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Confidential Materials omitted and filed separately with the
Securities and
Exchange Commission. Asterisks denote omissions.
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EXHIBIT 10.21
CONTRACT
Moscow
January 30, 2006
CORPORATION "CTC MEDIA INC.", hereinafter referred to as ((CTC)),
in
the person of President and Chief Executive director Mr. Rodnyansky
A.E. acting
on the basis of the Resolution of the Board of directors dd.
02.08.2004 and
Executive director Khanumyan V.S., acting on the basis of the Power
of attorney
#99NP dd. September 21, 2004, on the one hand,
CLOSED JOINT-STOCK COMPANY "VIDEO INTERNATIONAL "TREND", (OGRN
1027700294071 dd. October 09, 2002), hereinafter referred to as the
"COMPANY" in
the person of General director Matyushenko I.A., acting on the
basis of the
Charter, on the second hand,
and CLOSED JOINT-STOCK COMPANY "VIDEO INTERNATIONAL" GROUP OF THE
COMPANIES", hereinafter referred to as the "AGENCY", in the person
of General
director Vasiljev S.A., acting on the basis of the Charter, on the
third hand,
jointly referred to as the "PARTIES", have signed the present
Contract
as follows:
1. In realization of the provisions of the Memorandum on
cooperation
concluded on December 07, 2005 (hereinafter referred to as the
"Memorandum") by
the present Contract have approved the text of the Agreement
(Appendix 1 to the
present Contract) that will be recommended to participants of
networks -
broadcasters of Tele-channels "CTC" and "Home", listed in Appendix
2 to the
present Contract (hereinafter referred to as the "Broadcasters"),
for conclusion
with the Agency / affiliated and dependent to the companies of CJSC
"Video
International" Trend Group" (further - ((the Agency companies)))
according to
which the latter shall acquire the right to make the transactions
on the
exclusive basis on realization of services of the Broadcasters on
accommodation
in the regional air of the Tele-channels Broadcasters of the
advertising of the
third parties (further - ((regional advertising))). The Parties
have agreed that
amendments of the specified text shall be possible only as agreed
by the Parties
to the present Contract.
2. The Parties have determined that the placement of advertising
presented on the basis of transactions concluded by the Agency/ the
Agency
companies starting from January 01, 2006 shall be carried out on
regional air of
the Tele-channels Broadcasters distributed within the limits of the
cities/regions of the Russian Federation listed in Appendix 2 to
present
Contract.
The Parties have agreed that volumes of the offered advertising
time
in the regional air of Tele-channels Broadcasters in 2006 shall
make 6 % (Six
percent) of the duration of the corresponding Network program block
(according
to conditions of the corresponding "network" contract concluded
with a certain
Broadcaster on distribution of the corresponding Tele-channel) for
24 hours
prior to airing (not taking into account duration of Windows of a
regional
announcement), and also the whole volume of advertising time
permitted by the
current legislation in Regional Windows (according to the program
schedule of a
certain Broadcaster) except for that stipulated by the fourth
paragraph of
present item.
The Parties shall agree that the total amount of advertising on air
of
each Broadcaster cannot exceed the limits established by the
legislation of the
Russian Federation on advertising, and upon its determining the
federal
advertising placed on air of Tele-channels not subject to excluding
from Network
program blocks shall also be considered. If airing by the
Broadcaster of the
federal and regional advertising in full can lead to infringement
of
requirements of the legislation regarding the volume of
advertising, the volume
of the federal advertising shall remain constant, and the updating
shall be
carried out due to the advertising time allocated for regional
advertising
placement. Hereunder the Parties shall agree that such updating
should be
distributed as much as possible in regular intervals within air day
(prime time
/ beyond the prime time) and, whenever possible, to be coordinated
with the
Agency / the Agency companies.
The Parties have also agreed that the Broadcasters shall have the
right to place independently in the regional air the advertising
information on
the third parties (further - "Counterparts"), if a Counterpart in
their turn
places the advertising information on the corresponding Broadcaster
according to
conditions of the contracts concluded by the Broadcaster with the
Counterpart
(cross- promotion) as well as social advertising placed on a
gratuitous basis.
The total amount of the advertising time allocated for placing such
materials,
in any case cannot be more than 7 % of the volume of the
advertising time
offered for the Agency / the Agency companies advertising placement
specified in
the second paragraph of the present item in the regional air of
Tele-channels
Broadcasters (otherwise the conditions of placing such advertising
information
on Counterparts and social advertising should be preliminary
coordinated with
the Agency / the Agency companies), and cannot be to the detriment
of commercial
sales of the Agency / the Agency companies.
The Parties have agreed that the above-stated cross-promotion and
social advertising
placed on a gratuitous basis as well as political advertising will
not be
subject of the Agreement and contracts of the Agency / the Agency
companies with
Broadcasters (model form of the contract approved by the present
Contract).
Besides the Parties have agreed that if in 2006 - 2010
Tele-channels
Broadcasters regional air opportunities on the advertising
placement executed in
various other forms (sponsor's advertising, logotypes, banners,
etc.) the right
to execution of transactions on realization of Broadcasters'
services on the
Tele-channels airing of such regional advertising with the third
parties shall
not be granted to anybody, except for the Agency (the Agency
companies), the
Broadcaster shall not use such right either.
3. The Parties have agreed that under condition of maintenance of
conditions of the exclusivity specified in the present Memorandum
and proceeding
from the volumes of advertising time agreed above and opened by
Tele-channels
Broadcasters, the Agency / the Agency companies shall undertake to
provide
realization of services of the Broadcasters listed in Appendix 1 to
present
Contract, on Regional advertising placement so that the sum of the
Broadcaster's
actual gross advertising broadcast revenue (minus compensation to
the Agency /
the Agency companies under the rate according to paragraph 4 of the
present
Contract), received by them for regional advertising airing on
Tele-channels
Broadcasters, and calculated for a calendar year in conformity with
a technique
agreed by the Parties, should make not less than a rouble
equivalent of
o
In 2006 - [**] US dollars ([**] US dollars), including VAT under
the
rate stipulated by the current legislation of the Russian
Federation;
o
In 2007 - [**] US dollars ([**] US dollars) including VAT under the
rate stipulated by the current legislation of the Russian
Federation;
o
In 2008 - [**] US dollars ([**] US dollars), including VAT under
the
rate stipulated by the current legislation of the Russian
Federation;
o
In 2009 - [**] US dollars ([**] US dollars), including VAT under
the
rate stipulated by the current legislation of the Russian
Federation;
o
In 2010 - [**] US dollars ([**] US dollars) including VAT under the
rate stipulated by the current legislation of the Russian
Federation,
(hereunder the realization dollar equivalent shall be calculated on
a monthly
basis at the rate of the Central Bank of the Russian Federation for
the last day
of the month),
The Parties have agreed annually starting from 2006 not later than
October
01 of the corresponding year to coordinate (to sign) the Appendix
to the
Contract (and corresponding appendices to contracts of Broadcasters
with the
Agency / the Agency companies) under the form of Appendix 2 to the
present
Contract, with the instruction of the sums of gross revenues of the
Broadcasters
for the corresponding year. The parties shall understand that,
considering the
growing potential of the Broadcasters listed under items 9, 15, 16
and 18 of the
Appendix 2 to the present Memorandum (the cities of Nizhny
Novgorod, Volgograd,
Voronezh and Ufa), income growth of these companies can be above
growth rate of
the aggregate profits of the Broadcasters stipulated by the first
paragraph of
the present item.
The Parties have agreed that the sums of the Broadcasters' gross
revenues for 2006 - 2010 specified above shall be the scheduled
basic sums of
realization, achievement of which shall be the task of the Agency /
the Agency
companies provided keeping by CTC of the parameters agreed in the
present
Contract (para. 2, 4), the final settlement upon which shall be in
any case made
with the Broadcasters annually, not later than March 01 of the year
following
the reported one, that should find reflection in the corresponding
contracts of
the Agency / the Agency companies with the Broadcasters. Herewith
the Parties
shall understand that the gross revenues specified above are
determined as the
basic sums of realization for every calendar year of the valid term
of the
Agreement and cannot be calculated cumulatively for several (or
five) years of
the valid term of the Agreement.
4. The Parties shall confirm that for maintaining of the level of
CTC
services realization specified in paragraph 3 of the present
Contract within the
period from January 01 till December 31, 2006 the average annual
audience share
of the Tele-channel ((First entertaining ((CTC)) for the audience
((6-54))
(audience age) and the average annual audience share of the "Home"
Tele-channel
for the audience ((women 25-60)) in the cities agreed by the
Parties should
correspond to
parameters that shall be agreed upon separately for each city in
contracts,
herewith it should not be significantly less than the average
annual parameters
of Tele-channels audience shares in 2005 in the above-stated
cities.
The Parties shall agree that deviation of parameters of an average
annual Tele-channels audience share in the cities of Moscow and
St.-Petersburg
for less than 15 (Fifteen) % shall not be considered essential. The
deviation of
parameters of an average annual Tele-channels audience share in the
other cities
agreed by the Parties in Appendix 2 to the present Contract for
less than 20
(Twenty) % shall not be considered essential, if otherwise is not
agreed by the
Parties.
The data of the independent media monitoring company "TNS Gallup
Media"
recognized by the Parties shall be used to determine the specified
parameters of
the audience share.
If in any city the measurement are not carried out by the
independent media
monitoring company "TNS Gallup Media", the Parties have agreed that
the data of
specialized independent sociological monitoring company "GFK-Rus"
shall be used.
For date of signing of the present Contract such city is Tver.
5. Besides the Parties have agreed that the Company will conclude
with
Broadcasters the guarantee contracts securing performance within
the valid term
of the Agreement of following obligations of the Agency / the
Agency companies:
a) On duly transfer to the Broadcasters of the money resources
received by the Agency / the Agency companies from clients ordering
services on
advertising placement in terms specified in the Agreement and
contracts or
stipulated by the legislation;
b) On payment by the Agency / the Agency companies of the penalty
for the delay of payments, if such is stipulated by the Agreement
and contracts,
at the rate of stipulated by the Agreement / contracts;
c) On payment to the Broadcasters of release-money within the
terms specified in the Agreement / contracts.
6. In cases of:
changing of quantity of the Broadcasters coordinated by the Parties
which will carry out accommodation of regional advertising on air
of
Tele-channels Broadcasters on the basis of the Agreement, contracts
between the
Agency and Broadcasters and the transactions concluded
by the Agency;
CTC default of the guarantees on maintaining the conditions of
exclusivity of the Agency activity on granting advertising volumes
(advertising
time) specified in the present Contract;
reduction on the each Broadcaster's air of advertising volumes
(advertising time), defined in the absolute figures caused by
adopting and
coming into force after signing of the present Contract of the
legislative/statutory acts of the Russian Federation or changes of
"network"
contracts concluded by CTC with the Broadcasters on distribution of
a
corresponding Tele-channel;
guarantees on securing the conclusion with Broadcasters / the
Agency
companies of contracts under the coordinated form;
in case of the essential dynamics of the market occurred as a
result
of force majeure circumstances or an economic crisis,
change of the dollar exchange rate established by the Central Bank
of
the Russian Federation, in relation to the Russian rouble for more
than on 15 %,
The Parties shall agree upon the respective alteration of total
sums
of the Broadcasters' gross revenues stipulated by the present
Contract,
appendices to the present Contract and appendices to the
corresponding contracts
between the Broadcaster and the Agency / the Agency companies, by
signing of
additional agreements.
The Parties shall also agree that the revision of total sums of the
Broadcasters gross revenues specified in paragraph 3 of the present
Contract
shall occur also if the Agency / the Agency companies does not
conclude
contracts with Broadcasters and do not start realization of their
services on
regional advertising placement for the reasons not dependent on the
Agency / the
Agency companies.
7. The Parties have coordinated that the rate of commission of the
Agency / the Agency companies under the Agreement (commission for
concluding
transactions with clients as well as the cost of services that can
be rendered
by the Agency/ the Agency companies to the Broadcasters) shall make
15 %
including VAT under the rate stipulated by the current legislation
of the
Russian Federation of the sum of Broadcasters' actual gross
revenues for the
reported period received for regional advertising placement on air
of the
Tele-channels.
The payment procedure for the Agency / the Agency companies
services
shall be agreed upon
and determined in the Agreement making Appendix 1 to the present
Contract.
8. Certain conditions of regional advertising placement on air of
the
Tele-channels Broadcasters shall be determined in the contracts
between the
Agency and Broadcasters. CTC shall guarantee to the Company and to
the Agency,
signing by Broadcasters, and the Company and the Agency, in their
turn, shall
guarantee to CTC signing by the Agency companies of contracts under
the form
making Appendix 1 to the present Contract.
The Parties have agreed that contracts concluded between the Agency
/
the Agency companies and the Broadcasters shall include the
following basic
conditions of possible pre-schedule cancellation: the contract can
be terminated
prior to the expiry of its valid term upon application of one of
the parties
with the notice not later than 180 days prior to the date of the
prospective
cancellation of the Agreement. The form for such application shall
be registered
mail with notice.
Herewith the party-initiator of pre-schedule cancellation shall be
obliged to pay to other party the release money equal to:
o
upon cancellation of the present Agreement under the
initiative of the Broadcaster - 15 % (Fifteen percent) of
the sum of actual gross revenues of the Broadcaster from
rendering services on accommodation of Regional advertising
on air of the corresponding Tele-channel Broadcaster, for
six full calendar months, preceding the date of cancellation
of the Agreement;
o
upon cancellation of the present Agreement under the
initiative of the Agency / the Agency companies - the sum of
actual gross revenues of the Broadcaster from rendering
services on accommodation of regional advertising on air of
the corresponding Tele-channel Broadcaster, for six full
calendar months, preceding the date of cancellation of the
Agreement.
The Parties have agreed that in case of essential default by the
Agency on the results of fiscal year (for 10 (ten) % and more) of
the task of
maintenance of realization of services of the Broadcaster on
accommodation of
regional advertising so that gross revenues (minus commission to
the Agency /
the Agency companies at the rate according to paragraph 7 of the
present
Contract) of the Broadcaster received for regional advertising
placement on air
of the corresponding Tele-channel
Broadcaster should make not less than the sums coordinated in
paragraph 3 of the
present Contract, the Agreement and contracts with Broadcasters
cannot be
terminated without carrying out of preliminary talk between the
Parties. The
Parties shall undertake not later than on March 10th of the year
following the
reported one to carry out negotiations, determine an opportunity
and coordinate
conditions of the further joint work. If the Parties do not reach
the agreement
as a result of such negotiations as per the term specified above,
CTC/ the
Broadcasters shall have the right to terminate the Agreement /
contracts due to
the specified default by the Agency / the Agency companies of their
task
(hereunder the provisions on payment by the Broadcaster of the
release-money to
the Agency / the Agency companies shall not be applied).
9. The present Contract shall inure from the moment of its signing
by
the Parties, extend its validity to the relations of the Parties
arisen since
January 01, 2006 and operate till the moment of performance of the
obligations
by the Parties.
10. The Parties have agreed to not disclose or otherwise let know
to
any third parties any conditions and provisions of the present
Contract or any
other confidential information that a Party can share with another
Party in
connection to the execution of the present Contract (except for
sharing such
information with their representatives, consultants and lawyers)
without
preliminary written consent on such disclosure of the information
from another
Party except for the cases and in the amount directly stipulated by
the current
legislation, statutory acts or the rules approved by the authorized
state bodies
(including, but not limited to the authorized bodies in the sphere
of securities
market outside the jurisdiction of the Parties) or cases of the
usual procedure
of disclosing of the information to auditors, shareholders or
lawyers of a
Party.
11. The present Contract is made in triplicate, one for each Party.
SIGNATURES OF THE PARTIES
On behalf of CTC
[Signed] Rodnyansky A.E.
[Signed] Khanumyan V.S. [Stamp]
On behalf of the Company
[Signed] Vasiljev S.A. [Stamp]
On behalf of the "Agency"
[Signed] Matyushenko I.A. [Stamp]
Appendix 1 (a)
to the Contract concluded between
Corporation "CTC Media Inc.",
CJSC "Video International" Group of the Companies",
and CLSC "Video International "Trend",
dd. January 30, 2006
AGREEMENT # ______________
MOSCOW
JANUARY 31, 2006
________________ (hereinafter referred to as the "BROADCASTER")
(BASIC STATE
REGISTRATION NUMBER [OGRN] 1027739137887) in the person of
_____________________
___________________________________, acting on the basis of
____________________
______________________________________________, on the one hand,
and
_______________________________ (hereinafter referred to as the
"AGENCY") in the
person of ____________________, acting on the basis of
________________, on the
other hand, hereinafter jointly referred to as the "PARTIES", have
concluded the
present Agreement on the following:
1. DEFINITIONS
For the purpose of the present Agreement, the definitions and
expressions below
have the following meanings:
"NETWORK PROGRAM BLOCK" means a combined audiovisual work (the
result of
intellectual activity) created by CJSC "Network of television
stations" / CJSC
"New Channel" (further "CTC/ New Channel") for using by the
Broadcaster as
transmission through on-air broadcasting (Article 40 of the RF Law
"On Copyright
and Neighboring Rights") and transmission of cable broadcasting
(Article 41 of
the RF Law "On Copyright and Neighboring Rights") pursuant to the
contract
concluded between the Broadcaster and CTC / New Channel
(hereinafter referred to
as the "Network contract").
"REGIONAL WINDOW" means a time interval scheduled within the
Network Program
Block that allows the substitution of audiovisual works in the
Network Program
Block for any other programming at the discretion of the
Broadcaster pursuant to
the Network contract.
"ADVERTISING" means information on a physical or legal person,
goods, ideas,
undertakings (advertising information) intended for an uncertain
circle of
persons and aimed to form or support interest to these physical,
legal persons,
goods, ideas, undertakings and to promote realization of goods,
ideas and
undertakings.
"COMMERCIAL" means an audiovisual work containing advertising with
the
time-keeping of up to 120 (one hundred and twenty) seconds
inclusive.
"LOGOTYPE" means an original tracing of the advertiser's name used
as a symbol
of the goods and frequently being its trade mark. The said tracing
in the static
or dynamic form is placed in any
corner of the picture.
"RUNNING LINE" means an advertising message broadcasted inside TV
programs,
between TV programs, in Broadcaster's announcements and prompts by
imposing to
the television image of static and/or dynamic text image in the
bottom part of
the television screen.
"SPONSOR" means a physical person or a legal entity making a
contribution in the
form of property, results of intellectual activity, services, work,
etc., to the
production of a TV program or the broadcasting of a sports event
with the aim to
promote its own or another person's brand or trade mark or its own
activities,
products or any other direct or indirect commercial interests
through placing
the sponsor advertising on TV channel air.
"SPONSORSHIP ADVERTISING" means advertising about the sponsor, i.e.
a legal
entity or a physical person contributing into program producing or
into
broadcasting of an entertainment event (concert, festival, etc.) in
the form of
property, results of intellectual activity, services, work, etc.,
with the aim
to promote its own or another person's brand or trade mark or its
own
activities, products or any other direct or indirect commercial
interest.
"SOCIAL ADVERTISING" represents public and state interests and
serves charity
purposes.
Social Advertising shall promote neither business entities nor
individual
entrepreneurs, nor their specific brands (models, articles) or the
brands
(models, articles) of products resulting from the business activity
of
non-profit organizations.
"CROSS-PROMOTION" means advertising information on any third
parties (further
called "Contractors"), if the Contractor(-s) place(-s) in turn the
advertising
information on the Broadcaster pursuant to provisions of the
contracts concluded
by the Broadcaster with a Contractor(-s). Contractors for the
purposes of the
present paragraph of the Contract can be only mass media (mass
media office,
publishers), and the advertising information presented by them for
accommodation
can only be about the Contractor or corresponding mass-media
(mass-media group
of the corresponding Contractor), or other persons affiliated with
the
Broadcaster (CTC-MEDIA). Any other categories of Contractors should
be
preliminarily coordinated with the Agency.
"BROADCASTER'S OWN INFORMATION" means announcements of television
programs of
CTC / New Channel and the Broadcaster issued in Network program
blocks and
Regional Windows as well as announcement of actions prepared and
conducted by
CTC/ New Channel or Broadcaster independently without participation
of any third
party. The said definition shall not extend to advertising of other
broadcasters
in Network program blocks, advertising of legally independent
structures founded
with participation of the Broadcaster, as well as projects
conducted with
participation of any third party.
"UNAUTHORIZED ADVERTISING" means advertising placed by the
Broadcaster into
Network program blocks or Regional Windows without receipt of
preliminary
written approval of the Agency. The said definition shall also
extend to
advertising placed inside the Broadcaster's own information.
The concept of unauthorized advertising shall not include:
a) Headbands of CTC/ New Channel and/or Broadcaster opening and
closing
advertising blocks not containing advertising of any third parties;
b) Broadcaster's own information;
c) information on any third parties stipulated by para 2.4. of the
present
Contract.
"CLIENTS" means advertisers or any other third parties representing
the
advertisers pursuant to respective contracts.
"NETWORK ADVERTISING" means advertising obligatory for airing
within Network
program blocks according to the Network contract and not subject to
exclusion
from the Broadcaster's air or replacement with any other
audiovisual products.
"REGIONAL ADVERTISING" means advertising placed by the Broadcaster
in the
Network program blocks and Regional Windows within specially
defined time
intervals and subject to distribution exclusively within the limits
of
Territory.
"TERRITORY" means - ____________________(city/oblast/kray), wherein
the
Broadcaster shall carry out distribution of Network program blocks
and Regional
Windows according to the License # ____ issued __________ (on, by),
the copy of
which shall be Appendix 7 to the present Contract, and the Network
contract.
"ADVERTISING SERVICE" means placing by the Broadcaster within the
Network
Program Blocks and Regional windows (EMM "CTC-_______"/____________
presenting
"Home" tele-program) of regional advertising pursuant to the
contracts entered
into by the Agency in its own name, but on the account of the
Broadcaster, in
the form of Commercials or any other form determined by additional
agreement
hereto, including Social advertising distributed on payment basis.
"REPORTING PERIOD" means one calendar month.
"THE PRIME TIME" means continuous time intervals that have the
greatest watching
capacity - (time period from 18:00 till 24:00 hours local time).
"BROADCASTER'S ACTUAL GROSS ADVERTISING BROADCAST REVENUE for the
Reported
Period" (Actual Gross Broadcast Revenue) means:
o
Sales revenues on regional advertising transactions entered into
by the Agency regarding placement of advertising in Network
program blocks and Regional windows;
o
Sales revenues on advertising transactions entered into by the
Broadcaster with the Clients regarding placement of advertising
in Network program blocks and Regional windows prior to
concluding of the present Agreement, where advertising placement
is executed from January 01, 2006, as well as on advertising
transactions entered into between the Broadcaster (or any
authorized persons) and the Clients after signing the present
Agreement with a written consent of the Agency (excluding
transactions on Cross-promotion and Social advertising on behalf
of the Broadcaster).
o
Non-sale income (penalties, fines and other non-sale income) due
to the Broadcaster and actually collected by the Agency or
directly by the Broadcaster under contracts with Clients
concluded by the Agency with the aims of executing the present
Agreement;
o
Indemnity due to the Broadcaster actually received by the Agency
or directly by the Broadcaster regarding transactions with
Clients concluded by the Agency with the aim of executing the
present Agreement.
2. SUBJECT OF THE AGREEMENT
2.1. The present Agreement shall be deemed a mixed-type agreement
as defined by
Article 421 of the Civil Code of the Russian Federation. In the
present
Agreement, the Parties set forth arrangements regarding commission
services
(section 2.1.1 of the present Agreement), as well as contract and
reimbursable
services (section 2.1.2 of the present Agreement). The names used
for reference
to the Parties shall in no way be used to interpret the nature of
their
relationship and are identified exclusively for convenience.
2.1.1. In accordance with this Agreement, the Broadcaster shall
engage
the Agency, and the Agency shall be obliged for a commission fee to
conclude up to December 31, 2010 in the Agency's name, but for the
account of the Broadcaster, contracts with Clients for advertising
services of the Broadcaster for the period of January 01, 2006 to
December 31, 2010 regarding placing of Regional advertising in the
Network program blocks and Regional windows under the procedure
stipulated herein.
2.1.2. In accordance with this Agreement, the Agency shall render
to
the Broadcaster on a compensated basis certain services according
to
the list as defined in Appendix 2 to the present Agreement.
2.2. Within the valid period of the present Agreement the Agency
shall act
exclusively: realize services on placement of Regional advertising
in the
Network program blocks and Regional windows distributed by the
Broadcaster, and
the Broadcaster, on their part, shall be obliged neither to present
to any third
parties the right to conclude the mentioned contracts nor render
independently
services on placement of Advertising without written consent of the
Agency and
coordination with the Agency of the conditions of such placement
(excluding
cases stipulated in para 2.4. of the present Agreement).
2.3. The Broadcaster shall take obligations on distribution of the
Regional
advertising presented by the Agency on the basis of contracts
concluded within
the limits of the Territory with Clients (pursuant to the
conditions of the
present Agreement).
For rendering the Agency's services on the conclusion of contracts
with Clients on placement of regional advertising in the Network
program blocks
and Regional windows, the Broadcaster shall be obliged to provide
the following
volumes of time allocated for placement of regional advertising:
o
6 % (Six percent) of the duration of the corresponding Network
program block (according to the conditions of the Network
contract) for 24-hours broadcast (not taking into account
Regional windows duration),
o
as well as the volume of advertising time in Regional windows
permitted by the current legislation (according to the
Broadcaster's program schedule) but for the exception stipulated
by the present Agreement.
The Parties shall acknowledge and agree that the total amount of
advertising in the Network program blocks and the Regional Windows
distributed
by the Broadcaster in the Territory cannot exceed the limits
established by the
legislation of the Russian Federation on advertising, and upon its
definition the Network advertising placed on air of the Broadcaster
not subject
to exclusion from the Network program blocks shall also be taken
into account.
Should the placement of Network and Regional advertising in full
the in Network
program blocks and the Regional Windows distributed by the
Broadcaster lead to
infringement of requirements of the legislation regarding the
volume of
advertising, the Network advertising volume shall remain constant,
and updating
shall be carried out due to time allocated for accommodation of
Regional
advertising. Hereunder the Parties agree that such updating should
be
distributed as much as possible in regular intervals within the air
day (prime
time /beyond prime time) and, whenever possible, be coordinated
with the Agency.
2.4. The Parties have agreed that the Broadcaster shall have the
right
to place on air independently (in Network program blocks and
Regional Windows)
Cross-promotion as well as the Social advertising placed at the
expense of the
Broadcaster.
Total amount of the advertising time allocated for placement of
such
materials (Cross-promotion and the Social advertising placed at the
expense of
the Broadcaster), in any case cannot be more than 7 % from the time
specified in
para 2.3. The volume of the advertising time offered for placing
the advertising
presented by the Agency (otherwise conditions of placement of
Cross-promotion
and Social advertising should be preliminary coordinated with the
Agency),
cannot be to the detriment of commercial sales of the Agency and
should be
distributed as much as possible in regular intervals within the air
day (prime
time /beyond prime time).
Should the Broadcaster not use the right provided by the present
paragraph regarding placement of Cross-promotion and Social
advertising, the
Broadcaster shall notify the Agency thereon not later than 14 days
prior to the
date of the prospective air broadcast.
2.5. On their part, the Broadcaster shall undertake to pay to the
Agency the commission for fulfillment of transactions at the rate
and under the
procedure established by the present Agreement as well as to pay
for the
rendered services.
2.6. The present Agreement shall not extend to Advertising in the
form
of Sponsorship advertising, pre-election campaign and the Social
advertising
distributed at the expense of the Broadcaster. The Parties have
also agreed that
inclusion to the subject of the Agreement of any other kind of
Advertising
besides a Commercial (including, but not being limited, the
Sponsorship
advertising, Logotype, ((Running line)), etc.), shall require
signing by the
Parties of a special additional agreement to the present Agreement.
2.7. Execution by the Agency of conditions of para 4.6.3, 4.7,
4.10,
5.2, 8.3 of the present Agreement shall be guaranteed by ZAO "Video
International" Group of Companies" (3AO ((XXXXXX XXXXXXXX ((XXXXX
XXXXXXXXXX)))
with a subsidiary responsibility of the guarantor. The contract of
the guarantee
shall be concluded with the specified guarantor.
3. OBLIGATIONS OF THE PARTIES
3.1. The Broadcaster shall:
3.1.1. present to the Agency the exclusive right to conclude with
clients contracts on realization of services on placement of
Regional
advertising in Network program blocks and Regional Windows. The
Broadcaster
shall undertake not grant to any third party the right to make in
their interest
and at his expense transactions fulfillment of which is entrusted
to the Agency
under the present Agreement.
The Broadcaster shall have the right independently, without
participation of the Agency to realize Services on placing of the
Regional
advertising in Network program blocks and Regional
Windows only with the preliminary written consent of the Agency and
on the
conditions coordinated with the Agency.
The preliminary coordination shall not be required for placing by
the
Broadcaster of their own information, the Social advertising placed
at the
expense of the Broadcaster, and Cross-promotion (except for the
cases directly
stipulated by the present Agreement).
3.1.2. In due time present to the Agency the information necessary
for
fulfillment of transactions with Clients. Within three days from
the moment of
signing the present Agreement the Broadcaster shall present to the
Agency a
prospective Viewing grid (the schedule of programs of Network
program blocks and
Regional Windows) of the Broadcaster for the first quarter of 2006,
and further
present to the Agency a prospective Viewing grid in the shortest
terms after its
formation.
In the prospective Viewing grid presented by the Broadcaster to the
Agency the schedule of time intervals intended for placing the
Regional
advertising under transactions made by Agency, both in programs of
Network
program blocks, and in Regional Windows, as well as time intervals
intended for
Broadcaster's Own information, Social advertising placed at the
expense of the
Broadcaster and Cross-promotion.
Advertising in the form of overlapping (Logotype, ((Running line)),
etc.) can be placed only in those television programs in which
Advertising can
be placed according to the legislation of the Russian Federation
and concerning
which the Parties have entered into an additional agreement to the
present
Agreement regarding an opportunity to place such kind of
Advertising.
The prospective Viewing grid shall be presented signed by the
authorized person of the Broadcaster and certified with the
original stamp of
the Broadcaster.
The Broadcaster shall present to the Agency a current Viewing grid
(programs of Network program blocks and Regional Windows) for each
calendar week
not later than for ___ __ (___________) calendar days prior to the
beginning of
corresponding calendar week.
3.1.3. Have the right to make changes to a current Viewing grid
having
notified the Agency about such changes in the operative order not
less than for
___ (________) business days before implementation of changes (if
the changes
come into force during or right after the state holidays (days off)
- not less
than for ___ (_____) calendar days prior to the first day off).
The prior notification can be not given to the Agency only in cases
of
making the specified changes quickly due to the events of the state
importance
defined by the Broadcaster's editorial policy, should the prior
notification of
the Agency on the given changes be impossible due to the objective
bases and
under the condition of written informing of the Agency thereon (on
the day of
modification).
If such quickly implemented changes have led to the fact that any
advertising of clients was not placed air of the Broadcaster, in
such cases the
services on accommodation of advertising shall be compensated to
Clients by
accommodation of the not-placed advertising in the Network program
blocks and
Regional Windows during similar time and in similar (equivalent)
programs within
the nearest days or, as agreed, during another time and in other
programs (if
the Client refuses from placing the advertising during another time
and in the
other programs, the Broadcaster shall be obliged to return the sum
of cost of
the corresponding services on placing the advertising, if such
placement has already been paid for).
3.1.4. Provide accommodation of Regional advertising in Network
program blocks and Regional Windows according to the approved
schedules of
accommodation of regional advertising presented by the Agency
(media-plans), and
in view of conditions of para 3.1.2. of the Agreement.
Schedules of accommodation shall be presented signed by the
authorized
person of the Agency and certified by the original stamp of Agency
not later
than 24 (twenty four) hours prior to date of the first airing of
corresponding
Advertising.
Provide distribution of regional advertising to Network program
blocks
and Regional Windows within the limits of the Territory in exact
conformity with
contracts concluded by the Agency (with observance of positions of
the subpara
((e)) item 3.2.1. of the present Agreement) with Clients regarding
placement of
Regional advertising.
3.1.5. Inform the Agency on all failures which have occurred under
placing of Regional advertising. The notice should be given to the
Agency not
later than in 24 (Twenty four) hours from the moment when the
corresponding
Advertising should go on air of the Broadcaster according to the
approved
schedule of accommodation (See para. 3.1.4. of the present
Agreement) or, if the
failure in accommodation of Regional advertising has occurred on a
day-off, on
the first business day after such failure.
3.1.6. Have the right not to accept an advertising for
accommodation
in case if it does not correspond to the requirements of the
Broadcaster
regarding its technical characteristics of similar sorts of video
production,
mismatch ethical, political and thematic principles of the
Broadcaster, if the
content and/or decoration of advertising does not correspond to the
requirements
of the Russian legislation, as well on the days declared by the
order of the
Broadcaster free from advertising.
The Broadcaster shall immediately notify the Agency on refusal in
accommodation of Advertising on the specified bases and suggest to
replace the
rejected Advertising or to bring it in accordance with requirements
of the
Broadcaster and/or the legislation of the Russian Federation.
If the Broadcaster refuses to place the advertising within the days
declared by the order of the Broadcaster free from advertising,
service on
accommodation of such advertising shall be compensated to Clients
by
accommodation of the not-placed advertising in the Network program
blocks and
Regional Windows during similar time and in similar programs within
the nearest
days or, as agreed, during another time and in other programs (if
the Client
refuses from placing the advertising during another time and in the
other
programs, the Broadcaster shall be obliged to return the sum of
cost of the
corresponding services on placing the advertising, if such
placement has already
been paid for). Such cases of not-placement of advertising shall
not constitute
infringement of the obligations by the Broadcaster.
3.1.7. Render to the Agency all possible assistance in performance
of
their obligations under the present Agreement, render necessary
technical,
consulting and informational support.
3.1.8. Carry out full daily video-recording of the Broadcaster's
air
(Network program blocks and Regional Windows); keep the
video-recordings within
1 (One) year from the date of their output on air and present them
upon demand
of the Agency within 3 days from the moment of inquiry receipt.
Video-recording
should begin 3 (Three) minutes prior to the beginning of the
advertising block
and come to an end in 3 (Three) minutes after the termination of
the advertising
block.
3.1.9. In due time (in ten-day term after inquiry receipt) present
to
the Agency on-air information under the Broadcaster's form
confirming
accommodation of Regional advertising in Network program blocks and
Regional
windows.
3.1.10. All inquiries of Agency addressed to the Broadcaster
(regarding an opportunity of accommodation of disputable
promotional materials
in Network program blocks and Regional Windows, etc.) should be
considered by
the Broadcaster within two business days upon the Agency inquiry
receipt, and
the answer shall be directed within the same term to the Agency in
writing (by
fax and express service). Should the answer be not available within
the set
period (silence of the Broadcaster), the Agency shall have the
right to act as
follows:
o
If the inquiry contained a question requiring an unequivocal answer
-
"yes" or "no", the Agency shall consider the silence of the
Broadcaster as the "yes" answer.
o
If the inquiry asked for the opinion of the Broadcaster on any
disputable issue, the Agency shall consider the silence of the
Broadcaster as the consent of the latter to fulfillment by the
Agency
of actions under the discretion of the Agency.
The actions of the Agency accomplished according to the given
conditions, shall be considered accomplished within the limits of
performance of
the conditions of the present Agreement without excess of powers,
and in case of
occurrence of any adverse consequences as a result of the specified
actions the
Agency shall not bear any responsibility (except for the cases when
the Agency
has accepted Advertising with infringement of the requirements of
the current
legislation of the Russian Federation set for the placed
Advertising).
3.2. The Agency shall:
3.2.1. Enter into transactions with clients for the sale of
Regional
Advertising acting primarily for the benefit of the Broadcaster and
in
accordance with the terms and conditions of the present Agreement.
A) When entering into contracts with Clients, the Agency shall
enter into contracts on those terms that are the most favorable
for the Broadcaster. The cost of advertising services when
entering into contracts with certain clients shall be determined
based on the contract price calculation method (Appendix 1).
B) The Agency shall have all rights and bear all obligations
under contracts with Clients made on a commission basis even
where the Broadcaster is specifically named in any such contract
and entered into a direct relationship with Clients.
C) For the purposes of the present Agreement, the Agency shall
have the right to enter into sub-commission contracts with other
legal entities and/or individuals as long as it remains fully
liable to the Broadcaster for performance by such sub-commission
agent (hereunder only a subsidiary or a parent company of the
Agency can act as a sub-commission agent. Otherwise the
sub-commission agent is subject to the obligatory prior approval
of the Broadcaster).
D) If any unforeseen circumstances arise that prevent performance
under any advertising services contract concluded with the
Client, the Agency shall immediately notify the Broadcaster of
the same presenting the proof.
If provisions of the contract concluded by the Agency on its own
behalf, but at the expense of the Broadcaster, are broken by the
Client, the Agency shall be obliged to inform immediately the
Broadcaster thereon presenting the proof.
E) The following provisions shall be included into contracts with
Clients:
"The Client shall be fully liable for the content and design of
any advertising delivered hereunder and for the breach of
copyrights or allied rights with respect to the artistic work and
objects of allied rights included in the advertising. All
pecuniary claims for damages, including those asserted by authors
and holders of allied rights, with respect to advertising shall
be settled by the Client using its own resources and at its own
expense."
In case of losses of the Broadcaster caused by infringement by
the Client of the rights of any third party concerning products
and execution included into Advertising, as well as requirements
of the legislation concerning the content and design of
Advertising, the Client shall compensate to the Broadcaster all
the incurred losses caused by such infringement.
2. The Agency (Broadcaster) shall have the right not to place
advertising on the days declared by the order of the Broadcaster
free from
advertising (para 3.1.6.) as well as the right to reject and not to
