Option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:


 


(a)                                 Should Optionee
cease to remain in Service for any reason (other than death or Disability)
while the Option is outstanding, then Optionee shall have a period of ninety
(90) days (commencing with the date of such cessation of Service) during which
to exercise the Option, but in no event shall the Option be exercisable at any
time after the Expiration Date.


 


(b)                                 Should Optionee
die while the Option is outstanding, then the personal representative of
Optionee’s estate or the person or persons to whom the Option is transferred
pursuant to Optionee’s will or in accordance with the laws of inheritance shall
have the right to exercise the Option. 
Such right shall lapse, and the Option shall cease to be outstanding,
upon the earlier of (i) the expiration of the twelve (12) month period measured
from the date of Optionee’s death or (ii) the Expiration Date.


 


(c)                                  Should Optionee
cease Service by reason of Disability while the Option is outstanding, then
Optionee shall have a period of twelve (12) months (commencing with the date of
such cessation of Service) during which to exercise the Option.  In no event shall the Option be exercisable
at any time after the Expiration Date.


 


(d)                                 During the
limited period of post-Service exercisability, the Option may not be exercised
in the aggregate for more than the number of Option Shares for which the Option
is, at the time of Optionee’s cessation of Service, exercisable pursuant to the
exercise schedule specified in Paragraph 4 or the special acceleration
provisions of Paragraph 6.  Upon the
expiration of such limited exercise period or (if earlier) upon the Expiration
Date, the Option shall terminate and cease to be outstanding for any vested
Option Shares for which the Option has not been exercised.  To the extent Optionee is not vested in the
Option Shares at the time of Optionee’s cessation of Service, the Option shall
immediately terminate and cease to be outstanding with respect to those shares.


 


(e)                                  If the Optionee
is precluded from exercising the Option solely by virtue of any law (including
applicable securities law) or pursuant to any blackout or insider 


 


7

















 


trading
policy, then notwithstanding anything in this Agreement to the contrary, the
Option shall remain exercisable for thirty (30) days following the date the
Option first becomes exercisable after such preclusion lapses.  During the limited period of post-Service
exercisability provided for in the immediately preceding sentence, the Option
may not be exercised in the aggregate for more than the number of Option Shares
for which the Option is, at the time of Optionee’s cessation of Service,
exercisable pursuant to the exercise schedule specified in Paragraph 4 or the
special acceleration provisions of Paragraph 6.


 


6.    Acceleration of Option.


 


(a)                                 In the event of
any Corporate Transaction where the successor corporation in such transaction
(or the parent thereof) does not assume the Option or replace the Option with a
cash incentive program which provides Optionee with an economic benefit substantially
similar to the Option, the exercisability of the Option shall, to the extent
the Option is not otherwise fully exercisable, automatically accelerate in full
so that the Option shall, immediately prior to the effective date of such
Corporate Transaction, become fully exercisable for all the Option Shares and
may be exercised for any or all of those Option Shares as fully-vested shares
of Common Stock.


 


(b)                                 Without limiting
the generality of Section 6(a) above, in the event of (i) any
Corporate Transaction where neither MTG or Alfa is party to the merger or the
asset sale or (ii) a Change in Control where a party other than MTG or
Alfa achieves control of a majority of the voting power of the Company’s then
outstanding capital stock through direct and/or indirect beneficial ownership,
the exercisability of the Option shall, to the extent the Option is not
otherwise fully exercisable, automatically accelerate so that the Option shall,
immediately prior to the effective date of such Corporate Transaction or upon
the Change in Control, become exercisable for (i) all the A Option Shares
and (ii) those of the B and/or C Option Shares for which the
applicable Objectives have been achieved as of the effective date of such
Corporate Transaction or Change in Control but which have not yet become
exercisable because of the vesting schedules applicable to such B and/or C
Option Shares, and, in each case, may be exercised for any or all of such
Option Shares as fully-vested shares of Common Stock.


 


(c)                                  In connection
with any Corporate Transaction where the exercisability of the Option
automatically accelerates, the Option shall be exercised to the extent then
exercisable prior to or in connection with the closing of such Corporate
Transaction and, to the extent that the Option is not so exercised, it shall
terminate and cease to be outstanding immediately following the closing of such
Corporate Transaction.  Without limiting
the generality of Section 5, a Change in Control that is not also a
Corporate Transaction shall not effect the term of the Option.


 


(d)                                 This Agreement
shall not in any way affect the right of the Company to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.


 


7.    Adjustment in Option Shares.  In the event of (i) an extraordinary
dividend, other distribution, stock split, stock dividend, recapitalization,
reverse stock split, reorganization, 


 


8

















 


merger, split-up, split-off, combination of
shares, exchange of shares or similar corporate transaction or event whereby
the Common Stock is affected, or (ii) any unusual or nonrecurring events
affecting the Company, its affiliates or the financial statements of such
entities, or changes in applicable rules, rulings, regulations or other
requirements of any governmental body or securities exchange or quotation
system, such that in either case an adjustment is necessary or appropriate in
order to prevent dilution or enlargement of the benefits hereunder, the Board
shall make such appropriate adjustments to (i) the total number and/or
class of securities subject to the Option and (ii) the Exercise Price.


 


8.    Shareholder Rights.  The holder of the Option shall not have any
shareholder rights with respect to the Option Shares until such person shall
have exercised the Option, paid the Exercise Price, and become a holder of
record of the purchased shares.


 


9.    Manner of Exercising Option.


 


(a)                                 In order to
exercise the Option  with respect
to all or any part of the Option Shares for which the Option is at the time
exercisable, Optionee (or any other person or persons exercising the Option)
shall provide written notice of Optionee’s election to exercise all or a
portion of the Option and shall take the following additional actions:


 


(i)                                     Pay the aggregate
Exercise Price for the purchased shares in one or more of the following forms:


 


(A)                               cash or check
made payable to the Company; or


 


(B)                               by a “net
exercise” method whereby the Company withholds from the delivery of the shares
of Common Stock for which the Option is exercised that number of shares of
Common Stock having a Fair Market Value equal to the aggregate exercise price for
the shares of Common Stock for which the Option is exercised; or


 


(C)                               in shares of
Common Stock held by Optionee (or any other person or persons exercising the
Option) for the requisite period necessary to avoid a charge to the Company’s
earnings for financial reporting purposes and valued at Fair Market Value on
the Exercise Date; or


 


(D)                               If the Common
Stock is at the time traded on Nasdaq or any Stock Exchange at the time the
Option is exercised, then the Exercise Price may also be paid through a special
sale and remittance procedure pursuant to which Optionee (or any other person
or persons exercising the Option) shall concurrently provide irrevocable
written instructions (a) to a Company-designated brokerage firm to effect
the immediate sale of the purchased shares and remit to the Company, out of the
sale proceeds available on the settlement date, sufficient funds to cover the
aggregate Exercise Price for the purchased shares plus all applicable national
and local income and employment taxes required to be withheld by the Company by
reason of such exercise and (b) to the Company to deliver the certificates
for the purchased shares directly to such 


 


9

















 


brokerage firm in order to complete the sale.


 


Except to the extent the sale and remittance procedure
is utilized in connection with the Option exercise, payment of the Exercise
Price must accompany the notice delivered to the Company in connection with the
option exercise.


 


(ii)                                  Furnish to the
Company appropriate documentation that the person or persons exercising the
Option (if other than Optionee) have the right to exercise the Option.


 


(iii)                               Make appropriate arrangements
with the Company for the satisfaction of all applicable national and local
income and employment tax withholding requirements applicable to the Option
exercise.


 


(b)                                 As soon as
practical after the Exercise Date, the Company shall issue to or on behalf of
Optionee (or any other person or persons exercising the Option) a certificate
for the purchased Option Shares, with the appropriate legends (if any) affixed
thereto.


 


(c)                                  In no event may
the Option be exercised for any fractional shares.


 


10.    Non-Competition and Non-Solicitation; Proprietary
Information.  Notwithstanding
any provision of this Agreement to the contrary, Optionee shall not be
permitted to exercise the Option if he is in breach of Section 7 (Non-Competition and Non-Solicitation) or Section 8
(Proprietary Information) of his
employment agreement with the Company dated as of November 7, 2008 (as
such agreement may be amended from time to time).


 


11.    Representation. The Company
represents that it has properly reserved the number of shares subject to the
grant hereunder and has all corporate authority to make the grant. The shares
subject to the awards described herein shall be registered on a Form S-8
or other appropriate registration statement under the Securities Act of 1933,
as amended.


 


12.    Changes in Accounting Policies; Reporting
Methodologies.   In the
event that the Company changes its accounting policies and/or there is a change
in the method in which the size of the Russian television advertising market is
calculated and/or reported, in each case, so as to impact the manner in which
any of the Objectives are determined, Optionee and the Board or a committee
thereof shall in good faith negotiate appropriate amendments to the manner in
which the Objectives are determined to take into account such changes so that
there is no dilution or enlargement to Optionee of the benefits of the Option.


 


13.    Successors and Assigns.   Except to the extent otherwise provided in Paragraphs 3
and 6, the provisions of this Agreement shall inure to the benefit of, and be
binding upon, the Company and its successors and assigns and Optionee, Optionee’s
assigns and the legal representatives, heirs and legatees of Optionee’s estate.


 


14.    Notices.  Any notice required to be given or delivered
to the Company under the terms of this Agreement shall be in writing and
addressed to the Company at its principal 


 


10

















 


corporate offices.  Any notice required to be given or delivered
to Optionee shall be in writing and addressed to Optionee at the address
indicated below Optionee’s signature line. 
All notices shall be deemed effective (i) upon personal delivery, (ii) five
business days after being sent by registered or certified mail, return receipt
requested, postage prepaid or (iii) two business days after being sent via
reputable international overnight courier.


 


15.    Non-Statutory Option.  Optionee acknowledges that the Option is not
intended to satisfy the requirements of Section 422 of the US Internal
Revenue Code of 1986, as amended.


 


16.    Governing Law.  The interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the State of
Delaware without resort to that State’s conflict-of-laws rules.


 


17.    Arbitration.   Any dispute concerning, arising out of or
relating to this Agreement shall be submitted to binding arbitration before the
London Court of International Arbitration (the “LCIA”) and the arbitration shall be conducted pursuant to the
LCIA Rules.  The number of arbitrators
shall be three (the “Arbitrators”).  One Arbitrator shall be selected by the Company,
one shall be selected by Optionee and the third (who shall serve as Chair of
the arbitral tribunal) shall be selected by the other two Arbitrators.  In the event that either the Company or
Optionee shall fail to select its or his Arbitrator within thirty days after
the matter is submitted for arbitration, then, upon request of the other, such
Arbitrator shall be appointed by the LCIA. 
In the event the two Arbitrators selected by the Company and Optionee
fail to select the third Arbitrator within 15 calendar days of the appointment
of the second Arbitrator, then, upon request of either of them, such third
Arbitrator shall be appointed by the LCIA. 
The arbitration shall be conducted in accordance with the following
additional provisions:


 


(i)                                     The parties shall
commence the arbitration by jointly filing a written submission with the LCIA.


 


(ii)                                  The seat of
arbitration shall be London, England; the language to be used in the arbitral
proceedings shall be English; and the governing law shall be the substantive
internal laws of the State of Delaware.


 


(iii)                               Not later than 30
calendar days after the conclusion of the arbitration hearing, the Arbitrators
shall prepare and distribute to the parties a writing setting forth the
arbitral decision (which shall be by majority vote) and the Arbitrators’
reasons therefor.  Any award rendered by
the Arbitrators shall be final, conclusive and binding upon the parties, not
subject to appeal, and judgment thereon may be entered and enforced in any
court of competent jurisdiction, provided that the Arbitrators shall have no
power or authority to grant injunctive relief, specific performance or other
equitable relief.


 


(iv)                              The Arbitrators
shall have no power or authority, to (x) modify or disregard any provision
of this Agreement, including the provisions of this 


 


11

















 


Section 17,
or (y) address or resolve any issue outside the scope of this arbitration
provision that is not submitted by the parties.


 


(v)                                 The parties shall
not be entitled to discovery, and the Arbitrators shall have no power to order
discovery of documents, oral testimony or other materials.


 


(vi)                              In connection
with any arbitration proceeding pursuant to this Agreement, each party shall
bear its or his own costs and expenses.


 


18.                               Entire Agreement; Amendment.  This Agreement is intended to be the sole
agreement of the parties hereto as it relates to this subject matter and does
hereby supersede all other agreements of the parties relating to the subject
matter hereof, including, without limitation, the Prior Agreement.  Notwithstanding the foregoing, the parties
acknowledge and agree that the Exercise Price Amendment is subject to the
approval of the stockholders of the Company, as described in the Preliminary Statements,
and that the Vesting Schedule Amendment is subject to the approval of the
Exercise Price Amendment by the stockholders of the Company.  In the event that the stockholders of the
Company do not approve the Exercise Price Amendment at the Company’s 2010
annual meeting of stockholders, (a) the “A Exercise Price” and “B/C
Exercise Price” set forth in the Prior Agreement and (b) the schedule
pursuant to which the A Option Shares shall become exercisable as set forth in Section 4(a) of
the Prior Agreement, will continue to apply.


 


19.                               Captions.  The captions of the sections of this
Agreement are for convenience of reference only and in no way define, limit or
affect the scope or substance of any section of this Agreement.


 


20.                               Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.


 


12

















 


IN
WITNESS WHEREOF, the parties hereto have caused the Option to be executed as of
the date set forth in the preamble.


 


 


	
   

  	
  CTC
  MEDIA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Boris
  Podolsky

  
	
   

  	
   

  	
  Boris
  Podolsky

  
	
   

  	
   

  	
  Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Optionee:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Anton
  Kudryashov

  
	
   

  	
  Anton
  Kudryashov

  
	
   

  	
   

  
	
   

  	
  Address:

  



 


13














 


APPENDIX


 


The
following definitions shall be in effect under the Agreement:


 


A.                                    Adjusted
Revenues shall mean, with respect to any fiscal year of the
Company, Revenues for such fiscal year as adjusted to include the total
operating revenues for any acquisition for which the Company began
consolidating the results of operations of the acquired business with the
Company’s results of operations during such fiscal year on a pro forma annualized basis as if the acquired business had
been owned by the Company for the entirety of such fiscal year.


 


B.                                    Agreement shall mean this
Stock Option Agreement.


 


C.                                    AKAR shall mean the
Association of Communication Agencies of Russia or its any successor
organization thereto.


 


D.                                    Alfa shall mean ABH
Holdings Corporation together with its affiliates (as such term is defined in
the Exchange Act).


 


E.                                     A
Option Share shall have the meaning set forth in Section 1.


 


F.                                      Baseline
Operating Expenses shall mean:


 


(a)                                 in the case of 2009, the
Operating Expenses for 2008 (as adjusted to include Operating Expenses for any
acquisition for which the Company began consolidating the results of operations
of the acquired business with the Company’s results of operations during 2008
on a pro forma annualized basis as if the
acquired business had been owned by the Company for all of 2008) multiplied by
1.135 (or, in the event that the Consumer Price Inflation Index as published by
the Ministry of Statistics for the Russian Federation (the “official annual
inflation rate”) for 2009 is less than 12% or greater
than 15%, multiplied by a number equal to 1.0 plus such actual annual inflation
rate) (the “2009 Baseline Operating Expenses”);


 


(b)                                 in the case of 2010, the 2009
Baseline Operating Expenses multiplied by 1.135 (or, in the event that that the
official annual inflation rate for the Russian Federation for 2010 is
less than 12% or greater than 15%, multiplied by a number equal to 1.0 plus
such actual annual inflation rate) (the “2010 Baseline Operating Expenses”)


 


(c)                                  in the case of 2011, the 2010
Baseline Operating Expenses, multiplied by 1.135 (or, in the event that that
the official annual inflation rate for the Russian Federation for 2011 is
less than 12% or greater than 15%, multiplied by a number equal to 1.0 plus
such actual annual inflation rate).”


 


G.                                    B
Option Share shall have the meaning set forth in Section 1.


 


H.                                   B-1 Option Share shall have the
meaning set forth in Section 1.


 


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I.                                        B-2
Option Share shall have the meaning set forth in Section 1.


 


J.                                        B-3
Option Share shall have the meaning set forth in Section 1.


 


K.                                   Board shall mean the
Company’s Board of Directors.


 


L.                                     Change
in Control shall mean any party either alone or with its
affiliates (as such term is defined in the Exchange Act) achieving control of a
majority of the voting power of the Company’s then outstanding capital stock
through direct and/or indirect beneficial ownership.


 


M.                                 Common Stock shall mean the
Company’s common stock.


 


N.                                    C
Option Share shall have the meaning set forth in Section 1.


 


O.                                    C-1
Option Share shall have the meaning set forth in Section 1.


 


P.                                      C-2
Option Share shall have the meaning set forth in Section 1.


 


Q.                                    C-3
Option Share shall have the meaning set forth in Section 1.


 


R.                                    Corporate
Transaction shall mean either of the following
shareholder-approved transactions to which the Company is a party:


 


(i)                                     a merger or consolidation in
which securities possessing more than fifty percent (50%) of the total combined
voting power of the Company’s outstanding securities are transferred to a
person or persons different from the persons holding those securities
immediately prior to such transaction, or


 


(ii)                                  the sale,
transfer or other disposition of all or substantially all of the Company’s
assets in complete liquidation or dissolution of the Company.


 


S.                                      Company shall mean CTC
Media, Inc., a Delaware corporation.


 


T.                                     Cost
Objective  shall mean, with respect to any of 2009, 2010 and
2011, that Operating Expenses were lower than the applicable Baseline Operating
Expenses by 2.5%, 4.5% and 6.0%, respectively, for 2009, 2010 and 2011.


 


A-2

















 


U.                                    Cumulative
Revenue Objective shall mean, with respect to 2010, that the
percentage compounded annual growth rate by which 2010 Revenues exceeded 2008
Adjusted Revenues is at least five percentage points greater than the
percentage compounded annual growth rate by which the Russian Television
Advertising Market Size increased from 2008 to 2010, and, with respect to 2011,
that the percentage compounded annual growth rate by which 2011 Revenues
exceeded 2008 Adjusted Revenues is at least five percentage points greater than
the percentage compounded annual growth rate by which the Russian Television
Advertising Market Size increased from 2008 to 2011; by way of example if the
Russian Television Advertising Market Size grew by 10% from 2008 to 2009 and by
a further 10% from 2009 to 2010, Revenues for 2010 would need to be at least
32.25% more than Adjusted Revenues for 2008 for the Cumulative Revenue
Objective for 2010 to be met (or, on average, 15% growth year-on-year).


 


V.                                    Determination
Date shall mean the date on which the Board or a committee
thereof determines in good faith whether any Objective for the immediately
preceding fiscal year has been achieved, which date shall be no later than 30
calendar days following the date on which the Company files its annual report
on Form 10-K with the US Securities and Exchange Commission for such year
but in no event later than 100 calendar days after the end of such fiscal year;
provided, that with respect to any Revenue Objective or Cumulative
Revenue Objective, such date shall be no later than the later of (x) such
date and (x) 30 calendar days following the date on which AKAR publicly
announces the Russian Television Advertising Market Size for such year.


 


W.                                 Disability shall mean the
inability of Optionee to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment and shall be
determined by the Board or a committee thereof on the basis of such medical
evidence as the Board or such committee deems warranted under the
circumstances.


 


X.                                    Employee shall mean an
individual who is in the employ of the Company (or any Parent or Subsidiary),
subject to the control and direction of the employer entity as to both the work
to be performed and the manner and method of performance.


 


Y.                                    Exchange
Act shall mean the US Securities Exchange Act of 1934, as amended.


 


Z.                                     Exercise
Date shall mean the date on which the Option shall have
been exercised in accordance with Paragraph 9 of the Agreement.


 


AA.                           Exercise
Price
shall mean US$13.60 per Option Share, which was the official Nasdaq closing
price per share of Common Stock on August 11, 2009, as reported by
Nasdaq.  Notwithstanding the foregoing, “Exercise
Price” shall mean the A Exercise Price or the B/C Exercise Price (as set forth
in the Prior Agreement), as the case may be, in the event that the Exercise
Price Amendment is not approved by the Company’s stockholders as set forth in Section 18
above.


 


BB.                           Exercise Price Amendment shall have the
meaning set forth in paragraph C of the Preliminary Statements.


 


CC.                           Expiration Date shall mean August 4,
2018.


 


A-3

















 


DD.                           Fair Market Value per share of
Common Stock on any relevant date shall be determined in accordance with the
following provisions:


 


(i)                                     If the Common Stock is at the
time traded on Nasdaq, then the Fair Market Value shall be the official close
price per share of Common Stock on the date in question, as the price is
reported by Nasdaq.  If there is no close
price for the Common Stock on the date in question, then the Fair Market Value
shall be the close price on the last preceding date for which such quotation
exists.


 


(ii)                                  If the Common
Stock is at the time listed on any Stock Exchange, then the Fair Market Value
shall be the closing price per share of Common Stock on the date in question on
the Stock Exchange determined by the Board to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange.  If there
is no closing price for the Common Stock on the date in question, then the Fair
Market Value shall be the closing price on the last preceding date for which
such quotation exists.


 


(iii)                               If the Common
Stock is at the time neither listed on any Stock Exchange nor traded on Nasdaq,
then the Fair Market Value shall be determined in good faith by the Board.


 


EE.                             Grant Date shall mean November 7,
2008.


 


FF.                               MTG shall mean
Modern Times Group MTG AB together with its affiliates (as such term is defined
in the Exchange Act).


 


GG.                           Nasdaq shall mean the
Nasdaq Stock Market, any market thereof or any successor system, as applicable.


 


HH.                         Objective shall mean any
or all of the Revenue Objective, the Cumulative Revenue Objective, the Cost
Objective and/or the Reorganization Objective.


 


II.                                   Operating
Expenses  shall mean the Company’s total consolidated operating
expenses other than:


 


(i)                                     (a)  depreciation and
amortization, (b)  amortization of programming rights, and (c)  amortization
of sublicensing rights (currently categorized as direct operating expenses and
selling, general and administrative expenses, as adjusted for acquisitions that
are consolidated for only a portion of any year), each denominated in Russian
rubles;


 


(ii)                                  stock-based compensation
expense; and


 


(iii)                               any expense exempted from this
definition of “Operating Expenses” by the Board’s compensation committee.


 


Operating expenses that are generated in a
currency other than Russian rubles shall be translated into Russian rubles
using the same weighted average exchange rate methodology used by the Company
to translate its financial statements into US dollars.  In the event of any changes in accounting 


 


A-4

















 


principles or the classification of expenses, the
results for a fiscal year shall be adjusted so that such results will be
comparable with the results for the prior fiscal year.


 


JJ.                                   Option Shares shall mean,
collectively, the A Option Shares, B Option Shares and C Option Shares and
individually, any of them.


 


KK.                         Optionee shall mean Anton
Kudryashov.


 


LL.                             Parent shall mean any
corporation (other than the Company) in an unbroken chain of corporations
ending with the Company, provided each corporation in the unbroken chain (other
than the Company) owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.


 


MM.                     Prior Agreement shall mean the
Stock Option Agreement, dated as of November 7, 2009, between the Company
and the Optionee.


 


NN.                           Reorganization Objective shall mean, with
respect to 2009, 2010 and 2011, achieving in such year those organizational
objectives that the Board establishes for such year based upon its review and
consideration of the recommendations set out in the study by Booz Allen
Hamilton commissioned by the Company in 2008; which organizational objectives
for any year shall be provided to Optionee no later than December 20th of the immediately preceding year.


 


OO.                           Revenue Objective shall mean, with
respect to any of 2009, 2010 and 2011, that Revenues for such year exceeded
Adjusted Revenues for the immediately preceding year by at least five
percentage points more than the Russian Television Advertising Market Size for
such year exceeded the Russian Television Advertising Market Size for the
immediately preceding year; by way of example if the Russian Television
Advertising Market Size for 2009 was 15% more than the Russian Television
Advertising Market Size for 2008, Revenues for 2009 would need to be at least
20% more than Adjusted Revenues for 2008 for the Revenue Objective to be met.


 


PP.                               Revenues shall mean, with
respect to any fiscal year of the Company, the consolidated total operating
revenues of the Company for such year expressed in Russian rubles less
total operating revenues attributable to any acquisition by the Company for
which the Company began consolidating the results of operations of the acquired
business with the Company’s results of operations during such fiscal year, each
denominated in Russian rubles; provided that revenues that
are generated in a currency other than Russian rubles shall be translated into
Russian rubles using the same weighted average exchange rate methodology used
by the Company to translate its financial statements into US dollars.


 


QQ.                           Russian Television Advertising
Market Size shall mean, with respect to any year, the monetary
size of the Russian television advertising market for such year as reported by
AKAR.


 


A-5

















 


RR.                           Service shall mean the
Optionee’s performance of services for the Company (or any Parent or Subsidiary)
in the capacity of an Employee, a non-employee member of the board of directors
or an independent consultant.


 


SS.                               Stock Exchange shall mean the
American Stock Exchange, the New York Stock Exchange or the London Stock
Exchange.


 


TT.                             Subsidiary shall mean any
corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company, provided each corporation (other than the last
corporation) in the unbroken chain owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.


 


UU.                           Vesting Schedule Amendment shall have the
meaning set forth in paragraph C of the Preliminary Statements.


 


A-6