Document:

Exhibit 10.17

 

Execution Copy

 

 

MANAGEMENT COMPENSATION AGREEMENT

 

between

 

NORTHWEST AIRLINES, INC.

 

and

 

ANDREW C. ROBERTS

 

dated as of

 

April 14, 2008

 

 

MANAGEMENT COMPENSATION AGREEMENT

 

MANAGEMENT COMPENSATION AGREEMENT made as of
the 14th day of April, 2008 between Northwest Airlines, Inc., a
Minnesota corporation (the “Company”) and Andrew C. Roberts (the “Executive”).

 

WITNESSETH:

 

WHEREAS, Executive and the Company are
parties to a Management Compensation Agreement dated as of April 17, 2002 (the
“Prior Agreement”); and

 

WHEREAS, Executive and the Company desire to
enter into a new Management Compensation Agreement.

 

NOW, THEREFORE, as of the date hereof, the
Company and Executive have agreed to terminate the Prior Agreement as of the
date hereof and replace the Prior Agreement with this Agreement, which shall
supersede the Prior Agreement in all respects.

 

1.     Terms of Employment.

 

1.1     Employment.  The Company agrees to employ Executive, and
Executive agrees to be employed by the Company, on the terms and conditions set
forth herein.

 

1.2     Position
and Duties.  During the term of
Executive’s employment hereunder, Executive shall serve as an Executive Vice
President of the Company and shall have such powers and duties as may from time
to time be prescribed by the Company. 
Executive shall devote substantially all his working time and effort to
the business and affairs of the Company and its affiliates.

 

2.     Compensation.  During the term of Executive’s employment
hereunder, Executive shall receive the compensation and benefits set forth in
this Section 2.

 

2.1    Base Salary.  Executive’s Base Salary shall be his base
salary in effect on the Effective Date, as may be increased from time to time
thereafter by the Company, provided that Executive’s Base Salary may be reduced
in connection with one or more base wage reductions generally applicable to salaried
employees of the Company.  Executive’s
Base Salary shall be payable in accordance with the Company’s payroll policies.

 

2.2     Incentive
Compensation.  Executive shall be
entitled to participate in the Company’s Key Employee Annual Cash Incentive
Plan (the “KEACIP”) and the Company’s Long-Term Cash Incentive Plan (“LTIP”), to
the extent such plans continue in effect, or any successor incentive compensation
plans on the terms and conditions to be established from time to time by the
Board of Directors or a committee thereof.

 

2.3     Expenses.  During the term of Executive’s employment
hereunder, Executive shall be entitled to receive prompt reimbursements for all
reasonable business expenses incurred in performing services hereunder in
accordance with the Company’s business expense reimbursement policies in effect
from time to time.

 

 

2.4           Employee Benefit
Programs of the Company.  Executive
shall be entitled to participate while employed hereunder in the Company’s
employee benefit programs at levels in effect from time to time for salaried
employees at a level comparable to Executive, provided that Executive shall not
participate in any severance pay plan maintained by the Company except to the
extent necessary to receive any severance payments specifically provided for
hereunder.

 

3.     Other Benefits.

 

3.1           Airline Pass.  Executive shall be entitled to receive, upon
termination of employment, lifetime airline pass privileges for the personal
use of Executive and his spouse or registered domestic partner and dependent
children so long as spouses, registered domestic partners and dependent
children of employees generally are eligible for non-revenue travel pursuant to
the Company’s pass policies (hereinafter, “Eligible Individuals”).  Such airline pass privileges (the “Airline
Pass”) shall entitle Executive and Eligible Individuals to travel on
regularly scheduled domestic and international flights operated by the Company,
subject to all charges and fees then applicable to active management employees
of the Company and their dependents and pursuant to the Company’s pass policies
in effect from time to time, with boarding priority of F-1 or the equivalent
thereof for a period of ten (10) years from and after the date such
pass is issued and F-1R thereafter. 
Executive shall be responsible for any personal income tax liability
arising from such pass travel. 
Notwithstanding the foregoing, all benefits under this Section 3.1
shall immediately and permanently cease in the event Executive violates the
Company’s pass policies in connection with such travel and/or in the event that
Executive is or becomes, at any time thereafter, an employee of any air carrier
that competes with the Company (or any of its affiliates).

 

3.2           Medical and Dental
Benefits.  In the event (A) Executive
remains an active full-time employee of the Company continuously from the
Effective Date through November 1, 2008 or (B) Executive’s employment
with the Company is terminated by the Company other than for Cause or by
Executive for Good Reason on or before November 1, 2008, then, following
Executive’s termination of employment and thereafter during the Executive’s
lifetime, Executive and his eligible dependents shall be entitled to
participate in the Company’s group medical and dental plans generally
applicable to salaried employees of the Company under the same terms and
conditions as shall apply to such salaried employees; provided, however, that
such coverage shall be secondary to Medicare or any other government insurance
program in which Executive may be entitled to participate, and provided
further, if Executive becomes employed by another employer, such coverage shall
become secondary to any coverage provided by such employer for the period in
which Executive is entitled to such coverage. 
In addition, while employed by the Company hereunder and so long as such
program continues in effect, Executive shall be entitled to participate in the
Company’s Medical Expense Reimbursement Program on the same terms and
conditions generally applicable to other executives of the Company.

 

4.     Termination of Employment.

 

4.1           Upon Death.  Executive’s employment hereunder shall
terminate upon his death.

 

2

 

4.2           By the Company.  The Company may terminate Executive’s
employment hereunder at any time with or without Cause.

 

4.3           By the Executive.  Executive may terminate his employment
hereunder at any time for any reason.

 

4.4           Notice of Termination.  Any termination of Executive’s employment
hereunder by Executive (other than by death or Disability) shall be
communicated by thirty (30) days’ advance written notice of termination to
the Company.

 

4.5           Board/Committee
Resignation.  Executive’s termination
of employment for any reason, shall constitute, as of the date of such
termination and to the extent applicable, a resignation as an officer of the
Company and a resignation from the Board (and any committees thereof) and the
Board of Directors (and any committees thereof) of any of the Company’s
affiliates and from the board of directors or similar governing body of any
corporation, limited liability company or other entity in which the Company or
any affiliate holds an equity interest and with respect to which board or
similar governing body Executive serves as the Company’s or such affiliate’s
designee or other representative.

 

5.     Payments in the Event of
Termination of Employment.

 

5.1           Payments in the Event of Termination by
the Company for Cause or Voluntary Termination by Executive.  If Executive’s employment hereunder is
terminated by the Company for Cause, as a result of death or Disability or by
Executive other than for Good Reason, the Company shall pay Executive (a) his
accrued and unpaid Base Salary through the Date of Termination and (b) any
vested or accrued and unpaid payments, rights or benefits Executive may be
otherwise entitled to receive pursuant to the terms of any written retirement,
pension or other employee benefit or compensation plan maintained by the
Company at the time or times provided therein.

 

5.2           Payments in the Event of Any Other
Termination of Employment.  If
Executive’s employment hereunder is terminated by the Company other than for Cause,
or by Executive for Good Reason:

 

(a)   The Company shall pay Executive (i) his accrued
and unpaid Base Salary through the Date of Termination, (ii) any incentive
payment under the Key Employee Annual Cash Incentive Program, or any successor
annual incentive plan, (the “Incentive Payment”) for any calendar year
ended before the Date of Termination, (iii) a pro rata share (based on
days employed during the applicable year) of the Incentive Payment Executive
would otherwise have received with respect to the year in which the Date of
Termination occurs, payable at the time the Incentive Payment would otherwise
be payable to Executive; provided, however, that 100% of the
Incentive Payment shall be determined solely with reference to the financial
performance of the Company for the year (based on the goals previously
established with respect thereto) (rather than a portion of the Incentive Payment
determined on the basis of individual performance); provided, further,
in the event that Company’s performance exceeds 100% of the financial
performance target for the year, that portion of the Incentive Payment that 

 

3

 

would have, but for this Section 5.2(a), related to the
achievement of the individual performance target shall be 100% and (iv) any
vested or accrued and unpaid payments, rights or benefits Executive may be
otherwise entitled to receive pursuant to the terms of any written retirement,
pension or other employee benefit or compensation plan maintained by the
Company at the time or times provided therein.

 

(b)   In addition to the compensation and benefits
described in Section 5.2(a), the Company shall pay Executive, no later
than thirty (30) days following the Date of Termination, a lump sum amount equal
to the product of two (2) times the sum of (i) Executive’s annual
Base Salary and (ii) the target Incentive Payment for Executive with
respect to the year in which the Date of Termination occurs (or if no target
has been set for that year, the target Incentive Payment for the immediately
preceding year).

 

(c)   Executive shall not be required to mitigate the
amount of any payment provided for in this Section 5.2 by seeking other
employment or otherwise, and no such payment shall be offset or reduced as a
result of Executive’s obtaining new employment.

 

(d)   Notwithstanding anything else to the contrary in
this Agreement, the Company’s obligation regarding the payments and benefits continuation
provided for in this Section 5.2 is expressly conditioned upon the execution,
delivery and non-revocation of a general release in the form attached hereto as
Attachment A.

 

5.3           Compliance with the
Provisions of Code Section 409A. 
Notwithstanding anything in this Agreement to the contrary, any payment
under this Agreement to Executive shall be deferred, if necessary, until the
first date that such payment could be made without subjecting Executive to
taxes imposed by reason of Code Section 409A.

 

6.     Confidentiality;
Non-Compete; Non-Solicitation; Non-Disparagement.

 

(a)  While employed by the Company and
thereafter, Executive shall not disclose any Confidential Information either
directly or indirectly, to anyone (other than appropriate Company employees and
advisors), or use such information for his own account, or for the account of
any other person or entity, without the prior written consent of the Company or
except as required by law.  This
confidentiality covenant has no temporal or geographical restriction.  For purposes of this Agreement, “Confidential
Information” shall mean all non-public information respecting the Company’s
business, including, but not limited to, its services, pricing, scheduling,
products, research and development, processes, customer lists, marketing plans
and strategies, financing plans and the terms and provisions of this Agreement,
but excluding information that is, or becomes, available to the public (unless
such availability occurs through an unauthorized act on the part of the
Executive).  Upon termination of this
Agreement, Executive shall promptly supply to the Company all property and any
other tangible product or document that has been produced by, received by or
otherwise submitted to Executive during or prior to his term of employment, and
shall not retain any copies thereof.

 

(b)  Executive acknowledges that his
services are of special, unique and extraordinary value to the Company.  Accordingly, Executive shall not at any time
prior to the first anniversary of the Date of Termination (i) become an
employee, consultant, officer, partner 

 

4

 

or director of
any air carrier which competes with the Company (or any of its affiliates) or (ii) whether
on Executive’s own behalf or on behalf of or in conjunction with any person,
company, business entity or other organization whatsoever, directly or
indirectly solicit or encourage any employee of the Company or its affiliates
to leave the employment of the Company or its affiliates.

 

(c)  While employed by the Company and
thereafter, Executive agrees not to directly or indirectly make any disparaging
communication, or release any information or encourage others to make any
communication or release any information, that is designed to embarrass or
disparage the Company, its affiliates, their predecessors or successors or any
of their past or present officers, directors, stockholders, partners, members,
agents or employees or the Company’s business practices, operations or
personnel policies or practices to any of the Company’s customers, clients,
competitors, suppliers, investors, directors, consultants, employees, former
employees, or the press or other media in any country.

 

(d)  Executive agrees that any breach of
the terms of this Section 6 would result in irreparable injury and damage
for which there would be no adequate remedy at law, and that, in the event of
said breach or any threat of breach, the Company shall be entitled to an
immediate injunction and restraining order to prevent such breach or threatened
breach, without having to prove damages, in addition to any other remedies to
which the Company may be entitled at law or in equity. Executive further agrees
that the provisions of the covenant not to compete are reasonable.  Should a court determine, however, that any
provision of the covenant not to compete is unreasonable, either in period of
time, geographical area, or otherwise, the parties hereto agree that the
covenant should be interpreted and enforced to the maximum extent such court
deems reasonable.  The provisions of this
Section 6 shall survive any termination of this Agreement and Executive’s
term of employment.  The existence of any
claim or cause of action or otherwise, shall not constitute a defense to the
enforcement of the covenants and agreements of this Section 6.

 

7.     Successors and Assigns.

 

(a)   This Agreement shall bind any
successor to the Company, whether by purchase, merger, consolidation or
otherwise, in the same manner and to the same extent that the Company would be
obligated under this Agreement if no such succession had taken place.

 

(b)   This Agreement shall not be
assignable by Executive.  This Agreement
and all rights of Executive hereunder shall inure to the benefit of and be
enforceable by, Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributes, devises and legatees.

 

8.     Term.

 

The term of this Agreement shall commence on
the Effective Date and end upon the Executive’s termination of employment.  The rights and obligations of the Company and
Executive shall survive the termination of this Agreement to the fullest extent
necessary to give effect to the terms hereof.

 

5

 

9.     Notices.

 

Notices and other communications provided for
in this Agreement shall be in writing (which shall include notice by facsimile
transmission) and shall be delivered or mailed, addressed as follows:

 

(a)   if to Executive, to the address set forth on the
signature page hereto, and

 

(b)   if to the Company, c/o Northwest Airlines, Inc.,
2700 Lone Oak Parkway, Dept. A1180, Eagan, Minnesota 55121, Attention:  General Counsel,

 

or, in each case, to such other
address as a party may from time to time designate in writing in accordance
with this Section 9.  All notices
and other communications given to any party hereto in accordance with the
provisions of this Agreement shall be deemed to have been given when delivered
if delivered by hand, when transmission confirmation is received if delivered
by facsimile, three business days after mailing if mailed, and one business day
after deposit with an overnight courier service if delivered by overnight
courier.  Notwithstanding the foregoing,
if a notice or other communication is actually received after 5:00 p.m. at
the recipient’s designated address, such notice or other communication shall be
deemed to have been given the later of (i) the next business day or (ii) the
business day on which such notice or other communication is deemed to have been
given pursuant to the immediately preceding sentence.

 

10.   Withholding.

 

All payments required to be made by the
Company hereunder shall be subject to the withholding and/or deduction of such
amounts as are required to be withheld or deducted pursuant to any applicable
law or regulation.  The Company shall
have the right and is hereby authorized to withhold or deduct from any
compensation or other amount owing to Executive, applicable withholding taxes
and deductions and to take such action as may be necessary in the opinion of
the Company to satisfy all obligations for the payment of such taxes or
deductions.

 

11.   Certain Defined Terms.

 

As used herein, the following terms have the
following meanings:

 

“Agreement” shall mean this Management
Compensation Agreement, as the same may be amended, supplemented or otherwise
modified from time to time in accordance herewith.

 

“Base Salary” shall mean the annual salary
of the Executive in effect from time to time under Section 2.1.

 

“Board” shall mean the Board of
Directors of the Company.

 

“Cause” shall mean with respect to
termination by the Company of Executive’s employment hereunder (i) an act
or acts of dishonesty by Executive resulting in, or intended to result in,
directly or indirectly, any personal enrichment of Executive, (ii) an act
or acts of dishonesty by Executive intended to cause substantial injury to the
Company, (iii) material breach (other than as a result of a Disability) by
Executive of Executive’s obligations under this 

 

6

 

Agreement
which action was (a) undertaken without a reasonable belief that the
action was in the best interests of the Company and (b) not remedied
within a reasonable period of time after receipt of written notice from the
Company specifying the alleged breach, (iv) Executive’s conviction of, or
plea of nolo contendere to, a crime constituting (a) a felony under the
laws of any country, the United States or any state thereof or (b) a
misdemeanor involving moral turpitude or (v) a material breach of (a) the
Company’s Code of Business Conduct or (b) the provisions of this
Agreement.

 

“Date of Termination” shall mean, with
respect to Executive, the date of termination of Executive’s employment
hereunder in accordance with the terms of this Agreement.

 

“Disability” shall mean Executive’s
physical or mental condition which prevents continued performance of his duties
hereunder, if Executive establishes by medical evidence that such condition
will be permanent and continuous during the remainder of Executive’s life or is
likely to be of at least three (3) years duration.

 

“Effective Date” shall mean the date
of this Agreement, as set forth above.

 

“Good Reason” shall mean with respect
to an Executive, any one or more of the following:

 

(a)           a
material reduction in Executive’s Base Salary or level of target incentive
payment under the KEACIP or any successor annual incentive compensation plan
(except as permitted hereunder);

 

(b)           any
substantial and sustained diminution in Executive’s authority or
responsibilities hereunder, provided that the Company shall be permitted
from time to time to transfer a portion of Executive’s oversight
responsibilities without the consent of Executive as long as Executive retains
a substantial portion of his then current oversight responsibilities;

 

(c)           the
relocation of the Company’s principal executive offices to a location outside
the Minneapolis-St. Paul Metropolitan Area; or

 

(d)           a
material breach by the Company of this Agreement;

 

provided,
however, that the foregoing events shall constitute Good Reason only if
the Company fails to cure such event within thirty (30) days after receipt from
Executive of written notice of the event which constitutes Good Reason; provided,
further, that “Good Reason” shall cease to exist for an event on the 60th
day following the later of its occurrence or Executive’s knowledge thereof,
unless Executive has given the Company written notice thereof prior to such
date.

 

In addition, in order for Executive’s
termination of his employment to be considered for Good Reason, such
termination must occur within one (1) year after the event giving
rise to such Good Reason.  Executive’s
continued employment shall not constitute consent to, or a waiver of rights
with respect to, any circumstance constituting Good Reason hereunder.

 

7

 

12.   Executive Representation.

 

Executive hereby represents to the Company
that the execution and delivery of this Agreement by Executive and the Company
and the performance by Executive of Executive’s duties hereunder shall not
constitute a breach of, or otherwise contravene, the terms of any employment
agreement or other agreement or policy to which Executive is a party or
otherwise bound.

 

13.   Amendment.

 

No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by Executive and an authorized officer of the
Company.

 

14.   Governing Law.

 

The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
Minnesota, without regard to principles of conflicts of laws.

 

15.   Validity.

 

The invalidity or
unenforceability of any provision or provisions of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement
which shall remain in full force and effect.

 

16.   Arbitration.

 

Except as otherwise provided in Section 17
of this Agreement, all disputes and controversies arising from or in
conjunction with Executive’s employment with, or any termination from, the Company
and all disputes and controversies arising under or in connection with this
Agreement (except claims for vested benefits brought under ERISA) shall be
settled by mandatory arbitration conducted before one arbitrator having
knowledge of employment law in accordance with the rules for expedited
resolution of employment disputes of the American Arbitration Association then
in effect.  The arbitration shall be held
in the Minneapolis/St. Paul metropolitan area at a location selected by the
Company.  The determination of the
arbitrator shall be made within thirty (30) days following the close of
the hearing on any dispute or controversy and shall be final and binding on the
parties.  The parties hereby waive their
right to a trial of any and all claims arising out of this Agreement or breach
of this Agreement.  All costs and
expenses incurred in connection with any arbitration including, without
limitation, arbitrator and attorney’s fees, shall be paid by the nonprevailing
party in the arbitration unless the arbitrator determines that such expenses
must be otherwise allocated under applicable law to maintain the validity of
this Section 16.

 

17.   Specific Performance.

 

Notwithstanding Section 16 of this
Agreement, if Executive breaches or threatens to commit a breach of Section 6
of this Agreement, the Company shall have the right to specific 

 

8

 

performance
(i.e., the right and remedy to have the terms and conditions of Section 6
specifically enforced by any court of competent jurisdiction), it being agreed
that any breach or threatened breach of Section 6 would cause irreparable
injury and that money damages may not provide an adequate remedy.

 

18.   Cooperation.

 

Executive shall provide his reasonable
cooperation in connection with any investigation, action or proceeding (or any
appeal from any action or proceeding) which relates to events occurring during
Executive’s employment hereunder.  This
provision shall survive any termination of this Agreement.

 

19.   Entire Agreement.

 

This Agreement, together with the Release,
and the Company’s employee benefit plans in which Executive will continue to
participate as provided in this Agreement, contain the entire understanding
between the Company and Executive with respect to Executive’s employment with
the Company and supersedes in all respects any prior or other agreement or
understanding between the Company or any affiliate of the Company and Executive
with respect to Executive’s employment.

 

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

 

 

	
   

  	
  NORTHWEST AIRLINES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas M. Steenland

  
	
   

  	
   

  	
  Douglas M.
  Steenland

  
	
   

  	
   

  	
  President &
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
        /s/
  Andrew C. Roberts

  
	
   

  	
  Andrew C. Roberts

  
	
   

  	
   

  
	
   

  	
  Executive’s Address:

  

 

9Exhibit 10.64.1

 

Confidential Materials omitted and filed
separately with the Securities and Exchange.  Asterisks denote omissions.

 

AMENDED AND RESTATED

SHARE PURCHASE AGREEMENT

 

THIS
AMENDED AND RESTATED SHARE PURCHASE AGREEMENT is entered into  as of April 29, 2008 and amends and
restates in its entirety the Share Purchase Agreement dated as of December 18,
2007 by and between:

 

Mr. [**], a citizen of the Russian Federation, bearing passport number [**] issued by OVD of Sovetskiy district,
Novosibirsk on July 12, 2002, code of subdivision 542-009, with his
registered address at [**], and Mr. [**], a citizen of the Russian Federation, bearing passport number [**] issued by Subdivision of Yuzhnoportovyi district,
Moscow on December 11, 2007,  code
of subdivision 770-113, with his registered address at [**], and Mr. [**], a citizen of the Russian Federation, bearing
passport number [**] issued by Passports and visas issuing
department of the Supreme Department of Internal Affairs, Moscow on December 18,
2006, code of subdivision 771-001, with his registered address at [**], and Mr. [**], a citizen of the Russian Federation, bearing
passport number [**] issued by Traktorozavodskim RUVD, Chelyabinsk
on June 4, 2001, code of subdivision 742-047, with his registered address
at [**] (each,  a  “Seller” and collectively, the  “Sellers”), from one side, and CJSC “CTC NETWORK”, a company organised and existing under the laws of
the Russian Federation, having its registered office at 3rd Khoroshevskaya
str., 12, 123298, Moscow, Russia (“CTC Network”), and CTC Media, Inc.,
a Delaware corporation with its registered office at 2711 Centerville Road, Suite 400,
Wilmington, Delaware (“CTC Media”),
on the other side. 
CTC Network and CTC Media are hereinafter collectively referred to as
the “Purchaser”.

 

WITNESSETH:

 

WHEREAS,
the Purchaser and the Sellers entered into the original Share Purchase
Agreement on December 18, 2007 and wish to amend and restate such
agreement in its entirety as set forth herein;

 

WHEREAS,
Mr. [**], Mr. [**], Mr. [**]
and Mr. [**],  are the founders and
participants of Costafilm Limited Local Corporation, a limited liability
company incorporated under the laws of the Russian Federation, registered by
Interdistrict Tax Inspection No. 46, Moscow on August 28, 2007,
registration number 1077759492304, having its registered office at Radio str.,
14 – 1, 105005, Moscow, Russia (the “Company”). The charter capital of the
Company is divided into four participatory shares. Each of the Sellers owns one
participatory share in the Company. The participatory share of Mr. [**] amounts to RUR 6 000 and represents 60%, the
participatory share of Mr. [**] amounts to RUR 1250
and represents 12.5%, the participatory share of Mr. [**] amounts to RUR 1500 and represents 15% and  the participatory share of Mr. [**] amounts to RUR 1250 and represents 12.5% of the
charter capital of the Company.

 

 

WHEREAS,
the Purchaser is willing to acquire from the Sellers and the Sellers are
willing to sell to the Purchaser their participatory shares in the Company
subject to the terms and conditions hereinafter set forth:

 

NOW,
THEREFORE, the party hereto agrees as follows:

 

	
  1.

  	
  DEFINITIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  As used in this Agreement, unless expressly otherwise stated or
  evident in the context, the following terms shall have the following meanings
  and the singular (where appropriate) shall include the plural and vice
  versa.  Any references to appendices or
  sub-headings shall mean the appendices and sub-headings of this Agreement:

  
	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
  “Accounts”

  	
   

  	
  shall
  mean the profit and loss statement and balance sheet of the Company including
  the notes thereto as at October 31, 2007, together with the
  accompanying management’s report, prepared in accordance with all applicable
  Russian accounting rules and regulations, attached hereto as Appendix A.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.2

  	
  “Accounts
  Date”

  	
   

  	
  shall
  mean the date of the balance sheet of the Accounts.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.3

  	
  “Agreement”

  	
   

  	
  shall
  mean this Share Purchase Agreement and the Appendices hereto.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.4

  	
  “Company”

  	
   

  	
  shall
  have the meaning set out in the recitals of this Agreement.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.5

  	
  “Completion”

  	
   

  	
  shall
  mean discharge of the Purchaser’s obligations to purchase, and respective
  Sellers’ obligations to sell, the Shares.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.6

  	
  “Completion
  Accounts”

  	
   

  	
  shall
  mean the financial statements of the Company as at December 31, 2007
  prepared in accordance with all applicable Russian accounting rules and
  regulations.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.7

  	
  “Completion
  Date”

  	
   

  	
  shall
  mean January 25, 2008 or such later date as shall be mutually agreed
  between the Purchaser and the Seller Representative.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.8

  	
  “Confidential
  Information”

  	
   

  	
  shall
  have the meaning set out in Article 10.4.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.9

  	
  “CTC
  Network”

  	
   

  	
  shall
  have the meaning set out in the introductory paragraph of this Agreement.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.10

  	
  “CTC
  Media”

  	
   

  	
  shall
  have the meaning set out in the introductory paragraph of this Agreement.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.11

  	
  “Damages”

  	
   

  	
  shall
  have the meaning set out in Article 9.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.12

  	
  “Disability”

  	
   

  	
  shall
  mean, with respect to any Seller, the inability of the such Seller, due to a
  physical or mental disability for a period of ninety days (whether or not
  consecutive) during any three hundred sixty day period, to perform the
  services contemplated under his contract of employment with the Company.

  

 

2

 

	
  1.13

  	
  “EBIT”

  	
   

  	
  shall
  mean the earnings before interest expenses and interest income, and profit
  tax provision or benefit for the Company as per audited annual accounts
  prepared in accordance with US GAAP, excluding the amortisation of any
  purchase price adjustments related to intangible assets “pushed down” into
  the Company’s accounts by the Group.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.14

  	
  “Financial
  Year”

  	
   

  	
  shall
  mean the period between 1 January to 31 December.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.15

  	
  “Group”

  	
   

  	
  shall
  mean CTC Media, Inc., a Delaware corporation, and each of its
  subsidiaries.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.16

  	
  “Key
  Performance Indicators”

  	
   

  	
  shall
  mean the meaning set out in Article 3.5(a)(iii).

  
	
   

  	
   

  	
   

  	
   

  
	
  1.17

  	
  “Multiple
  Defaulting Sellers”

  	
   

  	
  shall
  have the meaning set out in Article 3.5(a)(ii).

  
	
   

  	
   

  	
   

  	
   

  
	
  1.18

  	
  “Ordinary
  Course of Business”

  	
   

  	
  shall
  mean the ordinary course of business of Company and prior to its
  incorporation, the Predecessor, consistent with past customs and business
  practices and always in accordance with good and sound business practice.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.19

  	
  “Other
  Channel Revenue Objective”

  	
   

  	
  shall
  have the meaning set out in Article 3.5(a)(iii)a.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.20

  	
  “Party”

  	
   

  	
  shall
  mean the Sellers and the Purchaser, as the context may require, and “Parties”
  shall be construed accordingly.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.21

  	
  “Performance
  Report”

  	
   

  	
  shall
  mean, with respect to any Financial Year, a report prepared by the Purchaser
  no later than 45 days following the end of such year, setting out the extent
  to which the Key Performance Indicators for such year have been achieved and,
  to the extent any Key Performance Indicators have not been achieved and/or
  there has been adjustment to the relevant Earn Out Payment pursuant to
  Article 3.5(a)(i), 3.5(a)(ii), 3.5(b), 7.6 or 9, showing the calculation
  of the deductions from such Earn Out Payment.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.22

  	
  “Predecessor”

  	
   

  	
  shall
  mean Kinoconstanta LLC.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.23

  	
  “Production
  Business”

  	
   

  	
  shall
  mean the business of creating, developing and/or producing programming, films
  or pilots for television broadcasting.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.24

  	
  “Purchaser”

  	
   

  	
  shall
  have the meaning set out in the introductory paragraph of this Agreement.

  

 

3

 

	
  1.25

  	
  “Purchase
  Price”

  	
   

  	
  shall
  have the meaning set out in Article 3.2.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.26

  	
  “Relevant
  Audience Share”

  	
   

  	
  shall
  mean the average audience share attained on the CTC Network TV channel by the
  original run of any TV Product as further specified in
  Article 3.5(a)(iii)e.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.27

  	
  “Reserve
  Amount for 2008”

  	
   

  	
  shall
  have the meaning set out in Article 3.5(a)(i). 

  
	
   

  	
   

  	
   

  	
   

  
	
  1.28

  	
  “Reserve
  Amount for 2009”

  	
   

  	
  shall
  have the meaning set out in Article 3.5(a)(i). 

  
	
   

  	
   

  	
   

  	
   

  
	
  1.29

  	
  “Ruble
  Equivalent”

  	
   

  	
  shall
  mean, with respect to any US dollar amount, such US dollar amount multiplied
  by the Russian ruble to US dollar exchange rate established by the Central
  Bank of Russia on December 18, 2007, or US$1.00 = RUR24.7060.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.30

  	
  “RUR”

  	
   

  	
  shall
  mean Russian rubles.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.31

  	
  “SEC”

  	
   

  	
  shall
  mean the US Securities and Exchange Commission.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.32

  	
  “Seller
  Bank Account”

  	
   

  	
  shall
  mean, with respect to each Seller, the bank account set out under such Seller’s
  name below: [**]

  
	
   

  	
   

  	
   

  	
   

  
	
  1.33

  	
  “Seller
  Representative”

  	
   

  	
  shall
  mean MR. [**].

  
	
   

  	
   

  	
   

  	
   

  
	
  1.34

  	
  “Sellers”

  	
   

  	
  shall
  have the meaning set out in the introductory paragraph of this Agreement.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.35

  	
  “Shares”

  	
   

  	
  shall
  mean a participatory share amounting to RUR 6 000 (60% of the charter capital
  of the Company), which belongs to MR. [**], a
  participatory share amounting to RUR 1250 (12.5% of the charter capital of
  the Company), which belongs to MR. [**], a
  participatory share amounting to RUR 1500 (15% of the charter capital of the
  Company), which belongs to MR. [**], and a participatory share amounting to
  RUR 1250 (12.5% of the charter capital of the Company), which belongs to MR. [**].

  
	
   

  	
   

  	
   

  	
   

  
	
  1.36

  	
  “Single
  Defaulting Seller”

  	
   

  	
  shall
  have the meaning set out in Article 3.5(a)(i).

  
	
   

  	
   

  	
   

  	
   

  
	
  1.37

  	
  “Taxes”

  	
   

  	
  shall
  mean all income tax, value-added tax, transfer tax, excise tax, property tax,
  stamp duty and any other taxes and similar charges, (including, without
  limitation, social security charges) imposed by any authority, including all
  penalties and interest.

  

 

4

 

	
  1.38

  	
  “Termination
  Without Cause”

  	
   

  	
  shall
  mean any termination of a Seller’s employment contract by the Company for a
  reason other than circumstances which entitle the Company to terminate such
  Seller’s employment on the grounds of such Seller’s misconduct and/or
  dishonesty and/or gross negligence and/or any other ground stated expressly
  in the contract of employment between the Company and such Seller which
  permits the Company to terminate such Seller’s contract of employment without
  notice.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.39

  	
  “TV
  Product”

  	
   

  	
  shall
  mean any television series, sitcom, show or made for TV movie.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.40

  	
  “Warranties”

  	
   

  	
  shall
  have the meaning set out in Article 7.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.41

  	
  “Working
  Capital”

  	
   

  	
  shall
  be equal to current assets less deferred expenses that are not related
  to the production of TV Products listed in Appendix E hereto less
  current liabilities of the Company as presented in the Completion Accounts.

  
	
   

  	
   

  	
   

  	
   

  
	
  1.42

  	
  “2008
  Earn Out Payment”

  	
   

  	
  shall
  have the meaning set out in Article 3.5(b)(i).

  
	
   

  	
   

  	
   

  	
   

  
	
  1.43

  	
  “2009
  Earn Out Payment”

  	
   

  	
  shall
  have the meaning set out in Article 3.5(b)(ii).

  
	
   

  	
   

  	
   

  	
   

  
	
  1.44

  	
  “2010
  Earn Out Payment”

  	
   

  	
  shall
  have the meaning set out in Article 3.5(b)(iii).

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  SUBJECT OF
  THE TRANSACTION

  

 

Subject
to the terms and conditions herein set forth each Seller agrees to sell to the
Purchaser, and the Purchaser agrees to purchase from each Seller, the Shares in
the Company.  As between CTC Network and
CTC Media, the Purchaser shall purchase Shares pro rata from each of the
Sellers as follows:

 

	
   

  	
   

  	
  Percentage of

  charter capital

  in the

  Company

  acquired from

  Mr. [**]

  	
   

  	
  Percentage of

  charter capital

  in the

  Company

  acquired from

  Mr. [**]

  	
   

  	
  Percentage of

  charter capital

  in the

  Company

  acquired from

  Mr. [**]

  	
   

  	
  Percentage of

  charter capital

  in the

  Company

  acquired from

  Mr. [**]

  	
   

  	
  Resulting

  overall

  percentage

  in the

  Company

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CTC Network

  	
   

  	
  59.40

  	
  %

  	
  12.375

  	
  %

  	
  14.85

  	
  %

  	
  12.375

  	
  %

  	
  99.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CTC Media

  	
   

  	
  0.60

  	
  %

  	
  0.125

  	
  %

  	
  0.15

  	
  %

  	
  0.125

  	
  %

  	
  1.00

  	
  %

  

 

5

 

Notwithstanding
any other provision of this Agreement to the contrary, in no event shall the
Purchaser be obligated to purchase any Share unless it is able to purchase all
of the Shares.

 

3.                                      AGGREGATE CONSIDERATION; PURCHASE PRICE; EARN OUT PAYMENTS AND
ADJUSTMENTS

 

3.1                                Aggregate Consideration

 

The total consideration payable
by the Purchaser to the Sellers in connection with the transactions
contemplated by this Agreement shall be the sum of the Purchase Price and the
Earn Out Payments actually paid.

 

3.2                                Purchase Price

 

The purchase price for the
Shares shall be the Ruble Equivalent of US$ 1,000,000 (one million dollars) less
the amount of any indebtedness of the Company as set out in the Completion
Accounts (the “Purchase Price”). Promptly following the date of this Amended
and Restated Share Purchase Agreement, the Purchase Price shall be paid to the
Sellers pro rata based on their respective ownership levels in the Company
immediately prior to Completion.

 

3.3                                Earn Out Payments

 

In addition to the Purchase
Price, the Purchaser shall pay to the Sellers the 2008 Earn Out Payment, the
2009 Earn Out Payment and the 2010 Earn Out Payment (collectively, the “Earn
Out Payments”), which payments shall be calculated in accordance with Article 3.5(b).   Each Earn Out Payment shall be made by the
Purchaser, subject to the adjustments provided herein, to the Sellers pro rata
based on their respective ownership levels in the Company immediately prior to
Completion.

 

The Earn Out Payments shall be
paid as follows:

 

(a)                                  The Purchaser will pay the 2008 Earn Out Payment, which shall be
equal to the Ruble Equivalent of US$ 13,000,000 (thirteen million) less the
deductions and adjustments set out in Article 3.5(b)(i) on March 31,
2009, provided that a Performance Report for 2008 has been signed by the
Purchaser and the Seller Representative. If the Purchaser fails to sign the Performance Report without stating a
reason for such failure by March 20, 2009 then such Performance Report
shall be deemed signed by the Purchaser;

 

(b)                                 The Purchaser will pay the 2009 Earn Out Payment, which shall be
equal to the Ruble Equivalent of US$ 13,000,000 (thirteen million) less the
deductions and adjustments set out in Article 3.5(b)(ii) on March 31,
2010, provided that a Performance Report for 2009 has been signed by the
Purchaser and the Seller Representative. If the Purchaser fails to sign the Performance Report without stating a
reason for such failure by March 20, 2010 then such Performance Report
shall be deemed signed by the Purchaser; and

 

(c)                                  The Purchaser will pay the 2010 Earn Out Payment, which shall be
equal to the Ruble Equivalent of US$ 13,000,000 (thirteen million) less the
deductions and adjustments set out in Article 3.5(b)(iii) on March 31,
2011, provided that a Performance Report for 2010 has been signed by the
Purchaser and the Seller Representative. 

 

6

 

If the Purchaser fails to sign the Performance Report without stating a
reason for such failure by March 20, 2011 then such Performance Report
shall be deemed signed by the Purchaser.

 

3.4                                 Payment of Purchase Price and Earn Out Payments

 

The Purchase Price and each
Earn Out Payment shall be paid in RUR in immediately available funds to the
Seller Bank Accounts and shall be paid by the Purchaser to the Sellers net of
any Taxes that the Purchaser is required to pay on behalf of the Sellers in
connection with the sale and purchase of the Shares.  Each Party’s obligations relating to payment
of Taxes shall be determined in accordance with 
applicable tax legislation.

 

3.5                                 Earn Out Payment Adjustments

 

(a)                                  The Earn Out Payments are subject to the following conditions
subsequent:

 

(i)                                    Each of the Sellers shall be continuous full-time employees of the
Company serving as managers located in Moscow, Russia from the Completion Date
up to and including 31 December 2010. 
If any one Seller (a “Single Defaulting Seller”) (A) fails for any
reason (including without limitation, Disability) to continue to be so employed
by the Company other than as a result of a Termination Without Cause or death
or (B) breaches of any of his obligations set out in Article 10
hereof (Non-competition; Non-solicitation
and Confidentiality Commitment) such Single Defaulting Seller shall
not receive the Earn Out Payment for the Financial Year in which such failure
or breach occurred, or Earn Out Payments for any future periods (if any). In
the event of a Single Defaulting Seller, the Purchaser shall use its
commercially reasonable efforts to retain a manager to replace the Single
Defaulting Seller but, for the avoidance of doubt, such replacement manager
shall not be entitled to any portion of the Purchase Price or any other of the
rights afforded a Seller under this Agreement. In the event of a Single
Defaulting Seller, the aggregate Earn Out Payment for the Financial Year in
which such failure or breach occurred, and all future Earn Out Payments, shall
be reduced by an amount equal to the Single Defaulting Seller’s percentage
interest in the Company immediately prior to Completion.

 

If, notwithstanding the occurrence in 2008 of
a Single Defaulting Seller, (i) the Company shall have fully achieved each
of the Key Performance Indicators set out in Article 3.5(a)(ii) for
the 2008 Financial Year and (ii) each of the Sellers other than the Single
Defaulting Seller shall have remained as a full-time employee of the Company
through and including 31 December 2008 and shall not have violated or be
in violation of his obligations set out in Article 10 hereof (Non-competition; Non-solicitation and Confidentiality Commitment),
the Purchaser shall, together with the 2008 Earn Out Payment, also pay to the
Sellers (other than the Single Defaulting Seller) the amount equal to 75% of
the portion of the 2008 Earn Out Payment that would otherwise have been payable
to the Single Defaulting Seller, less the sum of (i) any uncollectible
accounts receivable or loans as provided in Article 7.6, (ii) any
unpaid Damages as provided in Article 9, in each case, to the extent that
such amounts were not already deducted from an Earn Out Payment.  

 

7

 

Such amount shall be paid pro rata to such
Sellers based on their respective ownership interests in the Company
immediately prior to Completion. The remaining 25% of the portion of the Earn
Out Payment that would otherwise have been payable to the Single Defaulting
Seller, shall comprise the “Reserve Amount for 2008”. The “Reserve Amount for
2008” is not subject to any  adjustments
related to non-achievement of the Key Performance Indicators for 2009 and 2010
Financial Years.

 

If, notwithstanding the occurrence in 2009 of
a Single Defaulting Seller, (i) the Company shall have fully achieved each
of the Key Performance Indicators set out in Article 3.5(a)(iii) for
the 2009 Financial Year and (ii) each of the Sellers other than the Single
Defaulting Seller shall have remained as a full-time employee of the Company
through and including 31 December 2009 and shall not have violated or be
in violation of his obligations set out in Article 10 hereof (Non-competition; Non-solicitation and Confidentiality Commitment),
the Purchaser shall, together with the 2009 Earn Out Payment, also pay to the
Sellers (other than the Single Defaulting Seller) the amount equal to 90% of
the portion of the 2009 Earn Out Payment that would otherwise have been payable
to the Single Defaulting Seller less the sum of (i) any uncollectible
accounts receivable or loans as provided in Article 7.6, (ii) any
unpaid Damages as provided in Article 9, in each case, to the extent that
such amounts were not already deducted from an Earn Out Payment. Such amount
shall be paid pro rata to such Sellers based on their respective ownership interests
in the Company immediately prior to Completion. The remaining 10% of the
portion of the Earn Out Payment that would otherwise have been payable to the
Single Defaulting Seller, shall comprise the “Reserve Amount for 2009”. The “Reserve
Amount for 2009” is not subject to any 
adjustments related to non-achievement of the Key Performance Indicators
for 2010 Financial Years.

 

If, notwithstanding the occurrence in 2010 of
a Single Defaulting Seller, (i) the Company shall have fully achieved each
of the Key Performance Indicators set out in Article 3.5(a)(iii) for
the 2010 Financial Year and (ii) each of the Sellers other than the Single
Defaulting Seller shall have remained as a full-time employee of the Company
through and including 31 December 2010 and shall not have violated or be
in violation of his obligations set out in Article 10 hereof (Non-competition; Non-solicitation and Confidentiality
Commitment), the Purchaser shall, together with the 2010 Earn Out
Payment, also pay to the Sellers (other than the Single Defaulting Seller) the
amount equal to 100% of the portion of the Earn Out Payment that would
otherwise have been payable to the Single Defaulting Seller less the sum
of (i) any uncollectible accounts receivable or loans as provided in Article 7.6,
(ii) any unpaid Damages as provided in Article 9, in each case, to
the extent that such amounts were not already deducted from an Earn Out
Payment. 

 

8

 

Such amount shall be paid pro rata to such
Sellers based on their respective ownership interests in the Company
immediately prior to Completion.

 

The “Reserve
Amount for 2008” and the “Reserve Amount for 2009” shall be paid on 31 March 2011
to all Sellers who have remained as a full-time employees of the Company
through and including 31 December 2010. Such amount shall be paid pro rata
to such Sellers based on their respective ownership interests in the Company
immediately prior to Completion.

 

(ii)                                 If two or more Sellers (“Multiple Defaulting Sellers”) (A) fail
for any reason at any time (including without limitation, Disability) to be
continuous full-time employees of the Company serving as managers located in
Moscow, Russia from the Completion Date up to and including 31 December 2010
other than as a result of a Termination Without Cause or death or (B) breach
any of their respective obligations set out in Article 10 hereof on or
before 31 December 2010  (Non-competition; Non-solicitation and Confidentiality
Commitment), the Purchaser can elect, in its sole discretion, either
of the following:  (i) to treat the
event as multiple separate occurrences of Single Defaulting Sellers, mutatis mutandis, and 
continue with the Agreement, or (ii) to terminate this Agreement,
in which case all the Sellers shall
not be entitled to receive any Earn Out Payments for
the Financial Year in which the Sellers became Multiple Defaulting Sellers, or
any other future payments hereunder. The Sellers’ obligations in Article 10
shall survive any termination of this Agreement pursuant to this Article 3.5(a)(ii).

 

(iii)                               The Company shall achieve in each of the 2008,
2009 and 2010 Financial Years the following (the “Key Performance Indicators”):

 

a.                                       Number of free-to-air (FTA) hours:

 

The
Company shall produce and sell no less than 350 FTA hours of TV Product in the
2008 Financial Year, provided that CTC Network places orders for such number of
hours itself and/or ensures such orders are placed by other TV channels.

 

In
each of the 2009 and 2010 Financial Years, the Company shall (i) produce
and sell not less than 250 FTA hours of TV Product to CTC Network provided that
CTC Network places orders for at least such number of hours and (ii) either
(A) produce and sell a further 100 FTA hours of TV Product to TV channels
other than CTC Network or (B) achieve revenues (the “Other Channel Revenue
Objective”) from the production and sale of TV Product to TV channels other
than CTC Network equal to at least 40% of the total revenues derived by the
Company from the production and sale of TV Product to CTC Network during such
Financial Year at an EBIT margin of at least 14%.

 

9

 

Prior
to producing any TV Product for any TV channel other than CTC Network, the
Company must obtain the consent of CTC Network provided that such consent shall not be
unreasonably withheld. 
CTC Network shall be given priority by the Company when producing and
distributing TV Product.  In addition,
CTC Network’s orders for TV Product will have priority over orders from other
TV channels.

 

From
the Completion Date until 31 December 2010, if CTC Network acquires the
format rights for any television series or sitcom, CTC Network shall inform the
Company of the acquisition of such rights and provide the Company with a right
of first refusal in respect of the production of the related television series
or sitcom for the price and on the
terms established in this Agreement. 
Should the Company find it unfeasible to produce such television series or sitcom, CTC Network will be entitled to offer its
production to a third party.  CTC Network shall be entitled to negotiate and
contract with a third party producer only if the Company informs  CTC Network in writing of its decision not to produce such TV Product.  For the avoidance of doubt, the right of
first refusal set forth above shall not apply to any television series or
sitcom as to which a third-party producer owns or has licensed the format
rights directly from the holder thereof prior to entering into an arrangement
with CTC Network in respect of such production, or to a case in which the
licensing of such format rights to CTC Network is conditioned by the holder
thereof on the placement of the production of such television series or sitcom
with a specified third party producer other than the Company.

 

b.                                      EBIT margin: the Company shall achieve on a stand-alone basis an
EBIT margin of no less than 14% and the Parties acknowledge and agree that,
notwithstanding the definition of “Ruble Equivalent” set out in Article 1
hereto, EBIT shall be determined using exchange rates deemed appropriate by US
generally accepted accounting principles.

 

c.                                       Value of a multiplier EV/EBIT: the Company shall achieve an EV/EBIT
ratio of no more than:

 

x6.3 in 2008

x5.4 in 2009

x4.9 in 2010

 

where EV=the Ruble Equivalent of US$ 40
million.

 

10

 

d.                                      Pricing of programming: The base price of TV Product sold to CTC
Network in 2008 shall be as follows:

 

·                                        3 211 780 RUR (the Ruble Equivalent of US$ 130,000 at 24.7060
USD/RUR at December 18, 2007) for approximately 48 minutes of a standard
TV series, without VAT;

 

·                                        2 470 600 RUR (the Ruble Equivalent of US$ 100,000 at 24.7060
USD/RUR at December 18, 2007) for approximately 24 minutes of a sitcom,
without VAT; and

 

·                                        1 482 360 RUR (the Ruble Equivalent of US$ 60,000 at 24.7060 USD/RUR
at December 18, 2007) for approximately 48 minutes of any TV series
produced for children or teenagers, without VAT;

 

provided, that such prices shall include a transfer by the Company to CTC
Network and/or CTC Media of all intellectual property rights in such scope that can
be lawfully transferred by the Company subject to possible restrictions
established by applicable law and/or agreements of the Company with the
intellectual property right holders, relating to such TV Product for worldwide
broadcast, distribution and/or other use of such TV Product in any format.

 

In the 2009
and 2010 Financial Years, the base price of TV Product produced by the Company
and sold to CTC Network shall be adjusted by the forecasted average growth of
the Russian TV ad market in 2009 vs 2008 and 2010 vs. 2009, respectively, based
on the last projection of the Russian Association of Communication Agencies
(AKAR) or, in the absence of AKAR, Video International published or made
available on or around 1st October of the preceding year,
expressed as a percentage and multiplied by the coefficient x 0.75.

 

The pricing
for shows or made for TV movies produced and sold by the Company to CTC Network
shall be mutually agreed by the Purchaser and the Seller Representative on a
project-by-project basis before such TV Product’s initial launch.

 

11

 

Base
price adjustment

 

Any sequel,
prequel, development of screenplay using the same characters or cast of a
standard TV series, sitcom or series produced for children or teenagers, if
ordered for production by CTC Network, shall be subject to the following terms:

 

If the
previously aired season of series or sitcoms consisting of at least 40
consecutive episodes achieved less than 15% average audience share (TNS Gallup
Media Russia/All 6-54 in its designated time slot) on its premiere run then the
price for the following season ordered by CTC Network shall be increased by 10%
compared to the price of the previously aired season, always provided that the
price per episode for any consequent season shall not be less than the base
price of relevant TV Product type for such Financial Year increased by 10%.

 

If the
previously aired season of series or sitcoms consisting of at least 40
consecutive episodes achieved from 15% but less than 20% average audience share
(TNS Gallup Media Russia/All 6-54 in its designated time slot) on its premiere
run then the price for the following season ordered by CTC Network shall be
increased by 15% compared to the price of the previously aired season, always
provided that the price per episode for any consequent season shall not be less
than the base price of relevant TV Product type for such Financial Year
increased by 10%.

 

If the
previously aired season of series or sitcoms consisting of at least 40
consecutive episodes achieved 20% or more average audience share (TNS Gallup
Media Russia/All 6-54 in its designated time slot) on its premiere run then the
price for the following season ordered by CTC Network shall be increased by 20%
compared to the price of the previously aired season, always provided that the
price per episode for any consequent season shall not be less than the base
price of relevant TV Product type for such Financial Year increased by 10%.

 

e.                                       Relevant Audience Share for standard television sitcoms and series
produced and sold by the Company to CTC Network shall be no less than 10%
(based on the measuring of TNS Gallup Media Russia/All 4+ audience for such TV
Product in the 7 – 11 p.m. timeslot) or no less than 12% (based on the
measuring of TNS Gallup Media Russia/All 6-54 audience for such TV Product in
the 7 – 11 p.m. timeslot).

 

12

 

Relevant Audience Share for television
sitcoms and series  for children and/or teenagers produced and sold
by the Company to CTC Network shall be no less than 10% (based on the measuring
of TNS Gallup Media Russia/All 4+ audience for such TV Product in the 4  – 7 p.m. timeslot)
or no less than 12% (based on the measuring of TNS Gallup Media Russia/All 6-54
audience for such TV Product in the 4
– 7 p.m. timeslot).

 

Relevant Audience Share for shows or made for
TV movies produced and sold by the Company to CTC Network shall be no less than
the audience share threshold mutually agreed by the Purchaser and the Seller
Representative on a project-by-project basis before such TV Product’s initial
launch.

 

If the number of episodes of
any TV Product originally run in the 2008 or 2009 Financial Year is 20 or more,
the Relevant Audience Share for such Financial Year shall be measured by
reference to the actual number of consecutive episodes originally run in such
Financial Year and, if such Relevant Audience Share is below that set out
above, any related deduction to the Earn Out Payment (if any, as provided in Article 3.5(b))
shall be taken in such Financial Year. 
If the number of episodes of any TV Product originally run in the 2008
or 2009 Financial Year is less than 20 and further episodes of such TV Product
shall be run in the next succeeding Financial Year, the average audience share
for such TV Product for such Financial Year shall not be used to determine
whether or not the Relevant Audience Share has been achieved for such Financial
Year but the average audience share for such episodes shall be aggregated with
the episodes originally run in the next succeeding Financial Year to determine
the Relevant Audience Share and, if such Relevant Audience Share is below that
set out above, any related deduction to the Earn Out Payment (as provided in Article 3.5(b))
shall be taken in such next succeeding Financial Year rather than in the
Financial Year in which episodes of such TV Product were originally run.  If the TV Product is originally run only in
the 2010 Financial Year or the number of episodes of such TV Product originally
run in the 2008 or 2009 Financial Year shall be less than 20 and no further
episodes shall be originally run in the next succeeding Financial Year, the
Relevant Audience Share shall be measured by reference to the actual number of
consecutive episodes of originally run in such Financial Year and, if such
Relevant Audience Share is below that set out above, any related deduction to
the Earn Out Payment (if any, as provided in Article 3.5(b)) shall be
taken in such Financial Year.

 

In the sole discretion of the management of
CTC Network,  TV Product that is not
achieving the levels set out for the Relevant Audience Share can be removed
from broadcasting ahead of schedule or moved into timeslots outside of the
originally designated timeslots.  

 

13

 

In the event that upon moving the respective
TV product to a new timeslot located between 4 p.m and 11 p.m. (inclusive) the level of the Relevant Audience Share set out for the initial
timeslot is achieved, the number of FTA hours of such TV Product aired in the
new timeslot shall not be deducted for the purpose of calculation of the
Deduction pursuant to Article 3.5(b) of this Article 3.

 

(b)                                 The Earn Out Payments shall be calculated as follows:

 

(i)                                   Calculation of 2008 Earn Out Payment

 

The “2008 Earn
Out Payment” shall be equal to the Ruble Equivalent of US$ 13,000,000 (thirteen
million) less the sum of (1) the amount, if any, of the 2008
Deduction 1, (2) the amount, if any, of the 2008 Deduction 2, (3) the
amount of any adjustments for any Single Defaulting Seller or Multiple
Defaulting Sellers as set out in Articles 3.5(a)(i) and/or 3.5(a)(ii), (4) any
uncollectible accounts receivable or loans as provided in Article 7.6 and (5) any
unpaid Damages as provided in Article 9; provided, however,
that the 2008 Earn Out Payment can never be adjusted below 0.

 

Calculation of 2008 Deduction 1

 

If in the 2008
Financial Year, either (x) production hours sold by the Company is less
than 350 FTA hours of TV Product in cases where CTC Network ordered or caused
other TV channels to order 350 or more hours and/or (y) the Relevant
Audience Share for such Financial Year was below that set forth in Article 3.5(a)(iii)e,
2008 Deduction 1 shall be calculated in accordance with the formula set out
immediately below. Otherwise, 2008 Deduction 1 shall be 0.

 

2008 Deduction
1 = P x (1 - X/Z), where

 

P = US$ 13
million;

 

X = the lesser
of (i) the number of FTA hours of TV Product actually produced and sold by
the Company in the 2008 Financial Year less the aggregate number of FTA
hours of TV Product produced and sold in the 2008 Financial Year for any TV
Product where the Relevant Audience Share for such TV Product during the course
of such Financial Year was less than that stipulated by Article 3.5(a)(iii)e
and (ii) 350 FTA hours; and

 

Z = the lesser
of (i) the number of FTA hours of TV Product actually ordered for
production by CTC Network or other TV channels in the 2008 Financial Year and (ii) 350
FTA hours. If Z is less than X then Z equals X.

 

14

 

Calculation of 2008 Deduction 2

 

If in the 2008
Financial Year, the Company’s EBIT margin is less than 14%, 2008 Deduction 2
shall be calculated in accordance with the formula set out immediately below.
Otherwise, 2008 Deduction 2 shall 

be 0.

 

2008 Deduction
2 = (S x 14% - Y) x 6.3 x 32.5%, where

 

S = net sales
revenue (without VAT) in 2008

 

Y = actual
EBIT in 2008

 

(ii)                                 Calculation of 2009 Earn Out Payment

 

The “2009 Earn
Out Payment” shall be equal to the Ruble Equivalent of US$ 13,000,000 (thirteen
million) less the sum of (1) the amount, if any, of the 2009
Deduction 1, (2) the amount, if any, of the 2009 Deduction 2, (3) the
amount of any adjustments for any Single Defaulting Seller or Multiple
Defaulting Sellers as set out in Articles 3.5(a)(i) and/or 3.5(a)(ii), (4) any
uncollectible accounts receivable or loans as provided in Article 7.6, (5) any
unpaid Damages as provided in Article 9 and (6) the amount of any
deductions that would have been made to the 2008 Earn Out Payment but for the
fact that the amount of such deduction would have put the 2008 Earn Out Payment
below 0; provided, however, that the 2009 Earn Out Payment can
never be adjusted below 0.

 

Calculation of 2009 Deduction 1

 

If in the 2009
Financial Year, any of (x) the number of FTA hours of TV Product produced
by the Company and sold to CTC Network is less than the number of FTA hours of
TV Product ordered by CTC Network during such Financial Year (provided such number
of FTA hours ordered by CTC Network does not exceed 250 FTA hours), (y) the
Other Channel Revenue Objective is not achieved in such Financial Year and/or (z) the
Relevant Audience Share for such Financial Year was below that set forth in Article 3.5(a)(iii)e,
2009 Deduction 1 shall be calculated in accordance with the formula set out
immediately below. Otherwise, 2009 Deduction 1 shall be 0.

 

15

 

2009 Deduction
1 = P x (1 - X/Z), where

 

P = US$ 13
million;

 

X = the sum of
(1) number of FTA hours of TV Product actually produced by the Company and
sold to CTC Network in the 2009 Financial Year and (2) if the Other
Channel Revenue Objective was achieved in the 2009 Financial Year, 100 FTA
hours, or, otherwise, Y (as calculated below) less (3) the
aggregate number of FTA hours produced and sold in the 2009 Financial Year for
any TV Product where the Relevant Audience Share for such TV Product during the
course of such Financial Year was less than that stipulated by Article 3.5(a)(iii)e;

 

Z = the sum of
(1) the lesser of (i) the number of FTA hours of TV Product
actually ordered by CTC Network for production by the Company in the 2009
Financial Year and (ii) 250 FTA hours and (2) 100 FTA hours. If Z is less than X then Z
equals X; and

 

Y = 100 x (A /
0.40), where A = the Company’s revenues from the production and sale of TV
Product to TV channels other than CTC Network / the Company’s revenues from the
production and sale of TV Product to CTC Network, each for such Financial Year.

 

Calculation of 2009 Deduction 2

 

If in the 2009
Financial Year, the Company’s EBIT margin is less than 14%, 2009 Deduction 2
shall be calculated in accordance with the formula set out immediately below.
Otherwise, 2009 Deduction 2 shall 

be 0.

 

2009 Deduction
2 = (S x 14% - Y) x 5.4 x 32.5%, where

 

S = net sales
revenue (without VAT) in 2009

 

Y = actual
EBIT in 2009

 

(iii)                             Calculation of 2010 Earn Out Payment

 

The “2010 Earn
Out Payment” shall be equal to the Ruble Equivalent of US$ 13,000,000 (thirteen
million) less the sum of (1) the amount, if any, of the 2010
Deduction 1, (2) the amount, if any, of the 2010 Deduction 2, (3) the
amount of any adjustments for any Single Defaulting Seller or Multiple
Defaulting Sellers as set out in Articles 3.5(a)(i) and/or 3.5(a)(ii) (including,
without limitation, any amounts that that are due to be repaid to the Purchaser
pursuant to such Articles), (4) any uncollectible accounts receivable or
loans as provided in Article 7.6, (5) any unpaid Damages as provided
in Article 9 and (6) the amount of any deductions that would have
been made to the 2009 Earn Out Payment but for the fact that the amount of such
deduction would have put the 2009 Earn Out Payment below 0; provided, however,
that the 2010 Earn Out Payment can never be adjusted below 0.

 

16

 

Calculation of 2010 Deduction 1

 

If in the 2010
Financial Year, any of (x) the number of FTA hours of TV Product produced
by the Company and sold to CTC Network is less than the number of FTA hours of
TV Product ordered by CTC Network during such Financial Year (provided such
number of FTA hours ordered by CTC Network does not exceed 250 FTA hours), (y) the
Other Channel Revenue Objective is not achieved for such Financial Year and/or (z) the
Relevant Audience Share for such Financial Year was below that set forth in Article 3.5.(a)(iii)e,
2010 Deduction 1 shall be calculated in accordance with the formula set out
immediately below. Otherwise, 2010 Deduction 1 shall be 0.

 

2010 Deduction
1 = P x (1 - X/Z), where

 

P = US$ 13
million;

 

X = the sum of
(1) number of FTA hours of TV Product actually produced by the Company and
sold to CTC Network in the 2010 Financial Year and (2) if the Other
Channel Revenue Objective was achieved in the 2010 Financial Year, 100 FTA
hours, or, otherwise, Y (as calculated below) less (3) the
aggregate number of FTA hours produced and sold in the 2010 Financial Year for
any TV Product where the Relevant Audience Share for such TV Product during the
course of such Financial Year was less than that stipulated by Article 3.5(a)(iii)e;

 

Z = the sum of
(1) the lesser of (i) the number of FTA hours of TV Product
actually ordered by CTC Network for production by the Company in the 2010
Financial Year and (ii) 250 FTA, and (2) 100 FTA hours. If Z is less than X then Z
equals X; and.

 

Y = 100 x (A /
0.40), where A = the Company’s revenues from the production and sale of TV
Product to TV channels other than CTC Network / the Company’s revenues from the
production and sale of TV Product to CTC Network, each for such Financial Year.

 

17

 

Calculation of 2010 Deduction 2

 

If in the 2010
Financial Year,  the Company’s EBIT
margin is less than 14%, 2010 Deduction 2 shall be calculated in accordance
with the formula set out immediately below. Otherwise, 2010 Deduction 2 shall 

be 0.

 

2010 Deduction
2 = (S x 14% - Y) x 4.9 x 32.5%, where

 

S = net sales
revenue (without VAT) in 2010

 

Y = actual
EBIT in 2010

 

4.                                       DUE DILIGENCE

 

The Parties
agree that, before Completion, the Purchaser shall have the right to examine
any and all documents (whether or not attached as appendices hereto) of the
Company for the purposes of verifying the statutory accounts and the representations,
warranties and assurances of the Sellers contained in this Agreement.

 

In this
respect, the Sellers will provide access during regular business hours for the
representatives of the Purchaser to the documents mentioned in the due
diligence check-list approved by the Purchaser, and to any other documents
which may be additionally requested in the course of the due diligence. The
Sellers shall bear the responsibility for providing the representatives of the
Purchaser with true, complete and current copies of the documents listed in the
due diligence information request lists or additionally requested.

 

4A.                             RETENTION OF PERSONNEL

 

The Sellers shall cause the
following personnel of the Company to remain at their positions with the
Company as at the date of signing of this Agreement until 31 December 2010, or in case of their leaving the Company, the
Sellers shall retain, on behalf of the Company, other relevant professional
individuals to replace such persons, which individuals shall be acceptable to
the Purchaser:

 

Artemiy
Loginov  -  Creative
producer 

Ilya
Polezhaykin  -  Creative
producer

Dmitry
Permyakov  -  Creative
producer 

Anton
Kolbasov  -  Creative
producer 

Alexander
Zhigalkin  -  Creative
producer 

Victoria
Wilson  - Head of editors group 

Alla Kurakina  - Executive
producer 

Tatiana
Davtyan  - Executive producer 

Ivan
Permin  - Director of post-production

 

18

 

5.                                       TRANSFER OF TITLE

 

The full and
unrestricted ownership and title to the Shares shall pass from the Sellers to
the Purchaser on the Completion Date at Completion simultaneously with the
fulfilment of the Completion procedure set forth in Article 6 of this
Agreement.

 

6.                                       COMPLETION

 

6.1                                 Completion

 

Completion
shall take place on the Completion Date starting at 10.00 a.m. at the
offices of the Purchaser or as soon thereafter as practicable when all the
conditions for Completion set forth in this Article 6 of this Agreement
have been fulfilled.

 

6.2                                 Conditions precedent for Completion by the Purchaser

 

The obligation
of the Purchaser to consummate the transaction contemplated under this
Agreement shall be subject to the fulfilment, on or before the Completion Date,
of each of the following conditions (to the extent not waived by the Purchaser
which waiver shall be in the sole discretion of the Purchaser) and all of which
that require documentation shall be in the form and substance satisfactory to
the Purchaser and its legal counsel in their reasonable judgement:

 

(a)                                  New Information

 

The Purchaser shall not have become aware of
any new information between the date hereof and the Completion Date, which in
the Purchaser’s reasonable opinion would have an adverse effect on the Company
or its business.

 

(b)                                 Warranties True and Sellers’ Certificate

 

The representations, warranties and
assurances given by the Sellers in Article 7 of this Agreement shall be
true and correct on the date hereof and as of the Completion Date and each
Seller shall deliver a certificate dated as of the Completion Date certifying
to the same and to the fact that the Sellers have complied with all covenants,
obligations and conditions of this Agreement required to be performed or
completed as of Completion. Template of the compliance certificate is attached
hereto as Appendix J.

 

(c)                                  Authority Approvals

 

The Purchaser, the Sellers and/or the
Company, as the case may be, shall have obtained all necessary authorisations,
approvals and consents from all relevant authorities required for the lawful
and valid consummation of the transaction contemplated hereunder.

 

(d)                                 Corporate Action

 

All corporate actions necessary for the
lawful and valid consummation of the transactions contemplated hereby shall
have been duly taken by the Sellers and, as applicable, by the Company and
shall be in full force and effect. The Sellers shall have obtained proper
waivers of pre-emptive rights from each other and the Company for the sale of
the Shares.  Copies of documents
evidencing such corporate actions and waivers shall have been delivered to the
Purchaser.

 

19

 

(e)                                  Spousal Consents

 

Each of the Sellers shall have obtained a
properly notarised spousal consent (if applicable) to consummate all
transactions contemplated under this Agreement and copies of such spousal
consents shall have been delivered to the Purchaser.

 

(f)                                    Due Diligence

 

The Sellers have fulfilled
their obligations set forth in Article 4 of this Agreement.

 

(g)                                 Employment Agreements

 

Each
of the Sellers shall have executed and delivered an employment agreement with
the Company that shall be effective from the Completion Date and shall run
until 31 December 2010.  Such
agreements shall be in form and substance acceptable to the Purchaser and shall
provide for a monthly salary of RUR 248,000 payable in RUR, which monthly
salary shall be subject to annual adjustment based on official inflation rate
in the Russian Federation. In addition, each of the Sellers shall be entitled
to performance bonuses based on the results of the Company in 2009 and 2010
Financial Years, the amounts and conditions of such performance bonuses shall
be established no later that March 31 of such Financial Year.

 

In 2008 Financial Year the performance
bonuses shall be based on the following principles:

 

                                                (x)                                   Each Seller’s performance bonus shall be equal to 6 monthly salaries
if EBIT margin for the Company in the 2008 Financial Year is over 17% but less
than 20%.  (y)  Each Seller’s performance bonus shall be
equal to 12 monthly salaries if EBIT margin for the Company in the 2008
Financial Year is 20% or greater.

 

(h)                                 Accounts and Completion Accounts

 

The Sellers shall have delivered to the
Purchaser copies of the Accounts and the Completion Accounts.

 

6.3                                 Conditions precedent for Completion by the Sellers

 

The obligations for the Sellers to close
hereunder shall be subject to the satisfaction, on or before the Completion
Date, of each of the following conditions (to the extent not waived by the
Seller Representative) and all of which that require documentation shall be in
form and substance satisfactory to the Seller Representative and the Sellers’
legal counsel in their reasonable judgement.

 

(a)                                  Warranties True

 

The representations, warranties and
assurances given by the Purchaser in Article 8 of this Agreement shall be
true and correct on and as of the Completion Date.

 

20

 

(b)                                 Corporate Action

 

All corporate action necessary for the lawful
and valid consummation of the transactions contemplated hereby shall have been
duly taken by the Purchaser and shall be in full force and effect.

 

6.4                                 Deliveries at Completion

 

At
Completion:

 

(a)                                  The Sellers sell, transfer and convey to the Purchaser the Shares in
the Company by way of presenting properly registered amendments to the
constitutional documents of the Company listing the Purchaser as valid owners
of the Shares in the percentages set out in Article 2 above;

 

(b)                                 Promptly following confirmation of satisfaction of sub-article (a) above,
the Purchaser shall pay to the Sellers the Purchase Price on a pro rata basis
by reference to their respective percentage ownership levels in the Company
immediately prior to Completion; and

 

(c)                                  Any other document, condition, amount or matter herein called for to
be produced, delivered, released, paid or fulfilled at Completion as a
condition precedent to Completion shall be so produced, delivered, released,
paid and fulfilled.

 

6.5                                 Best Efforts

 

If any of the Parties of this Agreement
evades the consummation of the transactions contemplated hereunder without
essential reason, the other Party shall have the right to apply to a court with
a demand to compel the purchase of Shares to be concluded. The Party which has
unjustifiably evaded the consummation of the transactions contemplated
hereunder shall compensate the other Parties for the losses caused thereby.

 

7.                                       REPRESENTATIONS, WARRANTIES, ASSURANCES AND UNDERTAKINGS OF THE SELLERS

 

The
Sellers hereby, jointly and severally, represent to the Purchaser that the
statements contained in this Article 7 are true and correct.  The Sellers acknowledge that the Purchaser is
entering into this Agreement in reliance upon the representations, warranties
and assurances (the “Warranties”) given by the Sellers to the Purchaser in this
Article 7 being true and correct both on the date of signing of this
Agreement as well as at the Completion Date.

 

The
liability of the Sellers under, and the rights and remedies of the Purchaser in
respect of, the Warranties shall be joint and several and shall not be affected
by any knowledge of the Purchaser as a result of the Purchaser’s examination of
the Company or otherwise.

 

21

 

7.1                                 Records and Documentation

 

(a)                                  True, complete and current copies of the charter, foundation agreement and
registration certificates of the Company are attached
hereto as Appendix B.

 

(b)                                 The Company has not failed to timely file its annual reports or any
other documents with the relevant authorities, as required.

 

(c)                                  The statutory books, registers and records of the Company are
accurate and have been maintained consistent with good business practice and
are in the possession of the Company.

 

7.2                                 Title and Authority to Transfer the Shares; Capitalisation

 

(a)                                  The Sellers have full power, capacity and authority to sell and
transfer the Shares, execute and deliver this Agreement and to perform all other
undertakings set forth in this Agreement. The Shares are freely transferable to
the Purchaser and are free and clear of all liens, encumbrances and
restrictions on the ability to vote the Shares. 
The Share owned by MR. [**] represents 60%, the Share owned by MR. [**] represents
12.5%, the Share owned by MR. [**] represents 15% and the Share owned by MR. [**] represents
12.5 %, in each case,  of the charter
capital of the Company. The Shares are fully paid. There are no outstanding obligations,
warrants, options, pre-emptive rights or other agreements to which any of the
Sellers or the Company is a party or otherwise bound, providing for the
purchase, repurchase, redemption or other acquisition of the Shares, except for
this Agreement.

 

(b)                                 The Company does not
own any interest, directly or indirectly, in any corporation, partnership or
other legal entity and does not have any branch office.

 

(c)                                  Assuming all filings, registrations, approvals, notifications etc
required by applicable laws are duly made, the execution and delivery of this
Agreement by the Sellers and the completion of the transactions contemplated
hereby:

 

(i)                                    will not violate any provision of the charter or foundation
agreement of the Company;

 

(ii)                                will not violate any statute, rule, regulation, order, award,
judgement, injunction or decree of any public body or authority by which the
Sellers or the Company or any of their properties or assets is bound;

 

(iii)                             will not result in a violation or breach of, or constitute a default
under, any license, franchise, permit, indenture, agreement or other instrument
to which the Sellers or the Company is a party, or by which the Sellers or the
Company or any of their properties or assets is bound.

 

7.3                                 The Accounts

 

The
Accounts are, and the Completion Accounts will be, complete and correct in all
respects and truly and correctly reflect the results of the operation, the
financial condition and the assets and liabilities of the Company as at the  relevant dates and have been prepared in
conformity with appropriate accounting principles, book-keeping legislation and
tax legislation, consistently applied by the Company.  

 

22

 

Without
limiting the generality of the foregoing, all cash transactions undertaken by
the Company have been properly recorded in the Accounts and will be properly
recorded in the Completion Accounts.

 

7.4                                 Assets and Properties

 

(a)                                  Appendix C
lists all the property and tangible and intangible assets owned or leased by
the Company, including, without limitation, all programming and film rights,
owned real property (if any) and leases to real property.

 

(b)                                 The Company has exclusive title to all the real property and other
assets recorded in the Accounts except for such assets that have been sold at
ordinary market terms in the Ordinary Course of the Business after the Accounts
Date.  None of the assets are subject to
any liens, mortgages, charges or other encumbrances.

 

(c)                                  The Company owns or leases, and will following the consummation of
the transactions contemplated hereunder, continue to own or lease all the
assets and rights, and produce all services required to conduct its business as
currently conducted on a stand alone basis.

 

7.5                                 Intellectual Property

 

(a)                                  Appendix D
lists all intellectual property owned or used by the Company in the operation
of its business.  The Company owns all
intellectual property necessary to manufacture products presently manufactured
and produce the services presently produced, and to distribute and sell such
products and services in any country where business presently is conducted.

 

(b)                                 The intellectual property listed in Appendix D comprises all such rights necessary to permit the
operation of the Company’s business as now being conducted.  None of the intellectual property is subject
to any outstanding order, judgement, lien, encumbrance or attachment.

 

(c)                                  The activities of the Company (or of any licensee under any licence
granted by the Company) do not infringe and are not likely to infringe
intentionally any intellectual property rights of any third party and no claim
has been made against the Company or any such licensee in respect of such
infringement.

 

7.6                                 Accounts Receivable and Loans Given

 

All of the receivables of the Company and
loans given are good and fully collectible within three months from the date
when they become due and payable at the amounts recorded in the Completion
Accounts together with interest thereon. In case the amount of such receivables
of the Company or loans as per the Completion Accounts are not collected within
such three months period from the date each such receivable or loan is due and
payable, then a corresponding deduction shall be made to the Earn Out Payments.
Upon such adjustment of an Earn Out Payment in accordance with this Article 7.6,
the Purchaser shall cause such non-collected receivables paid for to be
transferred to the Sellers.

 

23

 

7.7                                 Pricing of Contracts

 

All the tenders and contracts binding the
Company have been priced as required by good and sound business practice,
allowing for a reasonable profit.

 

7.8                                 Compliance

 

(a)                                  All authorisations and approvals, in accordance with the legislation
of the Company’s location, necessary for the due conduct of its business in its
jurisdiction(s) of operation have been duly obtained and are in full force
and effect.  The entry into and the
consummation of this Agreement will not cause any termination, revocation,
suspension or modification thereof, nor has there been any violation of any
such authorisations or approvals of any terms thereof.

 

(b)                                 The Company has been and is in full compliance with all laws and
regulations, in accordance with the legislation of the Company’s location, in
its jurisdiction applicable to it, including terms and conditions set in any
authorisations and approvals, and with the requirements of all applicable
agencies and authorities, and the Company has obtained all applicable
authorisations and approvals which are required under all of such laws.

 

7.9                                 Contracts and Commitments

 

(a)                                  The Company is not party to or bound by:

 

(i)                                   any other material agreement than those listed in Appendix E;

 

(ii)                                any consultancy agreement, contract, understanding or relationship
with any officer, employee or individual or any such agreement, contract,
understanding or relationship that contains any severance or termination pay
liabilities;

 

(iii)                             any loan or credit arrangement or guarantee other than shown in the
Accounts or listed in Appendix F;

 

(iv)                            any agreement or contract otherwise outside the Ordinary Course of
Business; or

 

(v)                               any agreement which is expected to result in a loss to the Company
on completion or performance or cannot be fulfilled or performed by the Company
on time and without undue or unusual expenditure of money.

 

(b)                                 All agreements or contracts to which the Company is party are valid,
binding and enforceable in accordance with their respective terms. The Company
is not in default in any material respect in the performance of any of the
obligations under any agreement or contract and no event has occurred which
(whether with or without notice, lapse of time or both) would constitute a
default thereunder by the Company.

 

24

 

(c)                                  Neither of the Sellers nor any person connected with them, as of the
signing hereof or on the Completion Date, have any outstanding personal claims
against the Company, except for outstanding salary payments and business travel
expenses which do not in the aggregate exceed RUR 300,000.  Other than as set out in Appendix G, the Company is not party to any
contract or arrangement in which the Sellers are interested, directly or
indirectly, nor has there been any such contract or arrangement at any time
during the five years up to the date of this Agreement.

 

(d)                                 The Company is not party to, nor have its profits or financial
position for any accounting period been affected by, any contract or
arrangement which is not of an entirely arm’s length nature.

 

(e)                                  Other than as set out in Appendix
H, none of the Sellers nor any person connected with them is a party
to any outstanding agreement or arrangement for the provision of finance,
goods, services or other facilities to or by the Company or in any way relating
to the Company or its affairs.

 

7.10                           Labour Contracts and Pension Agreements

 

(a)                                  Accurate, complete and updated summaries of the essential employment
provisions of the employees of the Company are shown in Appendix I.

 

(b)                                 The Company is not engaged in any salary or other contracts or
commitments other than normally engaged with, and complete reserves have been
made in the Accounts and shall be made in due course in the Completion
Accounts, for the total amount of all present and future liabilities relating
to employment or pension agreements that shall be paid.

 

7.11                           Litigation and Claims

 

The Company has not been given notice of any
litigation or the initiation of any arbitration proceedings, neither is there
any litigation, arbitration or other legal proceedings in any court of law,
arbitral tribunal or with any administrative body or other authority pending or
threatened against the Company or initiated by the Company against a third
party.

 

7.12                           Ordinary Course of Business

 

(a)                                  During the period from signature hereof and until Completion, the
Sellers will ensure that the Company does not take any action or measure which
is outside the Ordinary Course of Business, unless such action or measure is
directly related to the transactions contemplated herein or has been approved by
the Purchaser.

 

(b)                                 Since the Accounts Date there has not been, nor will there from the
date hereof until the Completion Date be:

 

(i)                                   any adverse deviation by or within the Company from the ordinary
course of the day to day business carried on by the Company in accordance with
good and sound business practice;

 

25

 

(ii)                                any adverse change in the financial conditions, assets, liabilities
or prospects of the Company, including, without limitation, any incurrence of
indebtedness by the Company or the issuance of any guarantee of indebtedness of
another;

 

(iii)                             any adverse change in the relationship with the customers, suppliers
or employees of the Company or the authorities controlling the activities of
the Company,

 

(iv)                            any agreement or transaction for the sale or acquisition of any
essential assets by the Company, except in the Ordinary Course of Business;

 

(v)          any change in the accounting systems,
policies, principles or practices of the Company; or

 

(vi)         any other action, contract or
transaction by the Company which could have adverse effect on the assets or the
financial conditions of the Company.

 

7.13                           Tax warranties

 

(a)                                  The Company has filed with the appropriate authorities all tax
returns and reports in respect of any and all Taxes required to be filed with
such tax authorities and any Taxes payable are recorded in full in the Accounts
and will be recorded in full in the Completion Accounts.

 

(b)                                 The Company has paid or will pay to the appropriate tax authorities
all Taxes required to have been paid to them as of the date hereof and as of
the Completion Date.  The Company is not
in default in respect of any Taxes for any year or part thereof of the taxable
years up to and including the Completion Date.

 

(c)                                  There are no tax audits currently pending against the Company.

 

7.14                           Legal and Other Cost

 

The Sellers shall bear its own fees and
expenses in connection with the preparation for and completion of the
transactions contemplated hereby, including all fees and expenses of advisers,
representatives, counsels and accountants, and the Sellers shall not, directly
or indirectly, charge the Company, or otherwise seek reimbursement from the
Company, for said fees and expenses.

 

7.15                           No Undisclosed Liabilities

 

There are no liabilities of the Company
(contingent or otherwise), which relate to any fact, occurrence or event before
the Completion Date and which will not be reflected in full in the Accounts,
the Completion Accounts or appendices thereof.

 

7.16                           Nature of Disclosure

 

The Sellers have not during the negotiations
hereof, in this Agreement or its Appendices or during the due diligence review
referred to in Article 4 of this Agreement omitted to disclose any adverse
facts or circumstances that would materially affect the Company’s standing or
its operations.

 

26

 

7.17                           Powers of attorney

 

As of Completion, any power of attorney or
similar authority to represent the Company shall have been terminated or
otherwise validly revoked other than such powers of attorney that grant
authority to Company employees to represent the Company solely with respect to
ministerial, routine day-to-day matters.

 

7.18                           Systems

 

All the records and systems (including but
not limited to computer systems) and all data and information of the Company
are recorded, stored, maintained or operated or otherwise held exclusively by
the Company and are not wholly or partly dependent on any facilities or means
(including any electronic, mechanical or photographic process, computerised or
otherwise) which are not under the exclusive ownership and control of the
Company.

 

8.                                       REPRESENTATIONS, WARRANTIES AND ASSURANCES OF THE PURCHASER

 

The
Purchaser hereby represents, warrants and assures that:

 

8.1                                 it is duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation;

 

8.2                                 all corporate actions necessary for the lawful and valid
consummation of the transactions contemplated hereby have been duly taken; and

 

8.3                                 it has the authority to execute and perform all necessary actions
for the lawful and valid consummation of this Agreement.

 

9.                                       LIABILITY OF THE PARTIES

 

Without prejudice to any other remedy
available to the Purchaser or its ability to claim damages on any basis which
is available to it by reason of any of the Warranties being untrue or
misleading or being breached, the Sellers jointly and severally undertake with
the Purchaser that they shall, at the direction of the Purchaser, pay to the
Purchaser or (in the case of liability to another person which has not been
discharged) the person to whom the liability has been incurred the amount
necessary to put the Purchaser and/or the Company into the position they or it
would have been in if the Warranty had not been untrue, misleading or breached,
together with all costs and expenses incurred by the Purchaser and/or the
Company as a result of the Warranty being untrue, misleading or breached
(collectively, the “Damages”). The Purchaser shall be entitled to reduce the
amount of any Earn Out Payment by the amount of any Damages.   Any liability of the Sellers under this
Agreement shall be joint and several.

 

27

 

10.                                 NON-COMPETITION; NON-SOLICITATION AND CONFIDENTIALITY COMMITMENT

 

10.1                           To assure the Purchaser the full benefit of the business, know-how
and goodwill of the Company, each of the Sellers severally undertakes and
covenants to the Purchaser by way of further consideration for the obligations
of the Purchaser under this Agreement, as separate and independent agreements,
that he will not (without the Purchaser’s prior written consent):

 

(a)                                  use (whether for his own benefit or for the benefit of any other
person, firm, company or organisation) or disclose to any person, firm, company
or organisation any of the trade secrets or other Confidential Information of
or relating to: (a) the Company or the Predecessor; (b) any customer
or client of the Company or the Predecessor; (c) any person, firm, company
or organisation with whom or which the Company is involved in any kind of
business venture or partnership; or (d) the business or productions of the
Company or the Predecessor which information he may have received or obtained,
or may receive or obtain in the future, in confidence while he was a
shareholder, or in the employment, of the Company or the Predecessor, and will
likewise use his best endeavours to prevent the unauthorised publication or
disclosure by any third party of any such trade secrets or Confidential Information;

 

(b)                                 for three years after Completion, in relation to a business which is
substantially the same as or in competition with the business of the Company
immediately prior to Completion, either on his own account or for any other
person, for the purpose of obtaining business, orders or custom, directly or
indirectly, solicit or endeavour to entice away from the Company any business,
order or custom of any person who, to the Seller’s knowledge, is as at
Completion, or has during the one year immediately preceding Completion been, a
client or customer of the Company or the Predecessor and either: (i) with
whom he has had contact or dealings during the course of his shareholding of,
or employment with, the Company or the Predecessor during the one-year period
immediately preceding Completion; or (ii) about whom at Completion he
possesses any Confidential Information;

 

(c)                                  for three years after Completion, in relation to a business which is
substantially the same as or in competition with the business of the Company
immediately prior to Completion, either on his own account or for any other
person, directly or indirectly, supply or provide goods or services to any
person who, to the Seller’s knowledge, is as at Completion, or has during the
one year immediately preceding Completion been, a client or customer of the
Company or the Predecessor and either: (i) with whom he has had contact or
dealings during the course of his shareholding of, or employment with, the
Company or the Predecessor in the one-year period immediately preceding
Completion; or (ii) about whom at Completion he possesses Confidential
Information;

 

28

 

(d)                                 for three years after Completion, in relation to a business which is
substantially the same as or in competition with the business of the Company
immediately prior to Completion, either on his own account or for any other person,
directly or indirectly, entice away or endeavour to entice away from the
Company any person (including, without limitation, any writer, director,
producer, development executive, script editor or cast member) whom, as at
Completion or at any time during the period of one year immediately preceding
Completion supplied or provided any goods, services, ideas or talent to the
Company or the Predecessor and with whom he had material business contact on
behalf of the Company or the Predecessor in the course of the period of one
year immediately prior to Completion;

 

(e)                                  for three years after Completion, in any way seek to affect the
terms of business on which the Company or any member of the Group deals or
contracts with any person (including, without limitation,  any writer, director, producer, development
executive, script editor or cast member), firm, company or organisation whom or
which supplied goods or services to the Company or the Predecessor during the
period of one year immediately prior to Completion or attempt to persuade any
such person, firm, company or organisation to cease dealing with the Company or
such member of the Group;

 

(f)                                    for three years after Completion, in relation to a business which is
substantially the same as or in competition with the business of the Company
immediately prior to Completion, either on his own account or for another
person, directly or indirectly, offer employment to or employ or offer or
conclude any contract for services with any senior employee (being a person in
receipt of a salary in excess of RUR 80,000 per month), consultant or director
of the Company who has during the one-year period immediately preceding
Completion been employed, engaged or appointed by the Company or the
Predecessor in a technical, production, sales, marketing, advisory and/or
managerial capacity and with whom he has had contact or dealings during the course
of his employment with the Company or the Predecessor in the one-year period
immediately preceding Completion;

 

(g)                                 for three years after Completion, in the Russian Federation, either
alone or jointly with, or as principal, director, manager, consultant, agent
for or employee of, another person, directly or indirectly carry on or be
engaged, employed, appointed, concerned or interested in the business of
Production Business;

 

(h)                                 for three years after Completion, own beneficially or otherwise or
be interested in the share capital of any company engaged, concerned or
interested within the Russian Federation in the Production Business;

 

(i)                                     either during his employment with the Company or for a period of 6
months immediately following the termination of such employment, in relation to
a business which is substantially the same as or in competition with the
business of the Company at the Applicable Date, either on his own account or
for any other person, for the purpose of obtaining business, orders or custom,
directly or indirectly, solicit or endeavour to entice away from the Company
any business, order or custom of any person who is as at the Applicable Date,
or has during the period of one year immediately preceding the Applicable Date
been, a client or customer of the Company, the Predecessor or any  member of the Group in the Production
Business and either: (i) with whom he has had contact or dealings during the
course of his employment with the Company or the Predecessor during the
one-year period immediately preceding the Applicable Date; or (ii) about
whom he possesses any Confidential Information as at the Applicable Date.  

 

29

 

For the
purpose of this Agreement, the term “Applicable Date” means: (a) in relation
to the period during which the relevant Seller remains employed by the Company,
the date upon which any alleged breach of this Article occurs; and (b) in
relation to the period of 6 months immediately following the termination of the
relevant Seller’s employment by the Company, the applicable termination date of
that employment;

 

(j)                                     either during his employment with the Company or for a period of 6
months immediately following the termination of such employment with the
Company, in relation to a business which is substantially the same as or in
competition with the business of the Company at the Applicable Date, either on
his own account or for any other person, directly or indirectly, supply or
provide goods or services to any person who is as at the Applicable Date, or
has during the period of one year immediately preceding the Applicable Date
been, a client or customer of the Company, the Predecessor or any member of the
Group in the Production Business and either: (i) with whom he has had
contact or dealings during the course of his employment with the Company or the
Predecessor in the one-year period immediately preceding the Applicable Date;
or (ii) about whom he possesses Confidential Information as at the
Applicable Date;

 

(k)                                  either during his employment with the Company or for a period of 6
months immediately following the termination of such employment, in relation to
a business which is substantially the same as or in competition with the
business of the Company at the Applicable Date, either on his own account or
for any other person, directly or indirectly, entice away or endeavour to
entice away from the Company or any other member of the Group in the Production
Business any person (including, without limitation, any writer, director, producer,
development executive, script editor or cast member) whom, as at the Applicable
Date or at any time during the period of one year immediately preceding the
Applicable Date supplied or provided any goods, services, ideas or talent to
the Company, the Predecessor or such member of the Group and with whom he had
material business contact on behalf of the Company or the Predecessor in the
course of the period of one year immediately prior to the Applicable Date;

 

(l)                                     either during his employment with the Company or for a period of 6
months immediately following the termination of such employment, in any way
seek to affect the terms of business on which the Company or any member of the
Group in the Production Business deals or contracts with any person (including,
without limitation, any writer, director, producer, development executive,
script editor or cast member), firm, company or organisation whom or which
supplied goods or services to the Company, the Predecessor or such member of
the Group during the period of one year immediately prior to the Applicable
Date or attempt to persuade any such person, firm, company or  organisation to cease dealing with the Company
or such member of the Group;

 

30

 

(m)          either
during his employment with the Company or for a period of 6 months immediately
following the termination of such employment, in relation to a business which
is substantially the same as or in competition with the business of the Company
at the Applicable Date, either on his own account or for another person,
directly or indirectly, offer employment to or employ or offer or conclude any
contract for services with any senior employee (being a person in receipt of a
salary in excess of RUR 80,000 per month), consultant or director of the
Company who has during the one-year period immediately preceding the Applicable
Date been employed, engaged or appointed by the Company, the Predecessor or a
member of the Group in the Production Business in a technical, production,
sales, marketing, advisory and/or managerial capacity and with whom he has had
contact or dealings during the course of his employment with the Company or the
Predecessor in the one-year period immediately preceding the Applicable Date;

 

(n)           either
during his employment with the Company or for a period of 6 months immediately
following the termination of such employment, in the Russian Federation or any
other country in which the business of the Company, the Predecessor or any
member of the Group in the Production Business was carried on at or during the
period of two years immediately preceding the Applicable Date, either alone or
jointly with, or as principal, director, manager, consultant, agent for or
employee of, another person, directly or indirectly carry on or be engaged,
employed, appointed, concerned or interested in the Production Business; or

 

(o)           either
during his employment with the Company or for a period of 6 months immediately
following the termination of such employment, own beneficially or otherwise or
be interested in the share capital of any company engaged, concerned or
interested within the Russian Federation or any other country in which the
business of the Company, the Predecessor or any member of the Group in the Production
Business was carried on at or during the period of two years immediately
preceding the Applicable Date, in the Production Business;

 

(p)           for
three years after Completion or while at any time he is a consultant, director
or employee of any member of the Group, directly or indirectly carry on a
business activity under a name which is the same as, or similar to, the name of
the Company, the Predecessor or any member of the Group or a name used for
business purposes by a member of the Group; or

 

(q)           at any
time after Completion, make adverse comments in relation to the Group or its
businesses or employees;

 

provided always that nothing contained in this Article 10 shall prevent
any or all of the Sellers from at any time holding for investment purposes only
any class of securities in a company that is publicly traded and in which the
Sellers, together with their affiliates, hold and are beneficially interested
in less than 3% of any single class of the securities in that company.

 

10.2         The
Sellers agree that the covenants and undertakings contained in Article 10  are reasonable and are entered into for
the purpose of protecting the know-how, goodwill,confidential information and
trade connections of the businesses of the members of the Group.  

 

31

 

Accordingly the benefit of the covenants and
undertakings may be assigned by the Purchaser and its successors in title
without the consent of the Sellers.

 

10.3         Each
undertaking contained in this Article 10 shall be construed as a separate
undertaking.  If one or more of them is
held to be against the public interest or unlawful or an unreasonable restraint
of trade, the remaining undertakings shall continue to bind the Sellers.

 

10.4         For the
purposes of this Agreement “Confidential Information” shall include (but shall
not be limited to):

 

(i)            corporate
and marketing strategy and plans and business development plans;

 

(ii)           business,
sales and marketing methods, confidential techniques and processes used for the
creation and/or development and/or production and/or filming of any television
programme, motion picture, film or pilot;

 

(iii)          details
and specifications of any current, past or proposed motion picture, film or
television or entertainment projects or products, including all scripts, story
boards and financial arrangements, and any research or development related to
any current, past or proposed motion picture, film or television programmes,
films or pilots and all scripts and story boards associated therewith and any
material relating thereto;

 

(iv)          the
names, addresses and contact details of any writers, producers, directors,
producers, development executives, script editors, cast members, financiers or
employees who are involved in the Company’s projects from time to time,
including contact lists in whatever medium this information is stored and the
ideas of those writers, producers, directors, producers, development
executives, script editors, financiers or employees relating to the creation,
development, production or filming of any television programmes, films or
otherwise.

 

(v)           the
terms of business with advertisers, broadcasters, distributors, financiers,
sub-contractors, customers and suppliers, including any pricing policy adopted
and the terms of any partnership, joint venture or other form of commercial
co-operation or agreement with any third party;

 

(vi)          software
and technical information necessary for the operation of  the Company’s computer and technology systems
and applications, information relating to proprietary software (including
updates), source code to proprietary software, confidential algorithms
developed or used by the Company, information relating to the development,
maintenance or operation of any of the Company’s websites and the source code
of each website; and

 

32

 

(vii)         any
other information which is the subject of an obligation of confidence owed to a
third party, in particular the content of discussions or communications with
any prospective customers or prospective business partners.

 

11.           NOTICES

 

All
notices, demands or other communications, which all shall be in the Russian and
English languages, to or upon the respective Parties hereto shall be deemed to
have been duly given or made when delivered by mail or telefax to the Parties
in question as follows.

 

	
   

  	
  If to CTC
  Network:

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  3rd
  Khoroshevskaya Street, 12

  
	
   

  	
   

  	
  Moscow
  123298

  
	
   

  	
   

  	
  Russia

  
	
   

  	
   

  	
   

  
	
   

  	
  Telefax:

  	
  +7 (495) 797-4180

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Alexander
  Efimovich Rodnyansky

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  If to CTC
  Media:

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  15A Pravda
  Street

  
	
   

  	
   

  	
  Moscow
  125124

  
	
   

  	
   

  	
  Russia

  
	
   

  	
   

  	
   

  
	
   

  	
  Telefax:

  	
  +7 (495) 797-4180

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Alexander
  Efimovich Rodnyansky

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  If to
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  Address:

  	
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  If to
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  Address:

  	
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  [**]

  

 

33

 

	
   

  	
  If to Mr. [**]:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
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  Telefax:

  	
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  If to
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or at such
address as the respective Party hereto may hereafter specify in writing to the
other Parties.

 

12.           APPENDICES
INCORPORATED

 

Each Appendix to which reference is made
herein and which is attached hereto shall be deemed to be incorporated into
this Agreement by such reference.

 

13.           INTEGRATION

 

This Agreement, and the Appendices hereto,
represent the entire understanding and agreement between the parties hereto
with respect to the subject matter hereof and supersedes all prior negotiations
and understandings relating to the subject matter hereof.  This Agreement amends and restates in its
entirety the original Share Purchase Agreement among the parties hereto dated
as of December 18, 2007.

 

14.           THIRD PARTY RIGHTS

 

Except as
expressly set out in this Agreement, a person who is not a Party shall have no
rights under the Contracts (Rights of Third Parties) Act 1999 to enforce or
rely upon any term of this Agreement provided that this does not affect any
right or remedy of the third party that exists or is available apart from that
Act.  No Party may declare itself as a
trustee of the rights under this Agreement for the benefit of any third party.

 

15.           GOVERNING LAW

 

This Agreement shall be governed by and
construed in accordance with the laws of England and Wales.

 

16.           ARBITRATION OF THIS AGREEMENT

 

Any dispute, controversy or claim arising out
of or relating to this Agreement or the breach, termination, or invalidity
thereof shall be settled by arbitration in accordance with the Rules of
the Arbitration Institute of the Stockholm Chamber of Commerce. The arbitral
tribunal shall be composed of three arbitrators, one of whom shall be selected
by the Purchaser, one of whom shall be selected by the Sellers and the third of
whom shall be selected by the other two arbitrators. The arbitration shall be
held in Stockholm and the arbitration proceedings shall be conducted in the
English language.

 

34

 

17.           SELLER REPRESENTATIVE

 

Any notice, waiver, consent or Performance
Report signed by the Seller Representative in accordance with this Agreement
shall be binding upon each of the other Sellers as if such Sellers had signed
such notice, waiver, consent or Performance Report individually.

 

18.           AMENDMENTS; WAIVERS

 

Any amendments or waiver to this Agreement
shall be in writing and shall have no effect unless signed by the Purchaser and
the Seller Representative. Any amendment or waiver effected in accordance with
this provision shall be binding upon each Seller.  Notwithstanding the foregoing, in the event
that such amendment or waiver adversely affects the rights or obligations
provided herein of any Seller in a different manner than any other Seller, such
amendment or waiver shall also require the written consent of such Seller.

 

19.           PUBLICITY

 

All press releases and other public relations
activities of the Sellers with regard to the transactions contemplated by this
Agreement shall be subject to the prior written approval of the Purchaser.

 

20.           COUNTERPARTS OF THE AGREEMENT

 

This Agreement has been executed in six
identical counterparts, one for each Party hereto.

 

21.           PREVAILING LANGUAGE

 

This Agreement is made in Russian and
English.  In the event of a dispute as to
the terms of this Agreement the English version shall prevail.

 

35

 

IN WITNESS WHEREOF, the
Parties hereto have duly executed this Amended and Restated Share Purchase
Agreement as of the day and year first above written.

 

 

	
  EXECUTED  by

  	
   

  	
   

  
	
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    /S/

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXECUTED  by

  	
   

  	
   

  	
   

  
	
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    /S/

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXECUTED  by

  	
   

  	
   

  	
   

  
	
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    /S/

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXECUTED  by

  	
   

  	
   

  	
   

  
	
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    /S/

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXECUTED by

  	
   

  	
   

  	
   

  
	
  CJSC “CTC Networks”

  	
   

  	
   

  	
   

  
	
  acting by its General Director

  	
   

  	
   

  	
   

  
	
  Alexander Efimovich Rodnyansky

  	
   

  	
  /S/ ALEXANDER EFIMOVICH RODNYANSKY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXECUTED by

  	
   

  	
   

  	
   

  
	
  CTC Media, Inc.

  	
   

  	
   

  	
   

  
	
  acting by its President and

  	
   

  	
   

  	
   

  
	
  Chief Executive Officer

  	
   

  	
   

  	
   

  
	
  Alexander Efimovich Rodnyansky

  	
   

  	
  /S/ ALEXANDER EFIMOVICH RODNYANSKY

  	
   

  

 

36

 

Appendices

 

[CTC
Media, Inc. agrees to furnish supplementally a copy of any omitted
schedule to the Securities and Exchange Commission upon request.]

 

37

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