Document:

ex10_6.htm

    
      

    

    
      Exhibit
10.6

      

       

      Capped
Call Transaction

       

      
        	
                Date:

              	
                March
      4, 2008

              

      

       

      
        	
                To:

              	
                Central
      European Media Enterprises Ltd.

              

      

      c/o CME
Development Corporation

      Mark
Wyllie (VP Corporate Finance) / Robert Janta-Lipinski (Group
Treasurer)

      
        	
                 
      

              	
                Facsimile:

              	
                +44
      20 7430 5402 (United Kingdom)

              

      

      
        	
                 
      

              	
                Telephone:

              	
                +44
      20 7430 5337 / 5353

              

      

      

      
        	
                From:

              	
                Lehman
      Brothers, Inc acting as Agent

              

      

      Lehman
Brothers OTC Derivatives Inc., acting as Principal

      Andrew
Yare - Transaction Management Group

      
        	
                 
      

              	
                Facsimile:

              	
                646-885-9546
      (United States of America)

              

      

      
        	
                 
      

              	
                Telephone:

              	
                212-526-9986

              

      

      

       

      
        	
                Ref.
      Numbers:

              	
                Global
      Deal ID: 3694013

              

      

       

      
        
          

        
Dear Sir or
Madam:

       

      The
purpose of this communication (this “Confirmation”) is to confirm the terms and
conditions of the transaction (the “Transaction”) entered into between Lehman
Brothers OTC Derivatives Inc. (“Party A”) and Central European Media Enterprises
Ltd. (“Party B”) on the Trade Date specified below. This Confirmation
constitutes a “Confirmation” as referred to in the Agreement specified below.
This confirmation is sent on behalf of both Party A and Lehman Brothers Inc.
Lehman Brothers OTC Derivatives
Inc. is not a member of the Securities Investor Protection
Corporation.

      

      This
Confirmation evidences a complete and binding agreement between Party A and
Party B as to the terms of the Transaction to which this Confirmation relates.
This Confirmation supplements, forms part of, and is subject to, an agreement in
the form of the 1992 ISDA Master Agreement (Multicurrency—Cross Border) (the
“Agreement”) as if we had executed an agreement in such form (but without any
Schedule except for the elections set forth herein) on the Trade Date of the
Transaction.

      

      The
definitions and provisions contained in the 2002 ISDA Equity Derivatives
Definitions (the “Equity Definitions”) and the 2000 ISDA Definitions (the “Swap
Definitions”, and together with the Equity Definitions, the “Definitions”), in
each case as published by the International Swaps and Derivatives Association,
Inc. (“ISDA”) are incorporated into this Confirmation. The Transaction
constitutes a Share Option Transaction for the purposes of the Equity
Definitions. References herein to “Transaction” shall be deemed references to
“Swap Transaction” for purposes of the Swap Definitions.  In the event
of any inconsistency between the Equity Definitions and the Swap Definitions,
the Equity Definitions will govern.  In the event of any inconsistency
between either set of Definitions and this Confirmation, this Confirmation will
govern.

       

      Certain
defined terms used herein have the meanings assigned to them in the Offering
Memorandum dated March 4, 2008 (the “Offering Memorandum”) relating to the USD
425 million aggregate principal amount of 3.50% Convertible Senior Notes due
2013 (the “Convertible Notes” and each USD 1,000 principal amount of Convertible
Notes, a “Convertible Note”) issued by Party B pursuant to an Indenture to be
dated as of March 10, 2008 between Party B and The Bank of New York, as trustee
(as in effect on the date of its execution, the “Indenture”). In the event of
any inconsistency between the terms defined in the Offering Memorandum, the
Indenture and this Confirmation, this Confirmation shall govern. The parties
acknowledge that this Confirmation is entered into on the date hereof with the
understanding that (i) definitions set forth in the Indenture that are also
defined herein by reference to the Indenture and (ii) sections of the Indenture
that are referred to herein, in each case, will conform to the descriptions
thereof in the Offering Memorandum. If any such definitions in the Indenture or
any such sections of the Indenture differ from the descriptions thereof in the
Offering Memorandum, the descriptions thereof in the Offering Memorandum will
govern for purposes of this Confirmation. The parties further acknowledge that
the Indenture section numbers used herein are based on the draft of the
Indenture last reviewed by Party A and Party B as of the date of this
Confirmation, and if any such section numbers are changed in the Indenture as
executed, the parties will amend this Confirmation in good faith to preserve the
intent of the parties. For the avoidance of doubt, references to the Indenture
herein are references to the Indenture as in effect on the date of its execution
and if the Indenture is amended following its execution, any such amendment will
be disregarded for purposes of this Confirmation unless the parties agree
otherwise in writing.

       

      Lehman
Brothers

      745
SEVENTH AVENUE,

      NEW YORK
NY 10019

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      The terms
of the particular Transaction to which this Confirmation relates are as
follows:

       

      

      
        	
                General
      Terms:

              	 	 
      
	 	 	 
	
                Agent:

              	 	
                Lehman
      Brothers Inc. (“LBI”) is acting as agent on behalf of Party A and Party B
      for this Transaction.  LBI has no obligations, by guarantee,
      endorsement or otherwise, with respect to the performance of this
      Transaction by either party.

              
	 	 	 
	
                Trade
      Date:

              	 	
                March
      4, 2008

              
	 	 	 
	
                Option
      Style:

              	 	
                “Modified
      American” as set forth under “Procedures for Exercise”
    below.

              
	 	 	 
	
                Option
      Type:

              	 	
                Call

              
	 	 	 
	
                Seller:

              	 	
                Party
      A

              
	 	 	 
	
                Buyer:

              	 	
                Party
      B

              
	 	 	 
	
                Shares:

              	 	
                The
      Class A common stock of Central European Media Enterprises Ltd. (the
      “Issuer”), par value USD 0.08 per share, Ticker: CETV

              
	 	 	 
	
                Number
      of Options:

              	 	
                148,750,
      provided that if
      Lehman Brothers Inc. and J.P. Morgan Securities Inc. as representatives of
      the Initial Purchasers (as defined in the Purchase Agreement dated as of
      March 4, 2008 between Party B and Lehman Brothers Inc. and J.P. Morgan
      Securities Inc. as representatives of the initial purchasers party thereto
      (the “Purchase Agreement”)), exercise the option to purchase additional
      Convertible Notes pursuant to Section 2(d) of the Purchase Agreement, the
      Number of Options hereunder shall be automatically increased, effective
      upon payment by Party B of the Additional Premium on the Additional
      Premium Payment Date, by the Applicable Percentage times the number of
      Convertible Notes in denominations of USD 1,000 principal amount issued
      pursuant to such exercise (such Convertible Notes, the “Additional
      Convertible Notes”). For the avoidance of doubt, the Number of Options
      shall be reduced by the number of any Options exercised or terminated by
      Party B. In no event will the Number of Options be less than
      zero.

              

      

       

      
        
          Global
Deal ID: 3694013

          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        	
                Option
      Entitlement:

              	 	
                As
      of any date, a number equal to the Conversion Rate as of such date (as
      defined in the Indenture, but without regard to any adjustments to the
      Conversion Rate pursuant to Section 10.04(b) or Section 10.05(i) of the
      Indenture).

              
	 	 	 
	
                Applicable
      Percentage:

              	 	
                35%

              
	 	 	 
	
                Number
      of Shares:

              	 	
                The
      product of the Number of Options and the Option
    Entitlement.

              
	 	 	 
	
                Strike
      Price:

              	 	
                USD
      105.00

              
	 	 	 
	
                Cap
      Price:

              	 	
                USD
      151.20

              
	 	 	 
	
                Premium:

              	 	
                USD
      19,828,375 (Premium per Option: USD 133.30), provided that if the
      Number of Options is increased pursuant to the proviso to the definition
      of “Number of Options” above, Party B shall pay on the Additional Premium
      Payment Date an additional Premium (the “Additional Premium”) equal to the
      product of the number of Options by which the Number of Options is so
      increased and USD 133.30.

              
	 	 	 
	
                Premium
      Payment Date:

              	 	
                Four
      Currency Business Days after the Trade Date

              
	 	 	 
	
                Additional
      Premium Payment Date:

              	 	
                The
      closing date for the purchase and sale of the Additional Convertible
      Notes.

              
	 	 	 
	
                Exchange:

              	 	
                NASDAQ
      Global Select Market

              
	 	 	 
	
                Related
      Exchange(s):

              	 	
                All
      Exchanges

              
	 	 	 
	
                Market
      Disruption Event:

              	 	
                The
      definition of “Market Disruption Event” in Section 6.3(a) of the Equity
      Definitions is hereby amended by deleting the words “at any time during
      the one-hour period that ends at the relevant Valuation Time, Latest
      Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the
      case may be” and inserting the words “at any time on any Averaging Date”
      after the word “material,” in the third line thereof.

                 

                Section
      6.3(d) of the Equity Definitions is hereby amended by deleting the
      remainder of the provision following the term “Scheduled Closing Time” in
      the fourth line thereof.

              
	 	 	 
	
                Disrupted
      Day:

              	 	
                The
      definition of “Disrupted Day” in Section 6.4 of the Equity Definitions
      shall be amended by adding the following sentence after the first
      sentence: “A Scheduled Trading Day on which a Related Exchange fails to
      open during its regular trading session will not be a Disrupted Day if the
      Calculation Agent determines that such failure will not have a material
      adverse impact on Party A’s ability to unwind any related hedging
      transactions related to the
Transaction.”

              

      

       

      
        
          Global
Deal ID: 3694013

          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      
        	
                Procedure for
      Exercise:

              	 	 
      
	 	 	 
	
                Exercise
      Period:

              	 	
                Notwithstanding
      anything to the contrary in the Equity Definitions, an Exercise Period
      shall occur with respect to an Option hereunder only if such Option is an
      Exercisable Option (as defined below) and the Exercise Period shall be, in
      respect of any Exercisable Option, the period commencing on, and
      including, the relevant Conversion Date and ending on, but excluding, the
      first Averaging Date in respect of such Conversion Date; provided that in
      respect of any Exercisable Options relating to Convertible Notes for which
      the relevant Conversion Date occurs during the period beginning on, and
      including, December 15, 2012, the final day of the Exercise Period shall
      be the Scheduled Trading Day immediately prior to the Expiration Date
      (such Exercise Period, the “Final Exercise Period”).

              
	 	 	 
	
                Conversion
      Date:

              	 	
                With
      respect to any conversion of Convertible Notes, the date on which the
      holder of such Convertible Notes satisfies all of the requirements for
      conversion thereof as set forth in Section 10.02 of the
      Indenture.

              
	 	 	 
	
                Exercisable
      Options:

              	 	
                Upon
      the occurrence of a Conversion Date, a number of Options equal to (x) the
      Applicable Percentage times (y) the number of
      Convertible Notes in denominations of USD 1,000 principal amount converted
      on such Conversion Date.

              
	 	 	 
	
                Expiration
      Time:

              	 	
                The
      Valuation Time

              
	 	 	 
	
                Expiration
      Date:

              	 	
                March
      15, 2013

              
	 	 	 
	
                Multiple
      Exercise:

              	 	
                Applicable,
      as described under “Exercisable Options” above.

              
	 	 	 
	
                Automatic
      Exercise:

              	 	
                Applicable;
      and means that, in respect of any Exercise Period other than the Final
      Exercise Period, a number of Options not previously exercised hereunder
      equal to the number of Exercisable Options shall be deemed to be exercised
      on the relevant Averaging Dates to which such Options relate and, in
      respect of the Final Exercise Period, all Options not previously exercised
      shall be deemed exercised on the relevant Averaging Dates to which such
      Options relate; provided that in each
      case, if a Notice of Exercise is required, such Options shall be deemed
      exercised only to the extent that Party B has provided a Notice of
      Exercise to Party A (in each case, such number of Options deemed
      exercised, the “Exercised Options”); provided further that,
      with respect to Exercised Options relating to an Exercise Period occurring
      prior to the Final Exercise Period (an “Early Conversion”), Automatic
      Exercise means that an Additional Termination Event shall be deemed to
      occur with respect to a portion of the Transaction relating to a number of
      Options equal to the number of such Exercised Options, as provided in
      clause (i) under “Additional Termination Events” below; provided further that
      to the extent the number of Exercised Options relating to any Conversion
      Date is less than the number of Exercisable Options relating to such
      Conversion Date, Party B shall be deemed to make to Party A on the date it
      provided the related Notice of Exercise to Party A (or, if no such notice
      is provided, the final day of such Exercise Period) the representations
      and warranties contained in paragraph (g) under “Additional
      Representations and Warranties of Party B” below as if the reference
      therein to “at the time of placing any order with respect to the
      Transaction” were replaced with “as of the date of the related Notice of
      Exercise (or, if no such notice is provided, the final day of the related
      Exercise Period).”

              

      

       

      
        
          Global
Deal ID: 3694013

          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      
        	
                Notice
      of Exercise:

              	 	
                Notwithstanding
      anything to the contrary in the Equity Definitions, in order to exercise
      any Exercisable Options in respect of any Conversion Date occurring prior
      to the Final Exercise Period, Party B must notify Party A in writing
      before 5:00 p.m. (New York City time) on the Scheduled Trading Day prior
      to the scheduled first Averaging Date for the Exercisable Options being
      exercised of (i) the number of such Options, (ii) such first scheduled
      Averaging Date and the scheduled Settlement Date and (iii) if Party B elected
      to satisfy its obligations under the Convertible Notes solely with Shares
      (a “Gross Physical Settlement”) in connection with the related conversion
      of the Convertible Notes, the fact that Gross Physical Settlement applies
      to such conversion, and, in order to exercise any Exercisable Options
      during the Final Exercise Period, if Party B elected Gross Physical
      Settlement for any conversion of the Convertible Notes during the Final
      Exercise Period, Party B must notify Party A of such election in writing
      before 5:00 p.m. (New York City time) on December 15,
  2012.

              

      

       

      
        
          Global
Deal ID: 3694013

          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      
        	
                Valuation:

              	 	 
      
	 	 	 
	
                Valuation
      Time:

              	 	
                At
      the close of trading on the Exchange, without regard to extended or after
      hours trading.

              
	 	 	 
	
                Averaging
      Dates:

              	 	
                (x)
      For any Exercised Option relating to an Exercise Period occurring prior to
      the Final Exercise Period, the 25 (or 60 if Party B has notified Party A
      that Gross Physical Settlement applies to the related conversion)
      consecutive Scheduled Trading Days commencing on and including the third
      “Settlement Period Trading Day” (as defined in the Indenture) following
      the relevant Conversion Date, or (y) for any Exercisable Option relating
      to the Final Exercise Period, the 25 (or 60 if Party B has notified Party
      A that Gross Physical Settlement applies to conversions during the Final
      Exercise Period) consecutive Scheduled Trading Days commencing on, and
      including, the 27th (or 62nd if Party B has notified Party A that Gross
      Physical Settlement applies to conversions during the Final Exercise
      Period) Scheduled Trading Day immediately preceding the Expiration
      Date.

              
	 	 	 
	
                Averaging
      Date Market Disruption:

              	 	
                Modified
      Postponement; provided that,
      notwithstanding anything to the contrary in the Equity Definitions and in
      addition to the provisions of Section 6.7(c)(iii) of the Equity
      Definitions, if any Averaging Date is a Disrupted Day, the Calculation
      Agent may assign additional dates to be Averaging Dates and/or make
      adjustments to the number of Options to which each Averaging Date relates
      (including increasing such number or reducing such number to zero with
      respect to one or more Averaging Dates).

              
	 	 	 
	
                Relevant
      Price:

              	 	
                For
      any Averaging Date, the VWAP Price for such Averaging
  Date.

              
	 	 	 
	
                VWAP
      Price:

              	 	
                For
      any Exchange Business Day, the dollar volume weighted average price per
      Share for that Exchange Business Day based on transactions executed during
      that Exchange Business Day on the Exchange, as reported on Bloomberg Page
      “CETV.UQ <Equity> AQR” (or any successor thereto), or in the event
      such price is not so reported on such Exchange Business Day for any
      reason, as reasonably determined by the Calculation
  Agent.

              
	 	 	 
	
                Settlement
      Terms:

              	 	 
      
	 	 	 
	
                Settlement
      Currency:

              	 	
                USD

              
	 	 	 
	
                Settlement
      Date or Cash Settlement Payment Date:

              	 	
                For
      any Exercised Option, the date Shares will be delivered or cash will be
      paid with respect to the Convertible Notes related to such Exercised
      Options, under the terms of the Indenture; provided that if Gross
      Physical Settlement applies to the related conversion of the Convertible
      Notes and the Exercised Option relates to an Exercise Period other than
      the Final Exercise Period, one Settlement Cycle immediately following the
      final Averaging Date relating to such Exercised
  Option.

              

      

       

      
        
          Global
Deal ID: 3694013

          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      
        	
                Settlement
      Method Election:

              	 	
                Applicable;
      provided that
      Party B shall not be permitted to elect Cash Settlement and hereby agrees
      not to make an election other than the Default Settlement Method with
      respect to the Transaction unless Party B makes to Party A in writing on
      the date of its election the representations and warranties contained in
      paragraph (g) under “Additional Representations and Warranties of Party B”
      below where the reference therein to “at the time of placing any order
      with respect to the Transaction” shall be replaced with “as of the date of
      such election of Cash Settlement.”

              
	 	 	 
	
                Electing
      Party:

              	 	
                Party
      B

              
	 	 	 
	
                Settlement
      Method Election Date:

              	 	
                The
      third Scheduled Trading Day immediately preceding the first Averaging Date
      for the relevant Exercisable Options.

              
	 	 	 
	
                Default
      Settlement Method:

              	 	
                Physical
      Settlement

              
	 	 	 
	
                Cash
      Settlement Terms:

              	 	 
      
	 	 	 
	
                Cash
      Settlement:

              	 	
                If
      Cash Settlement applies with respect to any Exercised Options, a relevant
      portion of the Transaction shall expire on each Averaging Date with
      respect to a number of Options equal to the relevant number of Exercised
      Options divided
      by the number of scheduled Averaging Dates relating to such
      Exercised Options, rounded down to the nearest whole number, except the
      portion relating to the last such Averaging Date shall equal such relevant
      number of Exercised Options minus the number of
      Options relating to all preceding Averaging Dates relating to such
      Exercised Options (in each case subject to adjustment by the Calculation
      Agent in respect of any Disrupted Day). On the Cash Settlement Payment
      Date relating to the relevant Exercised Options, Party A shall pay to
      Party B the aggregate Cash Settlement Amount for all related Averaging
      Dates.

              
	 	 	 
	
                Cash
      Settlement Amount:

              	 	
                For
      each Averaging Date, an amount, as calculated by the Calculation Agent,
      equal to (i) the Strike Price Differential for such Averaging Date, multiplied by (ii) the
      number of Options to which such Averaging Date relates, multiplied by (iii) the
      Option Entitlement as of such Averaging
Date.

              

      

       

      
        
          Global
Deal ID: 3694013

          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      
        	
                Strike
      Price Differential:

              	 	
                For
      each Averaging Date, if the Relevant Price for such Averaging Date is (a)
      greater than the Strike Price and less than or equal to the Cap Price, an
      amount equal to the excess of the Relevant Price for such Averaging Date
      over the Strike Price, (b) greater than the Cap Price, an amount equal to
      the excess of the Cap Price over the Strike Price, or (c) less than or
      equal to the Strike Price, zero.

              
	 	 	 
	
                Physical
      Settlement Terms:

              	 	 
      
	 	 	 
	
                Physical
      Settlement:

              	 	
                If
      Physical Settlement applies with respect to any Exercised Options, a
      relevant portion of the Transaction shall expire on each Averaging Date
      with respect to a number of Options equal to the relevant number of
      Exercised Options divided by the number
      of scheduled Averaging Dates, rounded down to the nearest whole number,
      except the portion relating to the last such Averaging Date shall equal
      such relevant number of Exercised Options minus the number of
      Options relating to all preceding Averaging Dates relating to such
      Exercised Options (in each case subject to adjustment by the Calculation
      Agent in respect of any Disrupted Day). On the Settlement Date relating to
      the relevant Exercised Options, Party A shall deliver to Party B the
      aggregate Number of Shares to be Delivered for all related Averaging Dates
      and pay to Party B any Fractional Share Amount resulting from such
      aggregation (valued at the Relevant Price for the last Averaging
      Date).

              
	 	 	 
	
                Number
      of Shares to be Delivered:

              	 	
                An
      amount of Shares equal to the Cash Settlement Amount for such Averaging
      Date divided by
      the Relevant Price for such Averaging Date.

              
	 	 	 
	
                Other
      Applicable Provisions

                in
      Respect of Physical Settlement:

              	 	
                The
      representations and agreements contained in Section 9.11 of the Equity
      Definitions shall be modified by excluding any representations therein
      relating to restrictions, obligations, limitations or requirements under
      applicable securities laws that exist as a result of the fact that Party B
      is the issuer of the Shares.

              

      

       

      
        
          Global
Deal ID: 3694013

          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      
        	Share
      Adjustments:	 	 
	 	 	 
	
                Potential
      Adjustment Events:

              	 	
                Notwithstanding
      Section 11.2(e) of the Equity Definitions, a “Potential Adjustment Event”
      means an occurrence of any event or condition, as set forth in Section
      10.05 of the Indenture, that would result in an adjustment to the
      Conversion Rate of the Convertible Notes; provided that in no
      event shall there be any adjustment hereunder as a result of an adjustment
      to the Conversion Rate pursuant to Section 10.04(b) or Section 10.05(i) of
      the Indenture.

              
	 	 	 
	
                Method
      of Adjustment:

              	 	
                Calculation
      Agent Adjustment; which means, notwithstanding anything to the contrary in
      the Equity Definitions, upon any adjustment to the Conversion Rate of the
      Convertible Notes pursuant to the Indenture (other than pursuant to
      Section 10.04(b) or Section 10.05(i) of the Indenture) (i) the Calculation
      Agent shall make a corresponding adjustment to any of the Strike Price,
      Number of Options and the Option Entitlement and (ii) the Calculation
      Agent may, but is not required to, make any adjustment consistent with the
      Calculation Agent Adjustment set forth in Section 11.2(c) of the Equity
      Definitions to the Cap Price or any other variable relevant to the
      exercise, settlement or payment for the Transaction (other than the Strike
      Price) to preserve the fair value of the Options to Party A after taking
      into account the effect of such Potential Adjustment Event; provided that in no
      event shall the Cap Price be less than the Strike Price; provided further, that
      adjustments may be made to the Cap Price to account for changes in
      volatility, expected dividends, stock loan rate and liquidity relevant to
      the Shares or to the Transaction.

              
	 	 	 
	
                Extraordinary
      Events:

              	 	 
      
	 	 	 
	
                Merger
      Events:

              	 	
                Notwithstanding
      Section 12.1(b) of the Equity Definitions, a “Merger Event” means the
      occurrence of any event or condition set forth in Section 10.06(a) or
      Section 10.06(b)  of the Indenture.

              
	 	 	 
	
                Tender
      Offers:

              	 	
                Applicable;
      provided that
      notwithstanding Section 12.1(d) of the Equity Definitions, a “Tender
      Offer” means the occurrence of any event or condition set forth in Section
      10.05(f) or clause (1) of the definition of “Fundamental Change” in
      Section 1.01 of the Indenture.

              
	 	 	 
	
                Consequence
      of Merger Events/Tender Offers:

              	 	
                Notwithstanding
      Sections 12.2 and 12.3 of the Equity Definitions, upon the occurrence of a
      Merger Event or a Tender Offer:

              

      

       

      
        
          Global
Deal ID: 3694013

          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      
        	 
      	 	
                (i)   the
      Calculation Agent shall make a corresponding adjustment in respect of any
      adjustment under the Indenture to any one or more of the nature of the
      Shares, Strike Price, Number of Options and the Option Entitlement; provided, however, that such
      adjustment shall be made without regard to any adjustment to the
      Conversion Rate for the issuance of additional shares as set forth in
      Section 10.04(b) or Section 10.05(i)  of the Indenture;
      and

              
	 	 	 
	 
      	 	
                (ii)   the
      Calculation Agent may, in its sole discretion, make any adjustment
      consistent with the Modified Calculation Agent Adjustment set forth in
      Section 12.2(e) or 12.3(d) of the Equity Definitions, as applicable, to
      the Cap Price or any other variable relevant to the exercise, settlement
      or payment for the Transaction; provided, however, that in no
      event shall the Cap Price be less than the Strike
Price;

              
	 	 	 
	 
      	 	
                provided that, for the
      avoidance of doubt, adjustments shall be made pursuant to the provisions
      of subparagraphs (i) and (ii) above regardless of whether any Merger Event
      or Tender Offer gives rise to an Early Conversion; and

                 

                provided further that,
      notwithstanding the foregoing, with respect to any Majority Tender Offer,
      Party A may elect for Cancellation and Payment (Calculation Agent
      Determination) to apply.  “Majority Tender Offer” means A Tender
      Offer as defined in Section 12.1(d) of the Equity Definitions that results
      in the relevant entity or person purchasing, or otherwise obtaining or
      having the right to obtain, by conversion or other means, 50% or greater
      than 50% of the outstanding voting shares of the Issuer, as determined by
      the Calculation Agent, based upon the making of filings with governmental
      or self-regulatory agencies or such other information as the Calculation
      Agent deems relevant.

              

      

       

      
        
          Global
Deal ID: 3694013

          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      
        	
                Modified
      Calculation Agent Adjustment:

              	 	
                For
      greater certainty, the definition of “Modified Calculation Adjustment” in
      Sections 12.2 and 12.3 of the Equity Definitions shall be amended by (i)
      adding the following italicized language after the stipulated
      parenthetical provision: “(including adjustments to account for
      changes in
      expected dividends, stock loan rate, liquidity, or, in the case of the Cap
      Price, also changes in volatility, relevant to the Shares or to the
      Transaction) from the
      Announcement Date to the Merger Date (Section 12.2)  or Tender
      Offer Date (Section 12.3),” and (ii) deleting the phrase “,
      expected dividends, stock loan rate” from such stipulated parenthetical
      provision.

              
	 	 	 
	
                Announcement
      Event:

              	 	
                If
      an Announcement Event occurs, the Calculation Agent will determine the
      economic effect of the Announcement Event on the theoretical value of the
      Transaction (including without limitation any change in expected
      dividends, stock loan rate, liquidity, or, in the case of the Cap Price,
      also changes in volatility, relevant to the Shares or to the Transaction)
      from the Announcement Date to the Expiration Date. If such economic effect
      is material to either party, the Calculation Agent will adjust the Cap
      Price to account for such economic effect; provided that in no
      event shall the Cap Price be less than the Strike Price. “Announcement
      Event” shall mean the occurrence of (i) the first public announcement of a
      firm intention to engage in a transaction that may lead to a Merger Event,
      (ii) the first public announcement of a firm intention to purchase or
      otherwise obtain the requisite number of shares that may lead to a Tender
      Offer or (iii) in each case, any subsequent amendment to or withdrawal of
      such announcement.

              
	 	 	 
	
                Composition
      of Combined Consideration:

              	 	
                Not
      Applicable

              
	 	 	 
	
                Nationalization,
      Insolvency or Delisting:

              	 	
                Cancellation
      and Payment

                 

                (Calculation Agent
      Determination)

              
	 	 	 
	
                Delisting:

              	 	
                The
      definition of “Delisting” in Section 12.6 of the Equity Definitions shall
      be deleted in its entirety and replaced with the following: ‘“Delisting”
      means that the Exchange announces that pursuant to the rules of such
      Exchange, the Shares cease (or will cease) to be listed, traded or
      publicly quoted on the Exchange for any reason (other than a Merger Event
      or Tender Offer) and are not immediately re-listed, re-traded or re-quoted
      on the New York Stock Exchange, the American Stock Exchange, the NASDAQ
      Global Select Market or the NASDAQ Global Market (or their respective
      successors)”

              

      

       

      
        
          Global
Deal ID: 3694013

          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      
        	
                Additional
      Disruption Events:

              	 	 
      
	 	 	 
	
                Change
      in Law:

              	 	
                Applicable

              
	 	 	 
	
                Failure
      to Deliver:

              	 	
                Applicable

              
	 
      	 	 
	
                Insolvency
      Filing:

              	 	
                Applicable

                 

                The
      definition of “Insolvency Filing” in Section 12.9 of the Equity
      Definitions shall be amended by deleting the clause “provided that such
      proceedings instituted or petitions presented by creditors and not
      consented to by the Issuer shall not be deemed an Insolvency Filing” at
      the end of such definition and replacing it with the following: “; or it
      has instituted against it a proceeding seeking a judgment of insolvency or
      bankruptcy or any other relief under any bankruptcy or insolvency law or
      other similar law affecting creditors’ rights, or a petition is presented
      for its winding-up or liquidation by a creditor and such proceeding is not
      dismissed, discharged, stayed or restrained in each case within fifteen
      (15) days of the institution or presentation thereof.”

              
	 
      	 	 
      
	
                Hedging
      Disruption:

              	 	
                Applicable

              
	 	 	 
	
                Increased
      Cost of Hedging:

              	 	
                Applicable

              
	 	 	 
	
                Loss
      of Stock Borrow:

              	 	
                Not
      Applicable

              
	 	 	 
	
                Increased
      Cost of Stock Borrow:

              	 	
                Not
      Applicable

              
	 	 	 
	
                Hedging
      Party:

              	 	
                Party
      A shall be the Hedging Party for all Extraordinary
  Events

              
	 	 	 
	
                Determining
      Party:

              	 	
                Party
      A shall be the Determining Party for all Extraordinary
    Events

              
	 	 	 
	
                Additional
      Provisions:

              	 	 
      
	 	 	 
	
                Non-Reliance:

              	 	
                Applicable

              
	 	 	 
	
                Agreements
      and Acknowledgments Regarding Hedging Activities:

              	 	
                Applicable

              
	 	 	 
	
                Additional
      Acknowledgments:

              	 	
                Applicable

              
	 	 	 
	
                Credit
      Support Provider:

              	 	
                With
      respect to Party A, the guarantee (the “Parent Guarantee”) made by Lehman
      Brothers Holdings, Inc. (“Holdings”), in favor of Party B, attached hereto
      as Exhibit A.

              
	 	 	 
	
                Credit
      Support Document:

              	 	
                With
      respect to Party A, the Parent Guarantee.

              
	 	 	 
	Additional Representations and
      Warranties of Party B:	 	In
      addition to the representations set forth in the Agreement, Party B
      further represents that;

      

       

      
         

        
          
            Global
Deal ID: 3694013

            
            

          

          
            12

            
              

            

          

          
            
            

          

        

         

      

       

      
        	
                 

                 

              	 	
                (a)
      (i) It is not entering into the Transaction on behalf of or for the
      accounts of any other person or entity, and will not transfer or assign
      its obligations under the Transaction or any portion of such obligations
      to any other person or entity except in compliance with applicable laws
      and the terms of the Transaction; (ii) it understands that the Transaction
      is subject to complex risks which may arise without warning, may at times
      be volatile, and that losses may occur quickly and in unanticipated
      magnitude; (iii) it is authorized to enter into the Transaction and such
      action does not violate any laws of its jurisdiction of organization or
      residence (including, but not limited to, any applicable position or
      exercise limits set by any self-regulatory organization, either acting
      alone or in concert with others) or the terms of
      any agreement to which it is a party; (iv) it has consulted with its legal
      advisor(s) and has reached its own conclusions about the Transaction, and
      any legal, regulatory, tax, accounting or economic consequences arising
      from the Transaction; and (v) it has concluded that the Transaction is
      suitable in light of its own investment objectives, financial capabilities
      and expertise.

                 

                (b)
      If Party B purchases any Shares pursuant to the Transaction, such
      purchase(s) will comply with (i) all laws and regulations applicable to it
      and (ii) all contractual obligations of Party B.

                 

                (c)
      At all times until termination of the Transaction, Party B is an “eligible
      contract participant” as the term is defined in the Commodity Futures
      Modernization Act of 2000.

              

      

      
        	 	 	 
	 
      	 	
                 (d)
      Neither Party A nor any of its affiliates has advised it with respect to
      any legal, regulatory, tax, accounting or economic consequences arising
      from the Transaction, and neither Party A nor any of its affiliates is
      acting as agent (other than LBI as dual agent if specified above), or
      advisor for Party B in connection with the Transaction.

                 

                (e)
      Each of its required filings under all applicable securities laws have
      been filed and that, as of the respective dates thereof there is no
      material misstatement of material fact contained therein or omission of a
      material fact required to be stated therein or necessary to make the
      statements therein not misleading.

                 

                (f)
      It has not entered into any obligation that would contractually limit it
      from effecting Physical Settlement or Cash Settlement under the
      Transaction.

              
	 	 	 
	 
      	 	
                (g)
      As of the Trade Date, Party B is in compliance with its reporting
      obligations under the Exchange Act and its most recent Annual Report on
      Form 10-K, together with all reports subsequently filed by it pursuant to
      the Exchange Act, taken together and as amended and supplemented to the
      Trade Date, do not, as of their respective filing dates, contain any
      untrue statement of a material fact or omit to state any material fact
      required to be stated therein or necessary to make the statements therein,
      in the light of the circumstances under which they were made, not
      misleading such that Party B’s officers and directors are not in
      possession of any material non-public information concerning Party B or
      its securities.

              

      

       

      
        
          Global
Deal ID: 3694013

          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      
        	 
      	 	
                (h)
      The Transaction and any repurchase of Shares by Party B in connection with
      the Transaction has been approved by its board of directors and that any
      such repurchase has been publicly disclosed.

              
	 	 	 
	 
      	 	
                (i)
      It is not entering into the Transaction to create actual or apparent
      trading activity in the Shares (or any security convertible into or
      exchangeable for Shares), to manipulate the price of the Shares (or any
      security convertible into or exchangeable for Shares) or to facilitate a
      distribution of Shares (or any security convertible into or exchangeable
      for Shares).

              
	 	 	 
	 
      	 	
                (j)
      It is not, and, after giving effect to the transactions contemplated
      hereby will not be, an “investment company” as such term is defined in the
      Investment Company Act of 1940, as amended.

              
	 	 	 
	 
      	 	
                (k)
      It is not on the Trade Date engaged in a distribution, as such term is
      used in Regulation M under the Securities Exchange Act of 1934, as amended
      (“Regulation M”), of any securities of Party B, other than a distribution
      meeting the requirements of the exception set forth in section 101(b)(10)
      or 102(b)(7) of Regulation M.  Party B shall not, until the
      second Exchange Business Day immediately following the Trade Date, engage
      in any such distribution.

              
	 	 	 
	 
      	 	
                (l)
      On the Trade Date and on any Additional Premium Payment Date (A) the
      assets of Party B at their fair valuation exceed the liabilities of Party
      B, including contingent liabilities, (B) the capital of Party B is
      adequate to conduct the business of Party B and (C) Party B has the
      ability to pay its debts and obligations as such debts mature and does not
      intend to, or does not believe that it will, incur debt beyond its ability
      to pay as such debts mature.

              

      

       

      
        	
                Other
      Provisions:

              	 	 
      
	 	 	 

      

       

      
        
          Global
Deal ID: 3694013

          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      
        	
                Alternative
      Calculations and Payment on Early Termination and on
      Certain  Extraordinary Events:

              	 	
                If,
      in respect of the Transaction, an amount is payable by Party A to Party B
      (i) pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity
      Definitions (except in the event of a Nationalization, Insolvency, Tender
      Offer or a Merger Event, in each case, in which the consideration to be
      paid to holders of Shares consists solely of cash) or (ii) pursuant to
      Section 6(d)(ii) of the Agreement (except in the event of an Event of
      Default in which Party B is the Defaulting Party or a Termination Event in
      which Party B is the Affected Party that resulted from an event or events
      outside Party B’s control) (a “Payment Obligation”), Party B shall have
      the right, in its sole discretion, to require Party A to satisfy any such
      Payment Obligation by the Share Termination Alternative (as defined below)
      by giving irrevocable telephonic notice to Party A, confirmed in writing
      within one Currency Business Day, no later than 4:00 p.m. New York local
      time on the Merger Date, Tender Offer Date, Announcement Date or Early
      Termination Date, as applicable (“Notice of Share
      Termination”).

                 

                Notwithstanding
      anything to the contrary in the foregoing, with respect to any Payment
      Obligation resulting from an Additional Termination Event in connection
      with an Early Conversion, Party B shall be deemed to have elected as of
      the Trade Date to require Party A to satisfy any such Payment Obligation
      by the Share Termination Alternative; provided that Party B
      may elect for the Share Termination Alternative not to apply to such
      Payment Obligation by (x) giving written notice of such election to Party
      A no later than 4:00 p.m., New York local time, on the Scheduled Trading
      Day immediately preceding the relevant Early Termination Date and (y)
      making to Party A in such written notice the representations and
      warranties contained in paragraph (g) under “Additional Representations
      and Warranties of Party B” above where the reference therein to “at the
      time of placing any order with respect to the Transaction” shall be
      replaced with “as of the date of this written notice.”

                 

                Upon
      Notice of Share Termination no later than 8:00 a.m. on the Exchange
      Business Day immediately following the Merger Date, Tender Offer Date,
      Announcement or Early Termination Date, as applicable, the following
      provisions shall apply:

              
	 	 	 
	
                Share
      Termination Alternative:

              	 	
                Applicable
      and means that Party A shall deliver to Party B the Share Termination
      Delivery Property on the date, or within a commercially reasonable period
      of time after, when the Payment Obligation would otherwise be due pursuant
      to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) and
      6(e) of the Agreement, as applicable (the “Share Termination Payment
      Date”), in satisfaction of the Payment Obligation in the manner reasonably
      requested by Party B free of
payment.

              

      

       

      
        
          Global
Deal ID: 3694013

          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      
        	
                Share
      Termination Delivery Property:

              	 	
                A
      number of Share Termination Delivery Units, as calculated by the
      Calculation Agent, equal to the Payment Obligation divided by the Share
      Termination Unit Price.  The Calculation Agent shall adjust the
      Share Termination Delivery Property by replacing any fractional portion of
      a security therein with an amount of cash equal to the value of such
      fractional security based on the values used to calculate the Share
      Termination Unit Price.

              
	 	 	 
	
                Share
      Termination Unit Price:

              	 	
                The
      value to Party A of property contained in one Share Termination Delivery
      Unit on the date such Share Termination Delivery Units are to be delivered
      as Share Termination Delivery Property, as determined by the Calculation
      Agent in its discretion by commercially reasonable means and notified by
      the Calculation Agent to Party A at the time of notification of the
      Payment Obligation.

              
	 	 	 
	
                Share
      Termination Delivery Unit:

              	 	
                In
      the case of a Termination Event or Event of Default, one Share or, in the
      case of Nationalization, Insolvency or Merger Event or Tender Offer, a
      unit consisting of the number or amount of each type of property received
      by a holder of one Share (without consideration of any requirement to pay
      cash or other consideration in lieu of fractional amounts of any
      securities) in such Nationalization, Insolvency, Merger Event or Tender
      Offer, as determined by the Calculation Agent. If a Share Termination
      Delivery Unit consists of property other than cash or New Shares and if
      Party B provides irrevocable written notice to the Calculation Agent on or
      prior to the Merger Date that it elects to have Party A deliver cash, New
      Shares or a combination thereof (in such proportion as Party B designates)
      in lieu of such other property, the Calculation Agent will replace such
      property with cash, New Shares or a combination thereof as components of a
      Share Termination Delivery Unit in such amounts, as determined by the
      Calculation Agent in its discretion by commercially reasonable means, as
      shall have a value equal to the value of the property so
      replaced.  If such Nationalization, Insolvency, Merger Event or
      Tender Offer involves a choice of consideration to be received by holders,
      such holder shall be deemed to have elected to receive the maximum
      possible amount of cash.

              

      

       

      
        
          Global
Deal ID: 3694013

          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      
        	
                Failure
      to Deliver:

              	 	
                Applicable

              
	 	 	 
	
                Other
      applicable provisions:

              	 	
                If
      the Transaction is to be Share Termination Settled, the provisions of
      Sections 9.8, 9.9, 9.10, 9.11 and 9.12 (as modified above) of the Equity
      Definitions will be applicable, as if “Physical Settlement” applied to the
      Transaction; provided that all
      references to “Shares” shall be read as references to “Share Termination
      Delivery Units” and the representations and agreements contained in
      Section 9.11 of the Equity Definitions shall be modified by excluding any
      representations therein relating to restrictions, obligations, limitations
      or requirements under applicable securities laws that exist as a result of
      the fact that Party B is the issuer of the Shares.  “Share
      Termination Settled” in relation to a Transaction means that Share
      Termination Settlement is applicable to the
Transaction.

              
	 	 	 
	
                Special
      Provisions for Party B Payments:

              	 	
                Party
      A and Party B agree that, notwithstanding anything to the contrary herein
      or in the Agreement, in the event that (i) an Early Termination Date
      (whether as a result of an Event of Default or Termination Event) occurs
      or is designated with respect to any Transaction and, as a result, Party B
      owes to Party A an amount calculated under Section 6(e) of the Agreement
      or (ii) an Extraordinary Event occurs that results in the termination or
      cancellation of any Transaction pursuant to Article 12 of the Equity
      Definitions and, as a result, Party B owes to Party A a Cancellation
      Amount or any other amount in respect to this Transaction, such amount
      shall be deemed to be zero.

              
	 	 	 
	
                Regulatory
      Provisions:

              	 	
                (a)
      Party B represents and warrants that it has received and read and
      understands the Notice of Regulatory Treatment and the OTC Option Risk
      Disclosure Statement.

                 

                (b)
      The Agent will furnish Party B upon written request a statement as to the
      source and amount of any remuneration received or to be received by the
      Agent in connection with the Transaction evidenced
  hereby.

              
	 	 	 
	
                Transfer:

              	 	
                Notwithstanding
      Section 7 of the Agreement, Party A may assign its rights and obligations
      under the Transaction, in whole and not in part, to any Affiliate of
      Holdings effective upon delivery to Party B of the full unconditional
      guarantee by Holdings, substantially in the form of the Parent Guarantee,
      in favor of Party B, of the obligations of such Affiliate; provided, however, that
      notwithstanding the foregoing no such assignment by Party A as assignor
      (the “Assignor”) shall be permitted unless:

                 

              

      

       

      
        
          Global
Deal ID: 3694013

          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

      
         

      

       

      
        	 	 	
                (i)
      Party B will not, as a result of such assignment, be required to pay to
      such Affiliate any amount in respect of an Indemnifiable Tax under Section
      2(d)(i)(4) of the Agreement greater than the amount in respect of which
      Party B would have been required to pay to the Assignor absent such
      transfer or otherwise suffer any other additional tax burden (whether an
      Indemnifiable Tax or otherwise) or Party A or such Affiliate waives any
      such additional payment obligation under Section 2(d)(i)(4) of the
      Agreement or agrees to make Party B whole for such additional tax
      burden;

                 

                (ii)
      such Affiliate will not, as a result of such assignment, be required to
      withhold or deduct on account of a Tax under Section 2(d)(i) of the
      Agreement in an amount in excess of that which the Assignor would have
      been required to so withhold or deduct absent such transfer unless such
      Affiliate elects (or is required pursuant to Section 2(d)(i)(4) of the
      Agreement) to gross up Party B with respect to such excess withholding
      (either by payment directly to the taxing authority or a payment to Party
      B); and

                 

                (iii)
      immediately upon giving effect to such assignment, no Event of Default and
      no Termination Event will occur as a direct result of such
      assignment.

              
	 	 	 
	 
      	 	
                If
      Party A, in its sole discretion, determines that its “beneficial
      ownership” at any time (within the meaning of Section 16 of the Exchange
      Act and rules promulgated thereunder) exceeds 8.0% or more of Party B’s
      outstanding Shares; and, in its sole discretion, Party A is unable after
      its commercially reasonable efforts to effect a transfer or assignment on
      pricing terms and in a time period reasonably acceptable to Party A that
      would reduce its “beneficial ownership” to 7.5%; Party A may designate any
      Exchange Business Day as an Early Termination Date with respect to a
      portion (the “Terminated Portion”) of the Transaction, such that its
      “beneficial ownership” following such partial termination will be equal to
      or less than (but not materially less than) 7.5%.  In the event
      that Party A so designates an Early Termination Date with respect to a
      portion of the Transaction, a payment shall be made pursuant to Section 6
      of the Agreement as if (i) an Early Termination Date had been designated
      in respect of Transaction having terms identical to the Transaction and
      Numbers of Options equal to the Terminated Portion, (ii) Party B shall be
      the sole Affected Party with respect to such partial termination and (iii)
      such Transaction shall be the only Terminated
  Transaction.

              

      

       

      
        
          Global
Deal ID: 3694013

          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

      
        	
                Staggered
      Settlement:

              	 	
                Party
      A may, by notice to Party B on or prior to any Settlement Date (a “Nominal
      Settlement Date”), elect to deliver any Shares required to be delivered by
      it on two or more dates (each, a “Staggered Settlement Date”) as
      follows:

                 

                (i)   
      in such notice, Party A will specify to Party B the related Staggered
      Settlement Dates (the first of which will be such Nominal Settlement Date
      and the last of which will be no later than the twentieth (20th)
      Exchange Business Day following such Nominal Settlement Date) and the
      number of Shares that it will deliver on each Staggered Settlement
      Date;

                 

                (ii)  
      the aggregate number of Shares that Party A will deliver to Party B
      hereunder on all such Staggered Settlement Dates will equal the number of
      Shares that Party A would otherwise be required to deliver on such Nominal
      Settlement Date; and

                 

                (iii)
       if the Physical Settlement terms set forth above were to apply on
      such Nominal Settlement Date, then the Physical Settlement terms will
      apply on each Staggered Settlement Date, except that the related Shares to
      be delivered by Party A will be allocated among such Staggered Settlement
      Dates as specified by Party A in the notice referred to in clause (i)
      above and Party B shall pay the Settlement Amount for those Shares on the
      Nominal Settlement Date.

              
	 	 	 
	
                Set-Off
      and Netting:

              	 	
                Party
      A agrees not to set-off or net amounts due from Party B with respect to
      the Transaction hereunder against amounts due from Party A to Party B
      under obligations other than Equity Contracts. Section 2(c) of the
      Agreement as it applies to payments due with respect to the Transaction
      hereunder shall remain in effect and is not subject to the first sentence
      of this provision.

                 

                Upon
      the occurrence of an Event of Default or Termination Event with respect to
      a party who is the Defaulting Party or the Affected Party (“X”), the other
      party (“Y”) will have the right (but not be obliged) without prior notice
      to X or any other person to set-off or apply any obligation of X under an
      Equity Contract owed to Y (or any Affiliate of Y) (whether or not matured
      or contingent and whether or not arising under the Agreement, and
      regardless of the currency, place of payment or booking office of the
      obligation) against any obligation of Y (or any Affiliate of Y) under an
      Equity Contract owed to X (whether or not matured or contingent and
      whether or not arising under the Agreement, and regardless of the
      currency, place of payment or booking office of the
      obligation).  Y will give notice to the other party of any
      set-off effected under this
paragraph.

              

      

       

      
        
          Global
Deal ID: 3694013

          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	 	
                
                  “Equity
      Contract” shall mean for purposes of this paragraph any transaction
      relating to Shares between X and Y (or any Affiliate of Y) that qualifies
      as ‘equity’ under applicable accounting rules.

                   

                  Amounts
      (or the relevant portion of such amounts) subject to set-off may be
      converted by Y into the Termination Currency at the rate of exchange at
      which such party would be able, acting in a reasonable manner and in good
      faith, to purchase the relevant amount of such currency.

                   

                  If
      any obligation is unascertained, Y may in good faith and a commercially
      reasonable manner estimate that obligation and set-off in respect of the
      estimate, subject to the relevant party accounting to the other when the
      obligation is ascertained.

                   

                  Nothing
      in this section shall be effective to create a charge or other security
      interest.  This section shall be without prejudice and in
      addition to any right of set-off, combination of accounts, lien or other
      right to which any party is at any time otherwise entitled (whether by
      operation of law, contract or otherwise).

                   

                

              
	
                 Equity
      Rights:

              	 	Party
      A acknowledges and agrees that this Confirmation is not intended to convey
      to it rights with respect to the Transaction that are senior to the claims
      of common stockholders in the event of Party B’s
      bankruptcy.  For the avoidance of doubt, the parties agree that
      the preceding sentence shall not apply at any time other than during Party
      B’s bankruptcy to any claim arising as a result of a breach by Party B of
      any of its obligations under this Confirmation or the
      Agreement.  For the avoidance of doubt, the parties acknowledge
      that this Confirmation is not secured by any collateral that would
      otherwise secure the obligations of Party B herein under or pursuant to
      any other agreement.

      

       

      
        
          Global
Deal ID: 3694013

          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

      
        	
                No
      Collateral:

              	 	
                No
      collateral is required to be posted by Party B in respect of the
      Transaction.

              
	 	 	 
	
                Bankruptcy
      Code Provisions:

              	 	
                Each
      of Party A and Party B agrees and acknowledges that Party A is a “swap
      participant” and/or “financial participant” within the meaning of Sections
      101(53C) and 101(22A) of Title 11 of the United States Code (the
      “Bankruptcy Code”).  The parties hereto further agree and
      acknowledge (A) that this Confirmation is (i) a “securities contract,” as
      such term is defined in Section 741(7) of the Bankruptcy Code, with
      respect to which each payment and delivery hereunder is a “settlement
      payment,” as such term is defined in Section 741(8) of the Bankruptcy
      Code, and (ii) a “swap agreement,” as such term is defined in Section
      101(53B) of the Bankruptcy Code, with respect to which each payment and
      delivery hereunder is a “transfer,” as such term is defined in Section
      101(54) of the Bankruptcy Code, and (B) that Party A is entitled to the
      protections afforded by, among other sections, Sections 362(b)(6),
      362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy
      Code.

              
	 	 	 
	
                Early
      Unwind:

              	 	
                In
      the event the sale of the Convertible Notes by the Issuer is not
      consummated with the initial purchasers for any reason, other than as a
      result of a breach by Party A, by the close of business in New York on
      March 10, 2008 (or such later date as agreed upon by the parties) (March
      10, 2008 or such later date as agreed upon being the “Early Unwind Date”),
      the Transaction shall automatically terminate (the “Early Unwind”), on the
      Early Unwind Date and (i) the Transaction and all of the respective rights
      and obligations of Party A and Party B under the Transaction shall be
      cancelled and terminated and (ii) each party shall be released and
      discharged by the other party from and agrees not to make any claim
      against the other party with respect to any obligations or liabilities of
      the other party arising out of and to be performed in connection with the
      Transaction either prior to or after the Early Unwind Date; provided that Party B
      shall reimburse the costs and expenses (including market losses) relating
      to reselling those Shares to unwind its hedge positions, and will assume,
      or reimburse the cost of unwinding, any and all derivatives entered into
      by Party A or one or more of its affiliates in connection with hedging the
      Transaction (to the extent such costs and expenses in the aggregate do not
      exceed the product of USD 3,000,000 times the Applicable
      Percentage). Party A and Party B represent and acknowledge to the other
      that, subject to the proviso included in the preceding sentence, upon an
      Early Unwind, all obligations with respect to the Transaction shall be
      deemed fully and finally
discharged.

              

      

       

      
        
          Global
Deal ID: 3694013

          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

      
        	
                Additional
      Termination Events:

              	 	
                Notwithstanding
      anything to the contrary in this Confirmation, (i) upon the occurrence of
      an Early Conversion:

                 

                (A)
      such Early Conversion shall constitute an Additional Termination Event
      hereunder with respect to a number of Options equal to the number of the
      relevant Exercised Options (the “Affected Number of Options”), in which
      case (x) the sole Affected Transaction shall consist of a transaction
      identical to the Transaction except that Number of Options for such
      Affected Transaction shall equal the Affected Number of Options and Party
      B shall be deemed the sole Affected Party and (y) the Transaction shall
      remain in full force and effect, except that the Number of Options subject
      to the Transaction immediately prior to the Conversion Date for such Early
      Conversion shall as of such Conversion Date be reduced by the Affected
      Number of Options;

                 

                (B)
      notwithstanding anything to the contrary in the Agreement, Party A shall
      designate an Early Termination Date in respect of such Affected
      Transaction, which shall be no earlier than one Scheduled Trading Day
      following the Conversion Date for the related Early Conversion;
      and

                 

                (C)
      for the avoidance of doubt, in determining the amount payable in respect
      of such Affected Transaction pursuant to Section 6 of the Agreement, the
      Calculation Agent shall assume that (x) the relevant Early Conversion and
      any adjustments, agreements, payments, deliveries or acquisitions by or on
      behalf of Party B leading thereto had not occurred, (y) no adjustments to
      the Conversion Rate have occurred pursuant to Section 10.04(b) or Section
      10.05(i) of the Indenture and (z) the corresponding Convertible Notes
      remain outstanding, and

                 

                (ii)
      if there has occurred an acceleration of the Convertible Notes after an
      event of default with respect to Party B under the terms of the
      Convertible Notes as set forth in Section 6.02  of the
      Indenture, then such acceleration shall constitute an Additional
      Termination Event applicable to the Transaction and, with respect to such
      event of default (A) Party B shall be deemed to be the sole Affected Party
      and the Transaction shall be the sole Affected Transaction and (B) Party A
      shall be the party entitled to designate an Early Termination Date
      pursuant to Section 6(b) of the
Agreement.

              

      

       

      
        
          Global
Deal ID: 3694013

          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

      
        	
                Right
      to Extend:

              	 	
                Party
      A may extend, for as long as it is reasonably necessary, any Averaging
      Date, the Expiration Date, the Settlement Date or any other date of
      delivery by Party A, with respect to some or all of the Options hereunder,
      if Party A determines, in its commercially reasonable
      discretion based on the advice of nationally recognized outside
      counsel, that such extension is reasonably necessary or appropriate to
      preserve Party A’s hedging or hedge unwind activity hereunder in light of
      existing liquidity conditions or to enable Party A to effect purchases or
      sales of Shares in connection with its hedging or settlement activity
      hereunder in a manner that would, if Party A were Party B or an affiliated
      purchaser of Party B, be in compliance with applicable legal and
      regulatory or self-regulatory requirements or with related policies or
      procedures applicable to Party A.

              
	 	 	 
	
                Registration
      of Hedge Shares:

              	 	
                Party
      B hereby agrees that if Party A determines, in its reasonable judgment
      based on the advice of nationally recognized outside counsel, that the
      Shares (the “Hedge Shares”) acquired by Party A for the purpose of hedging
      its obligations pursuant to the Transaction cannot be sold in the U.S.
      public market by Party A without registration under the Securities Act,
      Party B shall, at Party B’s election: (i) in order to allow Party A to
      sell the Hedge Shares in a registered offering, make available to Party A
      an effective registration statement under the Securities Act to cover the
      resale of such Hedge Shares and (A) enter into an agreement, in form and
      substance satisfactory to Party A, substantially in the form of an
      underwriting agreement for a registered offering, (B) provide accountant’s
      “comfort” letters in customary form for registered offerings of equity
      securities, (C) provide disclosure opinions of nationally recognized
      outside counsel to Party B reasonably acceptable to Party A, (D) provide
      other customary opinions, certificates and closing documents customary in
      form for registered offerings of equity securities and (E) afford Party A
      a reasonable opportunity to conduct a “due diligence” investigation with
      respect to Party B customary in scope for underwritten offerings of equity
      securities (provided,
      however, that if Party A, in its sole reasonable discretion, is not
      satisfied with access to due diligence materials, the results of its due
      diligence investigation, or the procedures and documentation for the
      registered offering referred to above, then clause (ii) or clause (iii) of
      this paragraph shall apply at the election of Party B); (ii) in order to
      allow Party A to sell the Hedge Shares in a private placement, enter into
      a private placement agreement substantially similar to private placement
      purchase agreements customary for private placements of equity securities,
      in form and substance satisfactory to Party A, including customary
      representations, covenants, blue sky and other governmental filings and/or
      registrations, indemnities to Party A, due diligence rights (for Party A
      or any designated buyer of the Hedge Shares from Party A), opinions and
      certificates and such other documentation as is customary for private
      placements agreements, all reasonably acceptable to Party A (in which
      case, the Calculation Agent shall make any adjustments to the terms of the
      Transaction that are necessary, in its reasonable judgment, to compensate
      Party A for any discount from the public market price of the Shares
      incurred on the sale of Hedge Shares in a private placement); or (iii)
      purchase the Hedge Shares from Party A at the VWAP Price on such Exchange
      Business Days, and in the amounts, as requested by Party
      A.  

              

      

       

      
        
          Global
Deal ID: 3694013

          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      
        	
                Repurchase
      notices:

              	 	
                Party
      B shall, no later than ten Scheduled Trading Days prior to the day on
      which Party B effects any repurchase of Shares, give Party A a written
      notice of such repurchase (a “Repurchase Notice”) on such day if following
      such repurchase, the Options Equity Percentage as determined on such day
      is (i) greater than 8.0% and (ii) greater by 0.5% than the Options Equity
      Percentage included in the immediately preceding Repurchase Notice (or, in
      the case of the first such Repurchase Notice, greater than the Options
      Equity Percentage as of the date hereof).  The “Options Equity
      Percentage” as of any day is the fraction (A) the numerator of which is
      the Number of Shares and (B) the denominator of which is the number of
      Shares outstanding on such day.  Party B agrees to indemnify and
      hold harmless Party A and its affiliates and their respective officers,
      directors, employees, affiliates, advisors, agents and controlling persons
      (each, an “Indemnified Person”) from and against any and all losses
      (including losses relating to Party A's hedging activities as a
      consequence of becoming, or of the risk of becoming, a Section 16
      “insider”, including without limitation, any forbearance from hedging
      activities or cessation of hedging activities and any losses in connection
      therewith with respect to the Transaction), claims, damages, judgments,
      liabilities and expenses (including reasonable attorney’s fees), joint or
      several, which an Indemnified Person may become subject to, as a result of
      Party B's failure to provide Party A with a Repurchase Notice on the day
      and in the manner specified in this paragraph, and to reimburse, within 30
      days, upon written request, each of such Indemnified Persons for any
      reasonable legal or other expenses incurred in connection with
      investigating, preparing for, providing testimony or other evidence in
      connection with or defending any of the foregoing.  If any suit,
      action, proceeding (including any governmental or regulatory
      investigation), claim or demand shall be brought or asserted against the
      Indemnified Person, 

              

      

       

      
        
          Global
Deal ID: 3694013

          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

      
         

        
          	
                  Repurchase
      notices:

                	 	
                  such
      Indemnified Person shall promptly notify Party B in writing, and Party B,
      upon request of the Indemnified Person, shall retain counsel reasonably
      satisfactory to the Indemnified Person to represent the Indemnified Person
      and any others Party B may designate in such proceeding and shall pay the
      fees and expenses of such counsel related to such
      proceeding.  Party B shall not be liable for any settlement of
      any proceeding effected without its written consent, but if settled with
      such consent or if there be a final judgment for the plaintiff, Party B
      agrees to indemnify any Indemnified Person from and against any loss or
      liability by reason of such settlement or judgment.  Party B
      shall not, without the prior written consent of the Indemnified Person,
      effect any settlement of any pending or threatened proceeding in respect
      of which any Indemnified Person is or could have been a party and
      indemnity could have been sought hereunder by such Indemnified Person,
      unless such settlement includes an unconditional release of such
      Indemnified Person from all liability on claims that are the subject
      matter of such proceeding on terms reasonably satisfactory to such
      Indemnified Person.  If the indemnification provided for in this
      paragraph is unavailable to an Indemnified Person or insufficient in
      respect of any losses, claims, damages or liabilities referred to therein,
      then Party B, in lieu of indemnifying such Indemnified Person thereunder,
      shall contribute to the amount paid or payable by such Indemnified Person
      as a result of such losses, claims, damages or liabilities.  The
      remedies provided for in this paragraph are not exclusive and shall not
      limit any rights or remedies that may otherwise be available to any
      Indemnified Person at law or in equity.  The indemnity and
      contribution agreements contained in this paragraph shall remain operative
      and in full force and effect regardless of the termination of the
      Transaction.

                

        

         

        
          
            Global
Deal ID: 3694013

            
            

          

          
            25

            
              

            

          

          
            
            

          

        

         

      

       

       

      
        	
                Restrictions
      on Repurchases:

              	 	
                On
      any Averaging Date, neither Party B nor any “affiliate” or “affiliated
      purchaser” (each as defined in Rule 10b-18 under the Exchange Act (“Rule
      10b-18”)) shall directly or indirectly (including, without limitation, by
      means of any cash-settled or other derivative instrument) purchase, offer
      to purchase, place any bid or limit order that would effect a purchase of,
      or commence any tender offer relating to, any Shares (or an equivalent
      interest, including a unit of beneficial interest in a trust or limited
      partnership or a depository share) or any security convertible into or
      exchangeable or exercisable for Shares.

              
	 	 	 
	
                Restrictions
      on Certain Distributions:

              	 	
                During
      any Averaging Period, the Shares or securities that are convertible into,
      or exchangeable or exercisable for Shares shall not be subject to a
      “restricted period” (as such term is defined in Regulation M) and Party A
      shall not engage in any “distribution” (as such term is defined in
      Regulation M) until the sixth Exchange Business Day immediately following
      the Averaging Period.

              
	 	 	 
	
                Payments
      on Early Termination:

              	 	
                Party
      A and Party B agree that for the Transaction, for the purposes of Section
      6(e) of the Agreement, Loss and the Second Method will
    apply.

              
	 	 	 
	
                Governing
      Law:

              	 	
                The
      laws of the State of New York (without reference to choice of law doctrine
      other than Section 5-1401 of the New York General Obligations
      Law).

              
	 	 	 
	
                Termination
      Currency:

              	 	
                USD

              
	 	 	 
	
                Office:

              	 	
                For
      the purposes of the Transaction, Party A is not a Multibranch Party, and
      Party B is not a Multibranch Party.

              

      

       

      
        
          Global
Deal ID: 3694013

          
          

        

        
          26

          
            

          

        

        
          
          

        

      

       

      
        	
                Calculation
      Agent:

              	 	
                LBI;
      provided that,
      upon written request by Party B, the Calculation Agent shall provide in
      writing in reasonable detail evidence and explanation of any calculation
      or determination it made in respect of the Transaction, including a
      description of the methodology and data applied in making any adjustment
      to any terms of the Transaction, in each case within five Exchange Trading
      Days of receipt by Party A of such written request by Party B; provided further that
      (i) if the Calculation Agent fails to provide such evidence or calculation
      within such required time period and such failure resulted from
      administrative or clerical error, such failure shall not constitute an
      Event of Default with respect to the Calculation Agent if the Calculation
      Agent provides such evidence or calculation within three Exchange Business
      Days of being made aware of such failure and (ii) in providing such
      evidence and explanation, in no event shall the Calculation Agent be
      obligated to disclose any trading information proprietary to Party A or
      its affiliates or any information which Party A or its affiliate is
      required by contract or law to hold confidential.

              
	 	 	 
	
                WAIVER
      OF JURY TRIAL:

              	 	
                EACH
      PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
      IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR
      PROCEEDING RELATING TO THE TRANSACTION.  EACH PARTY (I)
      CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS
      REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
      THE EVENT OF SUCH A SUIT, ACTION OR PROCEEDING, SEEK TO ENFORCE THE
      FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE
      BEEN INDUCED TO ENTER INTO THE TRANSACTION, AS APPLICABLE, BY, AMONG OTHER
      THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS PROVIDED
    HEREIN.

              
	 	 	 
	
                Tax
      Disclosure:

              	 	
                Effective
      from the date of commencement of discussions concerning the Transaction,
      Party B and each of its employees, representatives, or other agents may
      disclose to any and all persons, without limitation of any kind, the tax
      treatment and tax structure of the transaction and all materials of any
      kind (including opinions or other tax analyses) that are provided to Party
      B relating to such tax treatment and tax
  structure.

              

      

      

      
        
          Global
Deal ID: 3694013

           

        

        
          27

          
            

          

        

        
           

        

      

      THE
SECURITIES REPRESENTED BY THE CONFIRMATION HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 OR ANY
OTHER UNITED STATES FEDERAL OR STATE SECURITIES LAWS; SUCH SECURITIES MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF APPROPRIATE REGISTRATION UNDER
SUCH SECURITIES LAWS OR EXCEPT IN A TRANSACTION EXEMPT FROM OR NOT SUBJECT TO
THE REGISTRATION REQUIREMENTS OF SUCH SECURITIES LAWS.

      

      
        
          Global
Deal ID: 3694013

           

        

        
          28

          
            

          

        

        
           

        

      

      Please
confirm your agreement with the foregoing by executing this Confirmation and
returning such Confirmation, in its entirety, to us at facsimile number
646-885-9546, Attention: Documentation.

      

       

      
        	
                Yours
      sincerely,

              	
                Accepted
      and agreed to:

              
	 
      	 
      
	
                Lehman
      Brothers OTC Derivatives Inc.

              	
                Central
      European Media Enterprises Ltd

              
	 	 
	 	 
	
                By:   /s/ Locke R.
      McMurray

                Name:
      Locke R. McMurray

                Title:
      Managing Director

              	
                By:    /s/ Michael
      Garin

                Name:
      Michael Garin

                Title:
      Chief Executive Officer

              

      

       

      Execution
time will be furnished upon Party B's written request.

       

      

       

      Lehman
Brothers

      745
SEVENTH AVENUE,

      NEW YORK
NY 10019

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      EXHIBIT
A

       

      

      GUARANTEE OF LEHMAN BROTHERS
HOLDINGS INC.

       

      LEHMAN
BROTHERS OTC DERIVATIVES INC. (“Party A”) and Central European Media Enterprises
Ltd. (“Party B”) have entered into a Confirmation dated as of March 4, 2008 (the
“Confirmation”) which evidences a transaction entered into between Party A and
Party B (the “Transaction”), which Confirmation supplements, forms part of, and
will be read and construed as one with, the ISDA Master Agreement referred to
therein (collectively referred to as the “Agreement”).  This Guarantee
is a Credit Support Document as contemplated in the Agreement. For value
received, and in consideration of the financial accommodation accorded to Party
A by Party B under the Agreement, LEHMAN BROTHERS HOLDINGS INC., a corporation
organized and existing under the laws of the State of Delaware (“Guarantor”),
hereby agrees to the following:

       

      (a)         Guarantor
hereby unconditionally guarantees to Party B the due and punctual payment of all
amounts payable by Party A in connection with each Transaction when and as Party
A’s obligations thereunder shall become due and payable in accordance with the
terms of the Agreement (whether at maturity, by acceleration or otherwise).
Guarantor hereby agrees, upon written demand by Party B, to pay or cause to be
paid any such amounts punctually when and as the same shall become due and
payable.

       

      (b)         Guarantor
hereby agrees that its obligations under this Guarantee constitute a guarantee
of payment when due and not of collection.

       

      (c)         Guarantor
hereby agrees that its obligations under this Guarantee shall be unconditional,
irrespective of the validity, regularity or enforceability of any obligation of
Party A under the Agreement, the absence of any action to enforce Party A’s
obligations under the Agreement, any waiver or consent by Party B with respect
to any provisions thereof, the entry by Party A and Party B into any amendments
to the Agreement, additional Transactions under the Agreement or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor (excluding the defense of payment or statute of
limitations, neither of which is waived) provided, however, that Guarantor shall
be entitled to exercise any right that Party A could have exercised under the
Agreement to cure any default in respect of its obligations under the Agreement
or to setoff, counterclaim or withhold payment with respect to any Event of
Default or Potential Event of Default, but only to the extent such right is
provided to Party A under the Agreement. The Guarantor acknowledges that Party A
and Party B may from time to time enter into one or more Transactions pursuant
to the Agreement and agrees that the obligations of the Guarantor under this
Guarantee will upon the execution of any such Transaction by Party A and Party B
extend to all such Transactions without the taking of further action by the
Guarantor.

       

      (d)         This
Guarantee shall remain in full force and effect until receipt by Party B of a
written notice of termination from Guarantor. Termination of this Guarantee
shall not affect Guarantor’s liability hereunder as to obligations incurred or
arising out of Transactions entered into prior to the termination
hereof.

       

      (e)         Guarantor
further agrees that this Guarantee shall continue to be effective or be
reinstated, as the case may be, if at any time, payment, or any part thereof, of
any obligation or interest thereon is rescinded or must otherwise be restored by
Party B upon an Event of Default as set forth in Section 5(a)(vii) of
the Master Agreement affecting Party A or Guarantor.

       

      (f)         Guarantor
hereby waives (i) promptness, diligence, presentment, demand of payment,
protest, order and, except as set forth in paragraph (a) hereof, notice of any
kind in connection with the Agreement and this Guarantee, or (ii) any
requirement that Party B exhaust any right to take any action against Party A or
any other person prior to or contemporaneously with proceeding to exercise any
right against Guarantor under this Guarantee.

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      (g)         Guarantor
shall have no right of subrogation with respect to any payments made under this
Guarantee until all obligations of the Guaranteed Party under the Agreement are
paid in full.

       

      (h)         Guarantor
represents and warrants (which representations and warranties shall be deemed to
have been made by Guarantor on the date of each Transaction) that:

       

      i.           Guarantor
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware;

       

      ii.          Guarantor
has the legal capacity and the legal right to execute and deliver this Guarantee
and to perform Guarantor’s obligations hereunder;

       

      iii.         no
consent or authorization of, filing with, or other act by or in respect of, any
governmental authority and no consent of any other person (including, without
limitation, any creditor of Guarantor) is required in connection with the
execution, delivery, performance, validity or enforceability of this
Guarantee;

       

      iv.         this
Guarantee has been duly executed and delivered by Guarantor and constitutes a
legal, valid and binding obligation of Guarantor enforceable in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors’ rights
generally; and

       

      v.          the
execution, delivery and performance of this Guarantee will not violate any
provision of the certificate of incorporation, by laws or other organizational
documents of Guarantor, or any law, treaty, rule or regulation or determination
of an arbitrator, a court or other governmental authority, applicable to or
binding upon Guarantor or any of its property or to which Guarantor or any of
its property is subject.

       

      (i)         Any
provision of this Guarantee which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

       

      (j)         No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege, and no waiver by Party B of any right or remedy
hereunder on any one occasion shall be construed as a bar to any right or remedy
which Party B would otherwise have on any future occasion. No failure to
exercise, nor any delay in exercising, any right, power or privilege hereunder
shall operate as a waiver thereof. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.

       

      (k)         If
any term, provision, covenant, or condition of this Guarantee, or the
application thereof to any party or circumstance, shall be held to be illegal,
invalid or unenforceable (in whole or in part) for any reason, the remaining
terms, provisions, covenants and conditions hereof shall continue in full force
and effect as if this Guarantee had been executed with the illegal, invalid or
unenforceable portion eliminated, so long as this Guarantee as so modified
continues to express, without material change, the original intentions of the
parties as to the subject matter of this Guarantee and the deletion of such
portion of this Guarantee will not substantially impair the respective benefits
or expectations of the parties to this Guarantee.

      

       

      This
Guarantee shall be governed by and construed in accordance with the laws of the
State of New York without regard to conflicts of laws principles. All
capitalized terms not defined in this Guarantee, but defined in the Agreement,
shall have the meanings assigned thereto in the Agreement.

       

      
        
           

        

        
          A-2

          
            

          

        

        
           

        

      

      IN
WITNESS WHEREOF, Guarantor has caused this Guarantee to be executed by its duly
authorized officer as of the date of the Agreement.

       

      
        	 
      	
                LEHMAN
      BROTHERS HOLDINGS INC.

              
	 
      	 
      	 	 
      
	 
      	 
      	 	 
      
	 
      	
                By:

              	_____________________________ 	 
      
	 
      	
                Name:

              	 	 
      
	 
      	
                Title:

              	 	 
      
	 
      	
                Date:ex10_7.htm

    
      

    

    Exhibit
10.7

    

    

    

     

    
      	 	

              Deutsche
      Bank 

              

              Deutsche
      Bank AG, London

              Branch

              Winchester
      house

              1
      Great Winchester St,

              London
      EC2N 2DB

              Telephone:
      +44 20 7545 8000

               

              c/o
      Deutsche Bank Securities Inc.

              60,
      Wall Street

              New
      York, NY 10005

              Telephone:
      212-250-2500

            

    

     

    

    
      	
              DATE:

            	
              March
      4, 2008

            

    

    

    
      	
              TO:

            	
              Central
      European Media Enterprises Ltd.

            

    

    c/o CME
Development Corporation

    
      	
              ATTENTION:

            	
              Mark
      Wyllie (VP Corporate Finance) /

            

    

    Robert
Janta-Lipinski (Group Treasurer)

    
      	
              TELEPHONE:

            	
              +44
      20 7430 5337 / 5353

            

    

    
      	
              FACSIMILE:

            	
              +44
      20 7430 5402

            

    

    

    
      	
              FROM:

            	
              Andrew
      Yaeger (Managing Director)

            

    

    Deutsche
Bank AG, London Branch

    
      	
              TELEPHONE:

            	
              212
      250 2717

            

    

    
      	
              FACSIMILE:

            	
              212
      797 4562

            

    

    

    
      	
              SUBJECT:

            	
              Equity
      Derivatives Confirmation

            

    

    

    
      	
               
      

            	
              REFERENCE
      NUMBER(S):243454

            

    

    

    
      
        
          

        

      

    

    Dear Sir
or Madam:

     

    The
purpose of this communication (this “Confirmation”) is to confirm the terms and
conditions of the transaction (the “Transaction”) entered into between Deutsche
Bank AG, London Branch (“Party A”) and Central European Media Enterprises Ltd.
(“Party B”) on the Trade Date specified below. This Confirmation constitutes a
“Confirmation” as referred to in the Agreement specified below.

    

    This
Confirmation evidences a complete and binding agreement between Party A and
Party B as to the terms of the Transaction to which this Confirmation relates.
This Confirmation supplements, forms part of, and is subject to, an agreement in
the form of the 1992 ISDA Master Agreement (Multicurrency—Cross Border) (the
“Agreement”) as if we had executed an agreement in such form (but without any
Schedule except for the elections set forth herein) on the Trade Date of the
Transaction.

     

    
    

     

    
      	

              Chairman
      of the Supervisory Board: Clemens Börsig

              Board
      of Managing Directors: Hermann-Josef Lamberti, Josef Ackermann, Anthony
      DiIorio, Hugo Banziger

            	 	Deutsche
      Bank AG is regulated by the FSA for the conduct of designated investment
      business in the UK, is a member of the London Stock Exchange and is a
      limited liability company incorporated in the Federal Republic of Germany
      HRB No. 30 000 District Court of Frankfurt am Main; Branch Registration
      No. in England and Wales BR000005, Registered address: Winchester House, 1
      Great Winchester Street, London EC2N
2DB.

    

     

    
 

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    The
definitions and provisions contained in the 2002 ISDA Equity Derivatives
Definitions (the “Equity Definitions”) and the 2000 ISDA Definitions (the “Swap
Definitions”, and together with the Equity Definitions, the “Definitions”), in
each case as published by the International Swaps and Derivatives Association,
Inc. (“ISDA”) are incorporated into this Confirmation. The Transaction
constitutes a Share Option Transaction for the purposes of the Equity
Definitions. References herein to “Transaction” shall be deemed references to
“Swap Transaction” for purposes of the Swap Definitions.  In the event
of any inconsistency between the Equity Definitions and the Swap Definitions,
the Equity Definitions will govern.  In the event of any inconsistency
between either set of Definitions and this Confirmation, this Confirmation will
govern.

    

    Certain
defined terms used herein have the meanings assigned to them in the Offering
Memorandum dated March 4, 2008 (the “Offering Memorandum”) relating to the
USD425 million aggregate principal amount of 3.50% Convertible Senior Notes due
2013 (the “Convertible Notes” and each USD1,000 principal amount of Convertible
Notes, a “Convertible Note”) issued by Party B pursuant to an Indenture to be
dated as of March 10, 2008 between Party B and The Bank of New York, as trustee
(as in effect on the date of its execution, the “Indenture”). In the event of
any inconsistency between the terms defined in the Offering Memorandum, the
Indenture and this Confirmation, this Confirmation shall govern. The parties
acknowledge that this Confirmation is entered into on the date hereof with the
understanding that (i) definitions set forth in the Indenture that are also
defined herein by reference to the Indenture and (ii) sections of the Indenture
that are referred to herein, in each case, will conform to the descriptions
thereof in the Offering Memorandum. If any such definitions in the Indenture or
any such sections of the Indenture differ from the descriptions thereof in the
Offering Memorandum, the descriptions thereof in the Offering Memorandum will
govern for purposes of this Confirmation. The parties further acknowledge that
the Indenture section numbers used herein are based on the draft of the
Indenture last reviewed by Party A and Party B as of the date of this
Confirmation, and if any such section numbers are changed in the Indenture as
executed, the parties will amend this Confirmation in good faith to preserve the
intent of the parties. For the avoidance of doubt, references to the Indenture
herein are references to the Indenture as in effect on the date of its execution
and if the Indenture is amended following its execution, any such amendment will
be disregarded for purposes of this Confirmation unless the parties agree
otherwise in writing.

    

    DEUTSCHE
BANK AG IS NOT REGISTERED AS A BROKER OR DEALER UNDER THE U.S. SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.  DEUTSCHE BANK SECURITIES INC.
(“AGENT”) HAS ACTED SOLELY AS AGENT IN CONNECTION WITH THE TRANSACTION AND HAS
NO OBLIGATION, BY WAY OF ISSUANCE, ENDORSEMENT, GUARANTEE OR OTHERWISE WITH
RESPECT TO THE PERFORMANCE OF EITHER PARTY UNDER THE
TRANSACTION.  WHENEVER DELIVERY OF FUNDS OR OTHER ASSETS IS REQUIRED
HEREUNDER BY OR TO PARTY B, SUCH DELIVERY SHALL BE EFFECTED THROUGH
AGENT.  IN ADDITION, ALL NOTICES, DEMANDS AND COMMUNICATIONS OF ANY
KIND RELATING TO THE TRANSACTION BETWEEN BANK AND PARTY B SHALL BE TRANSMITTED
EXCLUSIVELY THROUGH AGENT.

     

    DEUTSCHE
BANK AG LONDON IS NOT A MEMBER OF THE SECURITIES INVESTOR PROTECTION CORPORATION
(SIPC).

    

    The terms
of the particular Transaction to which this Confirmation relates are as
follows:

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    
      	
              General
      Terms:

            	 
      	 
      
	 	 	 
	
              Trade
      Date:

            	 
      	
              March
      4, 2008

            
	 	 	 
	
              Option
      Style:

            	 
      	
              “Modified
      American” as set forth under “Procedures for Exercise”
    below.

            
	 	 	 
	
              Option
      Type:

            	 
      	
              Call

            
	 	 	 
	
              Seller:

            	 
      	
              Party
      A

            
	 	 	 
	
              Buyer:

            	 
      	
              Party
      B

            
	 	 	 
	
              Shares:

            	 
      	
              The
      Class A common stock of Central European Media Enterprises Ltd. (the
      “Issuer”), par value USD0.08 per share, Ticker: CETV

            
	 	 	 
	
              Number
      of Options:

            	 
      	
              127,500,
      provided that if
      Lehman Brothers Inc. and J.P. Morgan Securities Inc. as representatives of
      the Initial Purchasers (as defined in the Purchase Agreement dated as of
      March 4, 2008 between Party B and Lehman Brothers Inc. and J.P. Morgan
      Securities Inc. as representatives of the initial purchasers party thereto
      (the “Purchase Agreement”)), exercise the option to purchase additional
      Convertible Notes pursuant to Section 2(d) of the Purchase Agreement, the
      Number of Options hereunder shall be automatically increased, effective
      upon payment by Party B of the Additional Premium on the Additional
      Premium Payment Date, by the Applicable Percentage times the number of
      Convertible Notes in denominations of USD1,000 principal amount issued
      pursuant to such exercise (such Convertible Notes, the “Additional
      Convertible Notes”). For the avoidance of doubt, the Number of Options
      shall be reduced by the number of any Options exercised or terminated by
      Party B. In no event will the Number of Options be less than
      zero.

            
	 	 	 
	
              Option
      Entitlement:

            	 
      	
              As
      of any date, a number equal to the Conversion Rate as of such date (as
      defined in the Indenture, but without regard to any adjustments to the
      Conversion Rate pursuant to Section 10.04(b) or Section 10.05(i) of the
      Indenture).

            
	 	 	 
	
              Applicable
      Percentage:

            	 
      	
              30%

            
	 	 	 
	
              Number
      of Shares:

            	 
      	
              The
      product of the Number of Options and the Option
    Entitlement.

            
	 	 	 
	
              Strike
      Price:

            	 
      	
              USD105.00

            
	 	 	 
	
              Cap
      Price:

            	 
      	
              USD151.20

            
	 	 	 
	
              Premium:

            	 
      	
              USD16,995,750
      (Premium per Option: USD133.30), provided that if the
      Number of Options is increased pursuant to the proviso to the definition
      of “Number of Options” above, Party B shall pay on the Additional Premium
      Payment Date an additional Premium (the “Additional Premium”) equal to the
      product of the number of Options by which the Number of Options is so
      increased and USD133.30.

            

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    
      	
              Premium
      Payment Date:

            	 
      	
              Four
      Currency Business Days after the Trade Date

            
	 	 	 
	
              Additional
      Premium Payment Date:

            	 
      	
              The
      closing date for the purchase and sale of the Additional Convertible
      Notes.

            
	 	 	 
	
              Exchange:

            	 
      	
              NASDAQ
      Global Select Market

            
	 	 	 
	
              Related
      Exchange(s):

            	 
      	
              All
      Exchanges

            
	 	 	 
	
              Market
      Disruption Event:

            	 
      	
              The
      definition of “Market Disruption Event” in Section 6.3(a) of the Equity
      Definitions is hereby amended by deleting the words “at any time during
      the one-hour period that ends at the relevant Valuation Time, Latest
      Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the
      case may be” and inserting the words “at any time on any Averaging Date”
      after the word “material,” in the third line thereof.

              Section
      6.3(d) of the Equity Definitions is hereby amended by deleting the
      remainder of the provision following the term “Scheduled Closing Time” in
      the fourth line thereof.

            
	 	 	 
	
              Disrupted
      Day:

            	 
      	
              The
      definition of “Disrupted Day” in Section 6.4 of the Equity Definitions
      shall be amended by adding the following sentence after the first
      sentence: “A Scheduled Trading Day on which a Related Exchange fails to
      open during its regular trading session will not be a Disrupted Day if the
      Calculation Agent determines that such failure will not have a material
      adverse impact on Party A’s ability to unwind any related hedging
      transactions related to the Transaction.”

            
	 	 	 
	
              Procedure for
      Exercise:

            	 
      	 
      
	 	 	 
	
              Exercise
      Period:

            	 
      	
              Notwithstanding
      anything to the contrary in the Equity Definitions, an Exercise Period
      shall occur with respect to an Option hereunder only if such Option is an
      Exercisable Option (as defined below) and the Exercise Period shall be, in
      respect of any Exercisable Option, the period commencing on, and
      including, the relevant Conversion Date and ending on, but excluding, the
      first Averaging Date in respect of such Conversion Date; provided that in
      respect of any Exercisable Options relating to Convertible Notes for which
      the relevant Conversion Date occurs during the period beginning on, and
      including, December 15, 2012, the final day of the Exercise Period shall
      be the Scheduled Trading Day immediately prior to the Expiration Date
      (such Exercise Period, the “Final Exercise
  Period”).

            

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    
      	
              Conversion
      Date:

            	 
      	
              With
      respect to any conversion of Convertible Notes, the date on which the
      holder of such Convertible Notes satisfies all of the requirements for
      conversion thereof as set forth in Section 10.02 of the
      Indenture.

            
	 	 	 
	
              Exercisable
      Options:

            	 
      	
              Upon
      the occurrence of a Conversion Date, a number of Options equal to (x) the
      Applicable Percentage times (y) the number of
      Convertible Notes in denominations of USD1,000 principal amount converted
      on such Conversion Date.

            
	 	 	 
	
              Expiration
      Time:

            	 
      	
              The
      Valuation Time

            
	 	 	 
	
              Expiration
      Date:

            	 
      	
              March
      15, 2013

            
	 	 	 
	
              Multiple
      Exercise:

            	 
      	
              Applicable,
      as described under “Exercisable Options” above.

            
	 	 	 
	
              Automatic
      Exercise:

            	 
      	
              Applicable;
      and means that, in respect of any Exercise Period other than the Final
      Exercise Period, a number of Options not previously exercised hereunder
      equal to the number of Exercisable Options shall be deemed to be exercised
      on the relevant Averaging Dates to which such Options relate and, in
      respect of the Final Exercise Period, all Options not previously exercised
      shall be deemed exercised on the relevant Averaging Dates to which such
      Options relate; provided that in each
      case, if a Notice of Exercise is required, such Options shall be deemed
      exercised only to the extent that Party B has provided a Notice of
      Exercise to Party A (in each case, such number of Options deemed
      exercised, the “Exercised Options”); provided further that,
      with respect to Exercised Options relating to an Exercise Period occurring
      prior to the Final Exercise Period (an “Early Conversion”), Automatic
      Exercise means that an Additional Termination Event shall be deemed to
      occur with respect to a portion of the Transaction relating to a number of
      Options equal to the number of such Exercised Options, as provided in
      clause (i) under “Additional Termination Events” below; provided further that
      to the extent the number of Exercised Options relating to any Conversion
      Date is less than the number of Exercisable Options relating to such
      Conversion Date, Party B shall be deemed to make to Party A on the date it
      provided the related Notice of Exercise to Party A (or, if no such notice
      is provided, the final day of such Exercise Period) the representations
      and warranties contained in paragraph (g) under “Additional
      Representations and Warranties of Party B” below as if the reference
      therein to “at the time of placing any order with respect to the
      Transaction” were replaced with “as of the date of the related Notice of
      Exercise (or, if no such notice is provided, the final day of the related
      Exercise Period).”

            

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    
      	
              Notice
      of Exercise:

            	 
      	
              Notwithstanding
      anything to the contrary in the Equity Definitions, in order to exercise
      any Exercisable Options in respect of any Conversion Date occurring prior
      to the Final Exercise Period, Party B must notify Party A in writing
      before 5:00 p.m. (New York City time) on the Scheduled Trading Day prior
      to the scheduled first Averaging Date for the Exercisable Options being
      exercised of (i) the number of such Options, (ii) such first scheduled
      Averaging Date and the scheduled Settlement Date and (iii) if Party B elected
      to satisfy its obligations under the Convertible Notes solely with Shares
      (a “Gross Physical Settlement”) in connection with the related conversion
      of the Convertible Notes, the fact that Gross Physical Settlement applies
      to such conversion, and, in order to exercise any Exercisable Options
      during the Final Exercise Period, if Party B elected Gross Physical
      Settlement for any conversion of the Convertible Notes during the Final
      Exercise Period, Party B must notify Party A of such election in writing
      before 5:00 p.m. (New York City time) on December 15,
  2012.

            
	 	 	 
	
              Valuation:

            	 
      	 
      
	 	 	 
	
              Valuation
      Time:

            	 
      	
              At
      the close of trading on the Exchange, without regard to extended or after
      hours trading.

            
	 	 	 
	
              Averaging
      Dates:

            	 
      	
              (x)
      For any Exercised Option relating to an Exercise Period occurring prior to
      the Final Exercise Period, the 25 (or 60 if Party B has notified Party A
      that Gross Physical Settlement applies to the related conversion)
      consecutive Scheduled Trading Days commencing on and including the third
      “Settlement Period Trading Day” (as defined in the Indenture) following
      the relevant Conversion Date, or (y) for any Exercisable Option relating
      to the Final Exercise Period, the 25 (or 60 if Party B has notified Party
      A that Gross Physical Settlement applies to conversions during the Final
      Exercise Period) consecutive Scheduled Trading Days commencing on, and
      including, the 27th (or 62nd if Party B has notified Party A that Gross
      Physical Settlement applies to conversions during the Final Exercise
      Period) Scheduled Trading Day immediately preceding the Expiration
      Date.

            

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    

    
      	
              Averaging
      Date Market Disruption:

            	 
      	
              Modified
      Postponement; provided that,
      notwithstanding anything to the contrary in the Equity Definitions and in
      addition to the provisions of Section 6.7(c)(iii) of the Equity
      Definitions, if any Averaging Date is a Disrupted Day, the Calculation
      Agent may assign additional dates to be Averaging Dates and/or make
      adjustments to the number of Options to which each Averaging Date relates
      (including increasing such number or reducing such number to zero with
      respect to one or more Averaging Dates).

            
	 	 	 
	
              Relevant
      Price:

            	 
      	
              For
      any Averaging Date, the VWAP Price for such Averaging
  Date.

            
	 	 	 
	
              VWAP
      Price:

            	 
      	
              For
      any Exchange Business Day, the dollar volume weighted average price per
      Share for that Exchange Business Day based on transactions executed during
      that Exchange Business Day on the Exchange, as reported on Bloomberg Page
      “CETV.UQ <Equity> AQR” (or any successor thereto), or in the event
      such price is not so reported on such Exchange Business Day for any
      reason, as reasonably determined by the Calculation
  Agent.

            
	 	 	 
	
              Settlement
      Terms:

            	 
      	 
      
	 	 	 
	
              Settlement
      Currency:

            	 
      	
              USD

            
	 	 	 
	
              Settlement
      Date or Cash Settlement Payment Date:

            	 
      	
              For
      any Exercised Option, the date Shares will be delivered or cash will be
      paid with respect to the Convertible Notes related to such Exercised
      Options, under the terms of the Indenture; provided that if Gross
      Physical Settlement applies to the related conversion of the Convertible
      Notes and the Exercised Option relates to an Exercise Period other than
      the Final Exercise Period, one Settlement Cycle immediately following the
      final Averaging Date relating to such Exercised Option.

            
	 	 	 
	
              Settlement
      Method Election:

            	 
      	
              Applicable;
      provided that
      Party B shall not be permitted to elect Cash Settlement and hereby agrees
      not to make an election other than the Default Settlement Method with
      respect to the Transaction unless Party B makes to Party A in writing on
      the date of its election the representations and warranties contained in
      paragraph (g) under “Additional Representations and Warranties of Party B”
      below where the reference therein to “at the time of placing any order
      with respect to the Transaction” shall be replaced with “as of the date of
      such election of Cash
Settlement.”

            

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    

    
      	
              Electing
      Party:

            	 
      	
              Party
      B

            
	 	 	 
	
              Settlement
      Method Election Date:

            	 
      	
              The
      third Scheduled Trading Day immediately preceding the first Averaging Date
      for the relevant Exercisable Options.

            
	 	 	 
	
              Default
      Settlement Method:

            	 
      	
              Physical
      Settlement

            
	 	 	 
	
              Cash
      Settlement Terms:

            	 
      	 
      
	 	 	 
	
              Cash
      Settlement:

            	 
      	
              If
      Cash Settlement applies with respect to any Exercised Options, a relevant
      portion of the Transaction shall expire on each Averaging Date with
      respect to a number of Options equal to the relevant number of Exercised
      Options divided
      by the number of scheduled Averaging Dates relating to such
      Exercised Options, rounded down to the nearest whole number, except the
      portion relating to the last such Averaging Date shall equal such relevant
      number of Exercised Options minus the number of
      Options relating to all preceding Averaging Dates relating to such
      Exercised Options (in each case subject to adjustment by the Calculation
      Agent in respect of any Disrupted Day). On the Cash Settlement Payment
      Date relating to the relevant Exercised Options, Party A shall pay to
      Party B the aggregate Cash Settlement Amount for all related Averaging
      Dates.

            
	 	 	 
	
              Cash
      Settlement Amount:

            	 
      	
              For
      each Averaging Date, an amount, as calculated by the Calculation Agent,
      equal to (i) the Strike Price Differential for such Averaging Date, multiplied by (ii) the
      number of Options to which such Averaging Date relates, multiplied by (iii) the
      Option Entitlement as of such Averaging Date.

            
	 	 	 
	
              Strike
      Price Differential:

            	 
      	
              For
      each Averaging Date, if the Relevant Price for such Averaging Date is (a)
      greater than the Strike Price and less than or equal to the Cap Price, an
      amount equal to the excess of the Relevant Price for such Averaging Date
      over the Strike Price, (b) greater than the Cap Price, an amount equal to
      the excess of the Cap Price over the Strike Price, or (c) less than or
      equal to the Strike Price, zero.

            
	 	 	 
	
              Physical
      Settlement Terms:

            	 
      	 
      
	 	 	 
	
              Physical
      Settlement:

            	 
      	
              If
      Physical Settlement applies with respect to any Exercised Options, a
      relevant portion of the Transaction shall expire on each Averaging Date
      with respect to a number of Options equal to the relevant number of
      Exercised Options divided by the number
      of scheduled Averaging Dates, rounded down to the nearest whole number,
      except the portion relating to the last such Averaging Date shall equal
      such relevant number of Exercised Options minus the number of
      Options relating to all preceding Averaging Dates relating to such
      Exercised Options (in each case subject to adjustment by the Calculation
      Agent in respect of any Disrupted Day). On the Settlement Date relating to
      the relevant Exercised Options, Party A shall deliver to Party B the
      aggregate Number of Shares to be Delivered for all related Averaging Dates
      and pay to Party B any Fractional Share Amount resulting from such
      aggregation (valued at the Relevant Price for the last Averaging
      Date).

            

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

    
      	
              Number
      of Shares to be Delivered:

            	 
      	
              An
      amount of Shares equal to the Cash Settlement Amount for such Averaging
      Date divided by
      the Relevant Price for such Averaging Date.

            
	 	 	 
	
              Other
      Applicable Provisions in Respect of Physical Settlement:

            	 
      	
              The
      representations and agreements contained in Section 9.11 of the Equity
      Definitions shall be modified by excluding any representations therein
      relating to restrictions, obligations, limitations or requirements under
      applicable securities laws that exist as a result of the fact that Party B
      is the issuer of the Shares.

            
	 	 	 
	
              Share
      Adjustments:

            	 
      	 
      
	 	 	 
	
              Potential
      Adjustment Events:

            	 
      	
              Notwithstanding
      Section 11.2(e) of the Equity Definitions, a “Potential Adjustment Event”
      means an occurrence of any event or condition, as set forth in Section
      10.05 of the Indenture, that would result in an adjustment to the
      Conversion Rate of the Convertible Notes; provided that in no
      event shall there be any adjustment hereunder as a result of an adjustment
      to the Conversion Rate pursuant to Section 10.04(b) or Section 10.05(i) of
      the Indenture.

            

    

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    
      	
              Method
      of Adjustment:

            	 
      	
              Calculation
      Agent Adjustment; which means, notwithstanding anything to the contrary in
      the Equity Definitions, upon any adjustment to the Conversion Rate of the
      Convertible Notes pursuant to the Indenture (other than pursuant to
      Section 10.04(b) or Section 10.05(i) of the Indenture) (i) the Calculation
      Agent shall make a corresponding adjustment to any of the Strike Price,
      Number of Options and the Option Entitlement and (ii) the Calculation
      Agent may, but is not required to, make any adjustment consistent with the
      Calculation Agent Adjustment set forth in Section 11.2(c) of the Equity
      Definitions to the Cap Price or any other variable relevant to the
      exercise, settlement or payment for the Transaction (other than the Strike
      Price) to preserve the fair value of the Options to Party A after taking
      into account the effect of such Potential Adjustment Event; provided that in no
      event shall the Cap Price be less than the Strike Price; provided further, that
      adjustments may be made to the Cap Price to account for changes in
      volatility, expected dividends, stock loan rate and liquidity relevant to
      the Shares or to the Transaction.

            
	 	 	 
	
              Extraordinary
      Events:

            	 
      	 
      
	 	 	 
	
              Merger
      Events:

            	 
      	
              Notwithstanding
      Section 12.1(b) of the Equity Definitions, a “Merger Event” means the
      occurrence of any event or condition set forth in Section 10.06(a) or
      Section 10.06(b) of the Indenture.

            
	 	 	 
	
              Tender
      Offers:

            	 
      	
              Applicable;
      provided that
      notwithstanding Section 12.1(d) of the Equity Definitions, a “Tender
      Offer” means the occurrence of any event or condition set forth in Section
      10.05(f) of the Indenture or Clause (1) of the definition of “Fundamental
      Change” in Section 1.01 of the Indenture.

            
	 	 	 
	
              Consequence
      of Merger Events/Tender Offers:

            	 
      	
              Notwithstanding
      Sections 12.2 and 12.3 of the Equity Definitions, upon the occurrence of a
      Merger Event or a Tender Offer:

            
	 	 	 
	 
      	 
      	
              (i)   the
      Calculation Agent shall make a corresponding adjustment in respect of any
      adjustment under the Indenture to any one or more of the nature of the
      Shares, Strike Price, Number of Options and the Option Entitlement; provided, however, that such
      adjustment shall be made without regard to any adjustment to the
      Conversion Rate for the issuance of additional shares as set forth in
      Section 10.04(b) or Section 10.05(i) of the Indenture;
  and

            

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    
      	 
      	 
      	
              (ii)   the
      Calculation Agent may, in its sole discretion, make any adjustment
      consistent with the Modified Calculation Agent Adjustment set forth in
      Section 12.2(e) or 12.3(d) of the Equity Definitions, as applicable, to
      the Cap Price or any other variable relevant to the exercise, settlement
      or payment for the Transaction; provided, however, that in no
      event shall the Cap Price be less than the Strike
Price;

            
	 	 	 
	 
      	 
      	
              provided that, for the
      avoidance of doubt, adjustments shall be made pursuant to the provisions
      of subparagraphs (i) and (ii) above regardless of whether any Merger Event
      or Tender Offer gives rise to an Early Conversion; and

               

              provided further that,
      notwithstanding the foregoing, with respect to any Majority Tender Offer,
      Party A may elect for Cancellation and Payment (Calculation Agent
      Determination) to apply.  “Majority Tender Offer” means A Tender
      Offer as defined in Section 12.1(d) of the Equity Definitions that results
      in the relevant entity or person purchasing, or otherwise obtaining or
      having the right to obtain, by conversion or other means, 50% or greater
      than 50% of the outstanding voting shares of the Issuer, as determined by
      the Calculation Agent, based upon the making of filings with governmental
      or self-regulatory agencies or such other information as the Calculation
      Agent deems relevant.

            
	 	 	 
	
              Modified
      Calculation Agent Adjustment:

            	 
      	
              For
      greater certainty, the definition of “Modified Calculation Adjustment” in
      Sections 12.2 and 12.3 of the Equity Definitions shall be amended by (i)
      adding the following italicized language after the stipulated
      parenthetical provision: “(including adjustments to account for
      changes in
      expected dividends, stock loan rate, liquidity, or, in the case of the Cap
      Price, also changes in volatility, relevant to the Shares or to the
      Transaction) from the
      Announcement Date to the Merger Date (Section 12.2)  or Tender
      Offer Date (Section 12.3),” and (ii) deleting the phrase “,
      expected dividends, stock loan rate” from such stipulated parenthetical
      provision.

            
	 	 	 
	
              Announcement
      Event:

            	 
      	
              If
      an Announcement Event occurs, the Calculation Agent will determine the
      economic effect of the Announcement Event on the theoretical value of the
      Transaction (including without limitation any change in expected
      dividends, stock loan rate, liquidity, or, in the case of the Cap Price,
      also changes in volatility, relevant to the Shares or to the Transaction)
      from the Announcement Date to the Expiration Date. If such economic effect
      is material to either party, the Calculation Agent will adjust the Cap
      Price to account for such economic effect; provided that in no
      event shall the Cap Price be less than the Strike Price. “Announcement
      Event” shall mean the occurrence of (i) the first public announcement of a
      firm intention to engage in a transaction that may lead to a Merger Event,
      (ii) the first public announcement of a firm intention to purchase or
      otherwise obtain the requisite number of shares that may lead to a Tender
      Offer or (iii) in each case, any subsequent amendment to or withdrawal of
      such announcement.

            

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

    
      	
              Composition
      of Combined Consideration:

            	 
      	
              Not
      Applicable

            
	 	 	 
	
              Nationalization,
      Insolvency or Delisting:

            	 
      	
              Cancellation
      and Payment

               

              (Calculation Agent
      Determination)

            
	 	 	 
	
              Delisting:

            	 
      	
              The
      definition of “Delisting” in Section 12.6 of the Equity Definitions shall
      be deleted in its entirety and replaced with the following: ‘“Delisting”
      means that the Exchange announces that pursuant to the rules of such
      Exchange, the Shares cease (or will cease) to be listed, traded or
      publicly quoted on the Exchange for any reason (other than a Merger Event
      or Tender Offer) and are not immediately re-listed, re-traded or re-quoted
      on the New York Stock Exchange, the American Stock Exchange, the NASDAQ
      Global Select Market or the NASDAQ Global Market (or their respective
      successors)”

            
	 	 	 
	
              Additional
      Disruption Events:

            	 
      	 
      
	 	 	 
	
              Change
      in Law:

            	 
      	
              Applicable

            
	 	 	 
	
              Failure
      to Deliver:

            	 
      	
              Applicable

            
	 	 	 
	
              Insolvency
      Filing:

            	 
      	
              Applicable

               

              The
      definition of “Insolvency Filing” in Section 12.9 of the Equity
      Definitions shall be amended by deleting the clause “provided that such
      proceedings instituted or petitions presented by creditors and not
      consented to by the Issuer shall not be deemed an Insolvency Filing” at
      the end of such definition and replacing it with the following: “; or it
      has instituted against it a proceeding seeking a judgment of insolvency or
      bankruptcy or any other relief under any bankruptcy or insolvency law or
      other similar law affecting creditors’ rights, or a petition is presented
      for its winding-up or liquidation by a creditor and such proceeding is not
      dismissed, discharged, stayed or restrained in each case within fifteen
      (15) days of the institution or presentation
  thereof.”

            

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    

    
      	
              Hedging
      Disruption:

            	 
      	
              Applicable

            
	 	 	 
	
              Increased
      Cost of Hedging:

            	 
      	
              Applicable

            
	 	 	 
	
              Loss
      of Stock Borrow:

            	 
      	
              Not
      Applicable

            
	 	 	 
	
              Increased
      Cost of Stock Borrow:

            	 
      	
              Not
      Applicable

            
	 	 	 
	
              Hedging
      Party:

            	 
      	
              Party
      A shall be the Hedging Party for all Extraordinary
  Events

            
	 	 	 
	
              Determining
      Party:

            	 
      	
              Party
      A shall be the Determining Party for all Extraordinary
    Events

            
	 	 	 
	
              Additional
      Provisions:

            	 
      	 
      
	 	 	 
	
              Non-Reliance:

            	 
      	
              Applicable

            
	 	 	 
	
              Agreements
      and Acknowledgments Regarding Hedging Activities:

            	 
      	
              Applicable

            
	 	 	 
	
              Additional
      Acknowledgments:

            	 
      	
              Applicable

            
	 	 	 
	
              Additional
      Representations and Warranties of Party B:

               

            	 
      	
              In
      addition to the representations set forth in the Agreement, Party B
      further represents that;

               

              (a)
      (i) It is not entering into the Transaction on behalf of or for the
      accounts of any other person or entity, and will not transfer or assign
      its obligations under the Transaction or any portion of such obligations
      to any other person or entity except in compliance with applicable laws
      and the terms of the Transaction; (ii) it understands that the Transaction
      is subject to complex risks which may arise without warning, may at times
      be volatile, and that losses may occur quickly and in unanticipated
      magnitude; (iii) it is authorized to enter into the Transaction and such
      action does not violate any laws of its jurisdiction of organization or
      residence (including, but not limited to, any applicable position or
      exercise limits set by any self-regulatory organization, either acting
      alone or in concert with others) or the terms of
      any agreement to which it is a party; (iv) it has consulted with its legal
      advisor(s) and has reached its own conclusions about the Transaction, and
      any legal, regulatory, tax, accounting or economic consequences arising
      from the Transaction; and (v) it has concluded that the Transaction is
      suitable in light of its own investment objectives, financial capabilities
      and expertise.

               

              (b)
      If Party B purchases any Shares pursuant to the Transaction, such
      purchase(s) will comply with (i) all laws and regulations applicable to it
      and (ii) all contractual obligations of Party B.

               

              (c)
      At all times until termination of the Transaction, Party B is an “eligible
      contract participant” as the term is defined in the Commodity Futures
      Modernization Act of 2000.

            

    

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    

    
      	 
      	 
      	
              (d)
      Neither Party A nor any of its affiliates has advised it with respect to
      any legal, regulatory, tax, accounting or economic consequences arising
      from the Transaction, and neither Party A nor any of its affiliates is
      acting as agent (other than Agent as specified above), or advisor for
      Party B in connection with the Transaction.

               

              (e)
      Each of its required filings under all applicable securities laws have
      been filed and that, as of the respective dates thereof there is no
      material misstatement of material fact contained therein or omission of a
      material fact required to be stated therein or necessary to make the
      statements therein not misleading.

               

              (f)
      It has not entered into any obligation that would contractually limit it
      from effecting Physical Settlement or Cash Settlement under the
      Transaction.

            
	 	 	 
	 
      	 
      	
              (g)
      As of the Trade Date, Party B is in compliance with its reporting
      obligations under the Exchange Act and its most recent Annual Report on
      Form 10-K, together with all reports subsequently filed by it pursuant to
      the Exchange Act, taken together and as amended and supplemented to the
      Trade Date, do not, as of their respective filing dates, contain any
      untrue statement of a material fact or omit to state any material fact
      required to be stated therein or necessary to make the statements therein,
      in the light of the circumstances under which they were made, not
      misleading such that Party B’s officers and directors are not in
      possession of any material non-public information concerning Party B or
      its securities.

            
	 	 	 
	 
      	 
      	
              (h)
      The Transaction and any repurchase of Shares by Party B in connection with
      the Transaction has been approved by its board of directors and that any
      such repurchase has been publicly disclosed.

            
	 	 	 
	 
      	 
      	
              (i)
      It is not entering into the Transaction to create actual or apparent
      trading activity in the Shares (or any security convertible into or
      exchangeable for Shares), to manipulate the price of the Shares (or any
      security convertible into or exchangeable for Shares) or to facilitate a
      distribution of Shares (or any security convertible into or exchangeable
      for Shares).

            
	 	 	 
	 
      	 
      	
              (j)
      It is not, and, after giving effect to the transactions contemplated
      hereby will not be, an “investment company” as such term is defined in the
      Investment Company Act of 1940, as
amended.

            

    

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    

    
      	 
      	 
      	
              (k)
      It is not on the Trade Date engaged in a distribution, as such term is
      used in Regulation M under the Securities Exchange Act of 1934, as amended
      (“Regulation M”), of any securities of Party B, other than a distribution
      meeting the requirements of the exception set forth in section 101(b)(10)
      or 102(b)(7) of Regulation M.  Party B shall not, until the
      second Exchange Business Day immediately following the Trade Date, engage
      in any such distribution.

            
	 	 	 
	 
      	 
      	
              (l)
      On the Trade Date and on any Additional Premium Payment Date (A) the
      assets of Party B at their fair valuation exceed the liabilities of Party
      B, including contingent liabilities, (B) the capital of Party B is
      adequate to conduct the business of Party B and (C) Party B has the
      ability to pay its debts and obligations as such debts mature and does not
      intend to, or does not believe that it will, incur debt beyond its ability
      to pay as such debts mature.

            

    

     

    
      	
              Other
      Provisions:

            	 
      	 
      
	 	 	 
	
              Alternative
      Calculations and Payment on Early Termination and on
      Certain  Extraordinary Events:

            	 
      	
              If,
      in respect of the Transaction, an amount is payable by Party A to Party B
      (i) pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity
      Definitions (except in the event of a Nationalization, Insolvency, Tender
      Offer or a Merger Event, in each case, in which the consideration to be
      paid to holders of Shares consists solely of cash) or (ii) pursuant to
      Section 6(d)(ii) of the Agreement (except in the event of an Event of
      Default in which Party B is the Defaulting Party or a Termination Event in
      which Party B is the Affected Party that resulted from an event or events
      outside Party B’s control) (a “Payment Obligation”), Party B shall have
      the right, in its sole discretion, to require Party A to satisfy any such
      Payment Obligation by the Share Termination Alternative (as defined below)
      by giving irrevocable telephonic notice to Party A, confirmed in writing
      within one Currency Business Day, no later than 4:00 p.m. New York local
      time on the Merger Date, Tender Offer Date, Announcement Date or Early
      Termination Date, as applicable (“Notice of Share
      Termination”).

               

              Notwithstanding
      anything to the contrary in the foregoing, with respect to any Payment
      Obligation resulting from an Additional Termination Event in connection
      with an Early Conversion, Party B shall be deemed to have elected as of
      the Trade Date to require Party A to satisfy any such Payment Obligation
      by the Share Termination Alternative; provided that Party B
      may elect for the Share Termination Alternative not to apply to such
      Payment Obligation by (x) giving written notice of such election to Party
      A no later than 4:00 p.m., New York local time, on the Scheduled Trading
      Day immediately preceding the relevant Early
      Termination Date and (y) making to Party A in such written notice the
      representations and warranties contained in paragraph (g) under
      “Additional Representations and Warranties of Party B” above where the
      reference therein to “at the time of placing any order with respect to the
      Transaction” shall be replaced with “as of the date of this written
      notice.”

            

    

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    
      	 	 	
              Upon
      Notice of Share Termination no later than 8:00 a.m. on the Exchange
      Business Day immediately following the Merger Date, Tender Offer Date,
      Announcement or Early Termination Date, as applicable, the following
      provisions shall apply:

            
	 	 	 
	
              Share
      Termination Alternative:

            	 
      	
              Applicable
      and means that Party A shall deliver to Party B the Share Termination
      Delivery Property on the date, or within a commercially reasonable period
      of time after, when the Payment Obligation would otherwise be due pursuant
      to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) and
      6(e) of the Agreement, as applicable (the “Share Termination Payment
      Date”), in satisfaction of the Payment Obligation in the manner reasonably
      requested by Party B free of payment.

            
	 	 	 
	
              Share
      Termination Delivery Property:

            	 
      	
              A
      number of Share Termination Delivery Units, as calculated by the
      Calculation Agent, equal to the Payment Obligation divided by the Share
      Termination Unit Price.  The Calculation Agent shall adjust the
      Share Termination Delivery Property by replacing any fractional portion of
      a security therein with an amount of cash equal to the value of such
      fractional security based on the values used to calculate the Share
      Termination Unit Price.

            
	 	 	 
	
              Share
      Termination Unit Price:

            	 
      	
              The
      value to Party A of property contained in one Share Termination Delivery
      Unit on the date such Share Termination Delivery Units are to be delivered
      as Share Termination Delivery Property, as determined by the Calculation
      Agent in its discretion by commercially reasonable means and notified by
      the Calculation Agent to Party A at the time of notification of the
      Payment Obligation.

            
	 	 	 
	
              Share
      Termination Delivery Unit:

            	 
      	
              In
      the case of a Termination Event or Event of Default, one Share or, in the
      case of Nationalization, Insolvency or Merger Event or Tender Offer, a
      unit consisting of the number or amount of each type of property received
      by a holder of one Share (without consideration of any requirement to pay
      cash or other consideration in lieu of fractional amounts of any
      securities) in such Nationalization, Insolvency, Merger Event or Tender
      Offer, as determined by the Calculation Agent. If a Share Termination
      Delivery Unit consists of property other than cash or New Shares and if
      Party B provides irrevocable written notice to the Calculation Agent on or
      prior to the Merger Date that it elects to have Party A deliver cash, New
      Shares or a combination thereof (in such proportion as Party B designates)
      in lieu of such other property, the Calculation Agent will replace such
      property with cash, New Shares or a combination thereof as components of a
      Share Termination Delivery Unit in such amounts, as determined by the
      Calculation Agent in its discretion by commercially reasonable means, as
      shall have a value equal to the value of the property so
      replaced.  If such Nationalization, Insolvency, Merger Event or
      Tender Offer involves a choice of consideration to be received by holders,
      such holder shall be deemed to have elected to receive the maximum
      possible amount of cash.

            

    

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    
      	
              Failure
      to Deliver:

            	 
      	
              Applicable

            
	 	 	 
	
              Other
      applicable provisions:

            	 
      	
              If
      the Transaction is to be Share Termination Settled, the provisions of
      Sections 9.8, 9.9, 9.10, 9.11 and 9.12 (as modified above) of the Equity
      Definitions will be applicable, as if “Physical Settlement” applied to the
      Transaction; provided that all
      references to “Shares” shall be read as references to “Share Termination
      Delivery Units” and the representations and agreements contained in
      Section 9.11 of the Equity Definitions shall be modified by excluding any
      representations therein relating to restrictions, obligations, limitations
      or requirements under applicable securities laws that exist as a result of
      the fact that Party B is the issuer of the Shares.  “Share
      Termination Settled” in relation to a Transaction means that Share
      Termination Settlement is applicable to the
Transaction.

            
	 	 	 
	
              Special
      Provisions for Party B Payments:

            	 
      	
              Party
      A and Party B agree that, notwithstanding anything to the contrary herein
      or in the Agreement, in the event that (i) an Early Termination Date
      (whether as a result of an Event of Default or Termination Event) occurs
      or is designated with respect to any Transaction and, as a result, Party B
      owes to Party A an amount calculated under Section 6(e) of the Agreement
      or (ii) an Extraordinary Event occurs that results in the termination or
      cancellation of any Transaction pursuant to Article 12 of the Equity
      Definitions and, as a result, Party B owes to Party A a Cancellation
      Amount or any other amount in respect to this Transaction, such amount
      shall be deemed to be zero.

            

    

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    

    
      	
              Right
      to Designate:

            	 
      	
              Notwithstanding
      any other provision in this Confirmation to the contrary requiring or
      allowing Party A to purchase, sell, receive or deliver any shares or other
      securities to or from Party B, Party A may designate any of its Affiliates
      to purchase, sell, receive or deliver such shares or other securities and
      otherwise to perform Party A’s obligations in respect of this Transaction
      and any such designee may assume such obligations. Party A shall be
      discharged of its obligations to Party B to the extent of any such
      performance; provided, however, that
      notwithstanding the foregoing no such designation shall be permitted
      unless:

               

              (i)
      Party B will not, as a result of such designation, be required to pay to
      such Affiliate any amount in respect of an Indemnifiable Tax under Section
      2(d)(i)(4) of the Agreement greater than the amount in respect of which
      Party B would have been required to pay to Party A absent such transfer or
      otherwise suffer any other additional tax burden (whether an Indemnifiable
      Tax or otherwise) or Party A or such Affiliate waives any such additional
      payment obligation under Section 2(d)(i)(4) of the Agreement or agrees to
      make Party B whole for such additional tax burden; and

               

              (ii)
      such Affiliate will not, as a result of such designation, be required to
      withhold or deduct on account of a Tax under Section 2(d)(i) of the
      Agreement in an amount in excess of that which Party A would have been
      required to so withhold or deduct absent such designation unless such
      Affiliate elects (or is required pursuant to Section 2(d)(i)(4) of the
      Agreement) to gross up Party B with respect to such excess withholding
      (either by payment directly to the taxing authority or a payment to Party
      B).

            

    

     

    
      	
              Transfer:

            	 
      	
              Notwithstanding
      Section 7 of the Agreement, Party A may, without Party B’s consent,
      transfer or assign all or any part of its rights or obligations under this
      Transaction to any Affiliate of Party A with a rating for its long term,
      unsecured and unsubordinated indebtedness equal to or better than the
      lesser of (i) the credit rating of Party A at the time of the transfer and
      (ii) A+ by Standard and Poor’s Rating Group, Inc. or its successor
      (“S&P”), or A1 by Moody’s Investor Service, Inc. (“Moody’s”) or, if
      either S&P or Moody’s ceases to rate such debt, at least an equivalent
      rating or better by a substitute agency rating mutually agreed by Party A
      and Party B; provided, however, that
      notwithstanding the foregoing no such assignment by Party A as assignor
      (the “Assignor”) shall be permitted
unless:

            

    

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    

    
      	 	 	
              (i)
      Party B will not, as a result of such assignment, be required to pay to
      such Affiliate any amount in respect of an Indemnifiable Tax under Section
      2(d)(i)(4) of the Agreement greater than the amount in respect of which
      Party B would have been required to pay to the Assignor absent such
      transfer or otherwise suffer any other additional tax burden (whether an
      Indemnifiable Tax or otherwise) or Party A or such Affiliate waives any
      such additional payment obligation under Section 2(d)(i)(4) of the
      Agreement or agrees to make Party B whole for such additional tax
      burden;

               

              
                (ii)
      such Affiliate will not, as a result of such assignment, be required to
      withhold or deduct on account of a Tax under Section 2(d)(i) of the
      Agreement in an amount in excess of that which the Assignor would have
      been required to so withhold or deduct absent such transfer unless such
      Affiliate elects (or is required pursuant to Section 2(d)(i)(4) of the
      Agreement) to gross up Party B with respect to such excess withholding
      (either by payment directly to the taxing authority or a payment to Party
      B); and

                 

                (iii)
      immediately upon giving effect to such assignment, no Event of Default and
      no Termination Event will occur as a direct result of such
      assignment.

              

            
	 	 	 
	 
      	 
      	
              If
      Party A, in its sole discretion, determines that its “beneficial
      ownership” at any time (within the meaning of Section 16 of the Exchange
      Act and rules promulgated thereunder) exceeds 8.0% or more of Party B’s
      outstanding Shares; and, in its sole discretion, Party A is unable after
      its commercially reasonable efforts to effect a transfer or assignment on
      pricing terms and in a time period reasonably acceptable to Party A that
      would reduce its “beneficial ownership” to 7.5%; Party A may designate any
      Exchange Business Day as an Early Termination Date with respect to a
      portion (the “Terminated Portion”) of the Transaction, such that its
      “beneficial ownership” following such partial termination will be equal to
      or less than (but not materially less than) 7.5%.  In the event
      that Party A so designates an Early Termination Date with respect to a
      portion of the Transaction, a payment shall be made pursuant to Section 6
      of the Agreement as if (i) an Early Termination Date had been designated
      in respect of Transaction having terms identical to the Transaction and
      Numbers of Options equal to the Terminated Portion, (ii) Party B shall be
      the sole Affected Party with respect to such partial termination and (iii)
      such Transaction shall be the only Terminated
  Transaction.

            

    

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

     

    
      	
              Staggered
      Settlement:

            	 
      	
              Party
      A may, by notice to Party B on or prior to any Settlement Date (a “Nominal
      Settlement Date”), elect to deliver any Shares required to be delivered by
      it on two or more dates (each, a “Staggered Settlement Date”) as
      follows:

               

              (i)   
      in such notice, Party A will specify to Party B the related Staggered
      Settlement Dates (the first of which will be such Nominal Settlement Date
      and the last of which will be no later than the twentieth (20th)
      Exchange Business Day following such Nominal Settlement Date) and the
      number of Shares that it will deliver on each Staggered Settlement
      Date;

               

              (ii) 
       the aggregate number of Shares that Party A will deliver to Party B
      hereunder on all such Staggered Settlement Dates will equal the number of
      Shares that Party A would otherwise be required to deliver on such Nominal
      Settlement Date; and

               

              (iii) 
      if the Physical Settlement terms set forth above were to apply on such
      Nominal Settlement Date, then the Physical Settlement terms will apply on
      each Staggered Settlement Date, except that the related Shares to be
      delivered by Party A will be allocated among such Staggered Settlement
      Dates as specified by Party A in the notice referred to in clause (i)
      above and Party B shall pay the Settlement Amount for those Shares on the
      Nominal Settlement Date.

            
	 	 	 
	
              Set-Off
      and Netting:

            	 
      	
              Party
      A agrees not to set-off or net amounts due from Party B with respect to
      the Transaction hereunder against amounts due from Party A to Party B
      under obligations other than Equity Contracts. Section 2(c) of the
      Agreement as it applies to payments due with respect to the Transaction
      hereunder shall remain in effect and is not subject to the first sentence
      of this provision.

            

    

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    
      	 	 	
              Upon
      the occurrence of an Event of Default or Termination Event with respect to
      a party who is the Defaulting Party or the Affected Party (“X”), the other
      party (“Y”) will have the right (but not be obliged) without prior notice
      to X or any other person to set-off or apply any obligation of X under an
      Equity Contract owed to Y (or any Affiliate of Y) (whether or not matured
      or contingent and whether or not arising under the Agreement, and
      regardless of the currency, place of payment or booking office of the
      obligation) against any obligation of Y (or any Affiliate of Y) under an
      Equity Contract owed to X (whether or not matured or contingent and
      whether or not arising under the Agreement, and regardless of the
      currency, place of payment or booking office of the
      obligation).  Y will give notice to the other party of any
      set-off effected under this paragraph.

               

              “Equity
      Contract” shall mean for purposes of this paragraph any transaction
      relating to Shares between X and Y (or any Affiliate of Y) that qualifies
      as ‘equity’ under applicable accounting rules.

            
	 	 	 
	 	 	
              Amounts
      (or the relevant portion of such amounts) subject to set-off may be
      converted by Y into the Termination Currency at the rate of exchange at
      which such party would be able, acting in a reasonable manner and in good
      faith, to purchase the relevant amount of such currency.

               

              If
      any obligation is unascertained, Y may in good faith and a commercially
      reasonable manner estimate that obligation and set-off in respect of the
      estimate, subject to the relevant party accounting to the other when the
      obligation is ascertained.

               

              Nothing
      in this section shall be effective to create a charge or other security
      interest.  This section shall be without prejudice and in
      addition to any right of set-off, combination of accounts, lien or other
      right to which any party is at any time otherwise entitled (whether by
      operation of law, contract or otherwise).

            
	 	 	 
	
              Equity
      Rights:

            	 
      	
              Party
      A acknowledges and agrees that this Confirmation is not intended to convey
      to it rights with respect to the Transaction that are senior to the claims
      of common stockholders in the event of Party B’s
      bankruptcy.  For the avoidance of doubt, the parties agree that
      the preceding sentence shall not apply at any time other than during Party
      B’s bankruptcy to any claim arising as a result of a breach by Party B of
      any of its obligations under this Confirmation or the
      Agreement.  For the avoidance of doubt, the parties acknowledge
      that this Confirmation is not secured by any collateral that would
      otherwise secure the obligations of Party B herein under or pursuant to
      any other agreement.

            

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    
      	
              No
      Collateral:

            	 
      	
              No
      collateral is required to be posted by Party B in respect of the
      Transaction.

            
	 	 	 
	
              Bankruptcy
      Code Provisions:

            	 
      	
              Each
      of Party A and Party B agrees and acknowledges that Party A is a
      “financial institution,” “swap participant” and/or “financial participant”
      within the meaning of Sections 101(22), 101(53C) and 101(22A) of Title 11
      of the United States Code (the “Bankruptcy Code”).  The parties
      hereto further agree and acknowledge (A) that this Confirmation is (i) a
      “securities contract,” as such term is defined in Section 741(7) of the
      Bankruptcy Code, with respect to which each payment and delivery hereunder
      is a “settlement payment,” as such term is defined in Section 741(8) of
      the Bankruptcy Code, and (ii) a “swap agreement,” as such term is defined
      in Section 101(53B) of the Bankruptcy Code, with respect to which each
      payment and delivery hereunder is a “transfer,” as such term is defined in
      Section 101(54) of the Bankruptcy Code, and (B) that Party A is entitled
      to the protections afforded by, among other sections, Sections 362(b)(6),
      362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy
      Code.

            
	 	 	 
	
              Early
      Unwind:

            	 
      	
              In
      the event the sale of the Convertible Notes by the Issuer is not
      consummated with the initial purchasers for any reason, other than as a
      result of a breach by Party A, by the close of business in New York on
      March 10, 2008 (or such later date as agreed upon by the parties) (March
      10, 2008 or such later date as agreed upon being the “Early Unwind Date”),
      the Transaction shall automatically terminate (the “Early Unwind”), on the
      Early Unwind Date and (i) the Transaction and all of the respective rights
      and obligations of Party A and Party B under the Transaction shall be
      cancelled and terminated and (ii) each party shall be released and
      discharged by the other party from and agrees not to make any claim
      against the other party with respect to any obligations or liabilities of
      the other party arising out of and to be performed in connection with the
      Transaction either prior to or after the Early Unwind Date; provided that Party B
      shall reimburse the costs and expenses (including market losses) relating
      to reselling those Shares to unwind its hedge positions, and will assume,
      or reimburse the cost of unwinding, any and all derivatives entered into
      by Party A or one or more of its affiliates in connection with hedging the
      Transaction (to the extent such costs and expenses in the aggregate do not
      exceed the product of USD3,000,000 times the Applicable
      Percentage). Party A and Party B represent and acknowledge to the other
      that, subject to the proviso included in the preceding sentence, upon an
      Early Unwind, all obligations with respect to the Transaction shall be
      deemed fully and finally
discharged.

            

    

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    
      	
              Additional
      Termination Events:

            	 
      	
              Notwithstanding
      anything to the contrary in this Confirmation, (i) upon the occurrence of
      an Early Conversion:

               

              (A)
      such Early Conversion shall constitute an Additional Termination Event
      hereunder with respect to a number of Options equal to the number of the
      relevant Exercised Options (the “Affected Number of Options”), in which
      case (x) the sole Affected Transaction shall consist of a transaction
      identical to the Transaction except that Number of Options for such
      Affected Transaction shall equal the Affected Number of Options and Party
      B shall be deemed the sole Affected Party and (y) the Transaction shall
      remain in full force and effect, except that the Number of Options subject
      to the Transaction immediately prior to the Conversion Date for such Early
      Conversion shall as of such Conversion Date be reduced by the Affected
      Number of Options;

               

              (B)
      notwithstanding anything to the contrary in the Agreement, Party A shall
      designate an Early Termination Date in respect of such Affected
      Transaction, which shall be no earlier than one Scheduled Trading Day
      following the Conversion Date for the related Early Conversion;
      and

               

              (C)
      for the avoidance of doubt, in determining the amount payable in respect
      of such Affected Transaction pursuant to Section 6 of the Agreement, the
      Calculation Agent shall assume that (x) the relevant Early Conversion and
      any adjustments, agreements, payments, deliveries or acquisitions by or on
      behalf of Party B leading thereto had not occurred, (y) no adjustments to
      the Conversion Rate have occurred pursuant to Section 10.04(b) or Section
      10.05(i) of the Indenture and (z) the corresponding Convertible Notes
      remain outstanding, and

            

    

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    
      	 	 	
              (ii)
      if there has occurred an acceleration of the Convertible Notes after an
      event of default with respect to Party B under the terms of the
      Convertible Notes as set forth in Section 6.02 of the Indenture, then such
      acceleration shall constitute an Additional Termination Event applicable
      to the Transaction and, with respect to such event of default (A) Party B
      shall be deemed to be the sole Affected Party and the Transaction shall be
      the sole Affected Transaction and (B) Party A shall be the party entitled
      to designate an Early Termination Date pursuant to Section 6(b) of the
      Agreement.

            
	 	 	 
	
              Right
      to Extend:

            	 
      	
              Party
      A may extend, for as long as it is reasonably necessary, any Averaging
      Date, the Expiration Date, the Settlement Date or any other date of
      delivery by Party A, with respect to some or all of the Options hereunder,
      if Party A determines, in its commercially reasonable
      discretion based on the advice of nationally recognized outside
      counsel, that such extension is reasonably necessary or appropriate to
      preserve Party A’s hedging or hedge unwind activity hereunder in light of
      existing liquidity conditions or to enable Party A to effect purchases or
      sales of Shares in connection with its hedging or settlement activity
      hereunder in a manner that would, if Party A were Party B or an affiliated
      purchaser of Party B, be in compliance with applicable legal and
      regulatory or self-regulatory requirements or with related policies or
      procedures applicable to Party A.

            
	 	 	 
	
              Registration
      of Hedge Shares:

            	 
      	
              Party
      B hereby agrees that if Party A determines, in its reasonable judgment
      based on the advice of nationally recognized outside counsel, that the
      Shares (the “Hedge Shares”) acquired by Party A for the purpose of hedging
      its obligations pursuant to the Transaction cannot be sold in the U.S.
      public market by Party A without registration under the Securities Act,
      Party B shall, at Party B’s election: (i) in order to allow Party A to
      sell the Hedge Shares in a registered offering, make available to Party A
      an effective registration statement under the Securities Act to cover the
      resale of such Hedge Shares and (A) enter into an agreement, in form and
      substance satisfactory to Party A, substantially in the form of an
      underwriting agreement for a registered offering, (B) provide accountant’s
      “comfort” letters in customary form for registered offerings of equity
      securities, (C) provide disclosure opinions of nationally recognized
      outside counsel to Party B reasonably acceptable to Party A, (D) provide
      other customary opinions, certificates and closing documents customary in
      form for registered offerings of equity securities and (E) afford Party A
      a reasonable opportunity to conduct a “due diligence” investigation with
      respect to Party B customary in scope for underwritten offerings of equity
      securities (provided,
      however, that if Party A, in its sole reasonable discretion, is not
      satisfied with access to due diligence materials, the results of its due
      diligence investigation, or the procedures and documentation for the
      registered offering referred to above, then clause (ii) or clause (iii) of
      this paragraph shall apply at the election of Party B); (ii) in order to
      allow Party A to sell the Hedge Shares in a private placement, enter into
      a private placement agreement substantially similar to private placement
      purchase agreements customary for private placements of equity securities,
      in form and substance satisfactory to Party A, including customary
      representations, covenants, blue sky and other governmental filings and/or
      registrations, indemnities to Party A, due diligence rights (for Party A
      or any designated buyer of the Hedge Shares from Party A), opinions and
      certificates and such other documentation as is customary for private
      placements agreements, all reasonably acceptable to Party A (in which
      case, the Calculation Agent shall make any adjustments to the terms of the
      Transaction that are necessary, in its reasonable judgment, to compensate
      Party A for any discount from the public market price of the Shares
      incurred on the sale of Hedge Shares in a private placement); or (iii)
      purchase the Hedge Shares from Party A at the VWAP Price on such Exchange
      Business Days, and in the amounts, as requested by Party
      A.  

            

    

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    
      	
              Repurchase
      notices:

            	 
      	
              Party
      B shall, no later than ten Scheduled Trading Days prior to the day on
      which Party B effects any repurchase of Shares, give Party A a written
      notice of such repurchase (a “Repurchase Notice”) on such day if following
      such repurchase, the Options Equity Percentage as determined on such day
      is (i) greater than 8.0% and (ii) greater by 0.5% than the Options Equity
      Percentage included in the immediately preceding Repurchase Notice (or, in
      the case of the first such Repurchase Notice, greater than the Options
      Equity Percentage as of the date hereof).  The “Options Equity
      Percentage” as of any day is the fraction (A) the numerator of which is
      the Number of Shares and (B) the denominator of which is the number of
      Shares outstanding on such day.  Party B agrees to indemnify and
      hold harmless Party A and its affiliates and their respective officers,
      directors, employees, affiliates, advisors, agents and controlling persons
      (each, an “Indemnified Person”) from and against any and all losses
      (including losses relating to Party A's hedging activities as a
      consequence of becoming, or of the risk of becoming, a Section 16
      “insider”, including without limitation, any forbearance from hedging
      activities or cessation of hedging activities and any losses in connection
      therewith with respect to the Transaction), claims, damages, judgments,
      liabilities and expenses (including reasonable attorney’s fees), joint or
      several, which an Indemnified Person may become subject to, as a result of
      Party B's failure to provide Party A with a Repurchase Notice on the day
      and in the manner specified in this paragraph, and to reimburse, within 30
      days, upon written request, each of such Indemnified Persons for any
      reasonable legal or other expenses incurred in connection with
      investigating, preparing for, providing testimony or other evidence in
      connection with or defending any of the foregoing.  If any suit,
      action, proceeding (including any governmental or regulatory
      investigation), claim or demand shall be brought or asserted against the
      Indemnified Person, 

            

    

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    
       

      
        	
                 

              	 
      	
                such
      Indemnified Person shall promptly notify Party B in writing, and Party B,
      upon request of the Indemnified Person, shall retain counsel reasonably
      satisfactory to the Indemnified Person to represent the Indemnified Person
      and any others Party B may designate in such proceeding and shall pay the
      fees and expenses of such counsel related to such
      proceeding.  Party B shall not be liable for any settlement of
      any proceeding effected without its written consent, but if settled with
      such consent or if there be a final judgment for the plaintiff, Party B
      agrees to indemnify any Indemnified Person from and against any loss or
      liability by reason of such settlement or judgment.  Party B
      shall not, without the prior written consent of the Indemnified Person,
      effect any settlement of any pending or threatened proceeding in respect
      of which any Indemnified Person is or could have been a party and
      indemnity could have been sought hereunder by such Indemnified Person,
      unless such settlement includes an unconditional release of such
      Indemnified Person from all liability on claims that are the subject
      matter of such proceeding on terms reasonably satisfactory to such
      Indemnified Person.  If the indemnification provided for in this
      paragraph is unavailable to an Indemnified Person or insufficient in
      respect of any losses, claims, damages or liabilities referred to therein,
      then Party B, in lieu of indemnifying such Indemnified Person thereunder,
      shall contribute to the amount paid or payable by such Indemnified Person
      as a result of such losses, claims, damages or liabilities.  The
      remedies provided for in this paragraph are not exclusive and shall not
      limit any rights or remedies that may otherwise be available to any
      Indemnified Person at law or in equity.  The indemnity and
      contribution agreements contained in this paragraph shall remain operative
      and in full force and effect regardless of the termination of the
      Transaction.

              

      

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

       

    

    
      	
              Restrictions
      on Repurchases:

            	 
      	
              On
      any Averaging Date, neither Party B nor any “affiliate” or “affiliated
      purchaser” (each as defined in Rule 10b-18 under the Exchange Act (“Rule
      10b-18”)) shall directly or indirectly (including, without limitation, by
      means of any cash-settled or other derivative instrument) purchase, offer
      to purchase, place any bid or limit order that would effect a purchase of,
      or commence any tender offer relating to, any Shares (or an equivalent
      interest, including a unit of beneficial interest in a trust or limited
      partnership or a depository share) or any security convertible into or
      exchangeable or exercisable for Shares.

            
	 	 	 
	
              Restrictions
      on Certain Distributions:

            	 
      	
              During
      any Averaging Period, the Shares or securities that are convertible into,
      or exchangeable or exercisable for Shares shall not be subject to a
      "restricted period" (as such term is defined in Regulation M) and Party A
      shall not engage in any "distribution" (as such term is defined in
      Regulation M) until the sixth Exchange Business Day immediately following
      the Averaging Period.

            
	 	 	 
	
              Payments
      on Early Termination:

            	 
      	
              Party
      A and Party B agree that for the Transaction, for the purposes of Section
      6(e) of the Agreement, Loss and the Second Method will
    apply.

            
	 	 	 
	
              Governing
      Law:

            	 
      	
              The
      laws of the State of New York (without reference to choice of law doctrine
      other than Section 5-1401 of the New York General Obligations
      Law).

            
	 	 	 
	
              Termination
      Currency:

            	 
      	
              USD

            

    

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

     

    
      	
              Office:

            	 
      	
              For
      the purposes of the Transaction, Party A is not a Multibranch Party, and
      Party B is not a Multibranch Party.

            
	 	 	 
	
              Calculation
      Agent:

            	 
      	
              Party
      A; provided that,
      upon written request by Party B, the Calculation Agent shall provide in
      writing in reasonable detail evidence and explanation of any calculation
      or determination it made in respect of the Transaction, including a
      description of the methodology and data applied in making any adjustment
      to any terms of the Transaction, in each case within five Exchange Trading
      Days of receipt by Party A of such written request by Party B; provided further that
      (i) if the Calculation Agent fails to provide such evidence or calculation
      within such required time period and such failure resulted from
      administrative or clerical error, such failure shall not constitute an
      Event of Default with respect to the Calculation Agent if the Calculation
      Agent provides such evidence or calculation within three Exchange Business
      Days of being made aware of such failure and (ii) in providing such
      evidence and explanation, in no event shall the Calculation Agent be
      obligated to disclose any trading information proprietary to Party A or
      its affiliates or any information which Party A or its affiliate is
      required by contract or law to hold confidential.

            
	 	 	 
	
              WAIVER
      OF JURY TRIAL:

            	 
      	
              EACH
      PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
      IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR
      PROCEEDING RELATING TO THE TRANSACTION.  EACH PARTY (I)
      CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS
      REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
      THE EVENT OF SUCH A SUIT, ACTION OR PROCEEDING, SEEK TO ENFORCE THE
      FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE
      BEEN INDUCED TO ENTER INTO THE TRANSACTION, AS APPLICABLE, BY, AMONG OTHER
      THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS PROVIDED
    HEREIN.

            
	 	 	 
	
              Tax
      Disclosure:

            	 
      	
              Effective
      from the date of commencement of discussions concerning the Transaction,
      Party B and each of its employees, representatives, or other agents may
      disclose to any and all persons, without limitation of any kind, the tax
      treatment and tax structure of the transaction and all materials of any
      kind (including opinions or other tax analyses) that are provided to Party
      B relating to such tax treatment and tax
  structure.

            

    

    

      
        
           

        

        
          28

          
            

          

        

        
           

        

      

    

     

    THE
SECURITIES REPRESENTED BY THE CONFIRMATION HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 OR ANY
OTHER UNITED STATES FEDERAL OR STATE SECURITIES LAWS; SUCH SECURITIES MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF APPROPRIATE REGISTRATION UNDER
SUCH SECURITIES LAWS OR EXCEPT IN A TRANSACTION EXEMPT FROM OR NOT SUBJECT TO
THE REGISTRATION REQUIREMENTS OF SUCH SECURITIES LAWS.

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

    This
Confirmation may be executed in several counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.

    

    Party B
hereby agrees to check this Confirmation and to confirm that the foregoing
correctly sets forth the terms of the Transaction by signing in the space
provided below and returning to Party A a facsimile of the fully-executed
Confirmation to Party A at +44 113 336 2009. Originals shall be provided for
your execution upon your request.

    

    We are
very pleased to have executed the Transaction with you and we look forward to
completing other transactions with you in the near future.

    

    Very
truly yours,

    DEUTSCHE
BANK AG, LONDON BRANCH

    

    
      	
              By:

            	
              /s/ Lee
      Frankenfield

            
	
              Name:

            	
              Lee
      Frankenfield

            
	
              Title:

            	
              Managing
      Director

            
	 	 
	
              By:

            	
              /s/ Andrea
      Leung

            
	
              Name:

            	
              Andrea
      Leung

            
	
              Title:

            	
              Managing
      Director

            

    

    

    
      DEUTSCHE
BANK SECURITIES INC.,

    

    acting
solely as Agent in connection with this Transaction

    

    
      	
              By:

            	
              /s/ Lee
      Frankenfield

            
	
              Name:

            	
              Lee
      Frankenfield

            
	
              Title:

            	
              Managing
      Director

            
	 	 
	
              By:

            	
              /s/ Andrea
      Leung

            
	
              Name:

            	
              Andrea
      Leung

            
	
              Title:

            	
              Managing
      Director

            

    

    

    
      	 
      	
              Central
      European Media Enterprises Ltd

            
	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/ Michael
      Garin

            
	 
      	 
      	
              Name:
      Michael Garin

            
	 
      	 
      	
              Title:
      Chief Executive Officer

            

    

     

     

    
       

      
        	

                Chairman
      of the Supervisory Board: Clemens Börsig

                Board
      of Managing Directors: Hermann-Josef Lamberti, Josef Ackermann, Anthony
      DiIorio, Hugo Banziger

              	 	Deutsche
      Bank AG is regulated by the FSA for the conduct of designated investment
      business in the UK, is a member of the London Stock Exchange and is a
      limited liability company incorporated in the Federal Republic of Germany
      HRB No. 30 000 District Court of Frankfurt am Main; Branch Registration
      No. in England and Wales BR000005, Registered address: Winchester House, 1
      Great Winchester Street, London EC2N
2DB.

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