EX-10.3






SHAREHOLDERS’ AGREEMENT




by and among




EDN SOVINTEL LLC




and




SFMT CIS INC.




and




INURE ENTERPRISES LTD.




and




ZAO CORTEC




Dated as of February 22, 2007




1




TABLE OF CONTENTS




	 	 	 	 	 
	
 
	 	 	 	Page
	 
	 	 	 	 
	ARTICLE I DEFINITIONS AND INTERPRETATION
	 	 
	 
	 	 	 	 
	1.1.

	 	Definitions.
	 	

	
 
	 	 
	 	

	1.2.

	 	Interpretation.
	 	

	
 
	 	 
	 	







	 	 	 
	ARTICLE II GENERAL PROVISIONS

	 
	 	 
	2.1.

	 	Status of the Company.
	
 
	 	 
	2.2.

	 	Subsidiaries.
	
 
	 	 






	 	 	 
	ARTICLE III BUSINESS AND MANAGEMENT OF BUSINESS

	 
	 	 
	3.1.

	 	Management of Business.
	
 
	 	 
	3.2.

	 	Agreement Concerning Provision of Services.
	
 
	 	 
	3.3.

	 	Forecast.
	
 
	 	 
	3.4.

	 	Financing.
	
 
	 	 






	 	 	 
	ARTICLE IV CORPORATE GOVERNANCE

	 
	 	 
	4.1.

	 	Shareholders’ Meetings; Board’s Meetings.
	
 
	 	 
	4.2.

	 	Voting.
	
 
	 	 
	4.3.

	 	Reserved Matters.
	
 
	 	 
	4.4.

	 	Board of Directors.
	
 
	 	 
	4.5.

	 	Executive Officers.
	
 
	 	 
	4.6.

	 	Books and Records.
	
 
	 	 






	 	 	 
	ARTICLE V SHARE TRANSFERS

	 
	 	 
	5.1.

	 	Right of First Refusal.
	
 
	 	 
	5.2.

	 	Tag-Along Rights.
	
 
	 	 
	5.3.

	 	Liens.
	
 
	 	 
	5.4.

	 	Transfers Void.
	
 
	 	 






	 	 	 
	ARTICLE VI PRE-EMPTION RIGHTS AND LISTING

	 
	 	 
	6.1.

	 	Pre-emption Rights.
	
 
	 	 
	6.2.

	 	Listing.
	
 
	 	 






	 	 	 
	ARTICLE VII CHANGES IN SHARES

	 	

	 
	 	 
	ARTICLE VIII REPRESENTATIONS AND WARRANTIES OF INURE

	 
	 	 
	8.1.

	 	Organization; Standing.
	
 
	 	 
	8.2.

	 	Power and Authority.
	
 
	 	 
	8.3.

	 	Authorization.
	
 
	 	 
	8.4.

	 	Binding Obligation.
	
 
	 	 
	8.5.

	 	Non-Contravention.
	
 
	 	 






	 	 	 
	ARTICLE IX REPRESENTATIONS AND WARRANTIES OF BUYER

	 
	 	 
	9.1.

	 	Organization, Standing and Authority.
	
 
	 	 
	9.2.

	 	Power and Authority.
	
 
	 	 
	9.3.

	 	Binding Obligation.
	
 
	 	 
	9.4.

	 	Authorization.
	
 
	 	 
	9.5.

	 	Non-Contravention.
	
 
	 	 






	 	 	 
	ARTICLE X TERM AND TERMINATION

	 
	 	 
	10.1.

	 	Term.
	
 
	 	 
	10.2.

	 	Termination.
	
 
	 	 
	10.3.

	 	New Shareholders’ Agreement.
	
 
	 	 






	 	 	 
	ARTICLE XI MISCELLANEOUS

	 
	 	 
	11.1.

	 	Entire Agreement.
	
 
	 	 
	11.2.

	 	Confidentiality.
	
 
	 	 
	11.3.

	 	Notices.
	
 
	 	 
	11.4.

	 	Successors and Assigns; No Agency.
	
 
	 	 
	11.5.

	 	Performance by Affiliates of the Parties.
	
 
	 	 
	11.6.

	 	Specific Performance.
	
 
	 	 
	11.7.

	 	Further Assurances.
	
 
	 	 
	11.8.

	 	Amendment.
	
 
	 	 
	11.9.

	 	Breach.
	
 
	 	 
	11.10.

	 	Remedies.
	
 
	 	 
	11.11.

	 	Non-waiver.
	
 
	 	 
	11.12.

	 	Attorneys’ Fees.
	
 
	 	 
	11.13.

	 	Indemnification for Breach of Representations and Warranties.
	
 
	 	 
	11.14.

	 	Indemnification of Parties.
	
 
	 	 
	11.15.

	 	Conflict with Organizational Documents.
	
 
	 	 
	11.16.

	 	Governing Law.
	
 
	 	 
	11.17.

	 	Dispute Resolution.
	
 
	 	 
	11.18.

	 	Severability.
	
 
	 	 
	11.19.

	 	Counterparts.
	
 
	 	 






Exhibit A: List of Entities used in Business



Exhibit B: Business Plan



Exhibit C: Fair Value Determination Procedure



2




SHAREHOLDERS’ AGREEMENT




THIS SHAREHOLDERS’ AGREEMENT (this “Agreement” or this “Shareholders’ Agreement”) is entered
into as of February 22 , 2007 and shall become effective (the “Effective Date”) on the Closing
Date, as defined below, by and among



(i) EDN SOVINTEL LLC, a limited liability company organized and existing under the laws of the
Russian Federation, with its principal offices at 1, Kozhevnichesky Proezd, 2nd floor, Moscow,
115114, Russia (“Buyer”);



(ii) SFMT CIS INC., a company organized and existing under the laws of the state of Delaware,
with its principal offices at 2831 29th Street, NW Washington, D.C. 20008, USA (“SFMT”)
and wholly owned by Golden Telecom, Inc., a company organized and existing under the laws of
Delaware, with its principal offices at 2831 29th Street, NW Washington, D.C. 20008, USA
(“Parent”);



(iii) INURE ENTERPRISES, Ltd., a company organized and existing under the laws of the Republic
of Cyprus (“Inure”), with its principal offices at Diagoru 4, Kermia Building, 6th
floor, office 601 Nicosia P.C. 1097, Cyprus;



(iv) ZAO CORTEC, a closed joint stock company organized and existing under the laws of the
Russian Federation (the “Company”), with its principal offices at 30/15 Ryazansky Prospect, Moscow,
109428, Russian Federation; and



Buyer, Inure, SFMT and the Company are referred to collectively as the “Parties” and Buyer,
Inure and their permitted transferees who become party to this Shareholders’ Agreement are referred
to collectively as the “Shareholders.”



RECITALS




A. Immediately prior to the consummation of the Acquisition (as defined below), Inure was the
legal, record, and beneficial owner of 99 (ninety-nine) ordinary registered shares, with a nominal
value of 75.9 (seventy-five decimal nine) Rubles per share of the Company representing 99%
(ninety-nine percent) of all issued and outstanding shares of capital stock of the Company and
Rambert Management Limited, a company organized and existing under the laws of the British Virgin
Islands (“RML”), was the legal, record and beneficial owner of 1 (one) such share of the Company.



B. Dawn Key Limited, a company organized and existing under the laws of the British Virgin
Islands (“DKL”), is the legal, record and beneficial owner of 21,682,830 (twenty one million sixty
hundred eighty two thousand eight hundred thirty) shares, representing on the Closing Date 71.11%
(seventy-one decimal eleven percent) of all issued and outstanding shares of capital stock of
Inure;



C. Ansley Financial Holdings Ltd., a company organized and validly existing under the laws of
the British Virgin Islands (“Ansley”), is the legal, record and beneficial owner of 8,808,621
(eight million eighty hundred eight thousand and six hundred twenty one) shares of the issued and
outstanding capital stock of Inure, representing on the Closing Date 28.89% (twenty-eight decimal
eighty-nine percent) of all of the issued and outstanding shares of capital stock of Inure.



D. Pursuant to a Stock Purchase Agreement, dated as of February 22, 2007, among Buyer, Parent,
Inure and RML (the “Stock Purchase Agreement”), Inure and RML (the “Sellers”), are selling to Buyer
and Buyer is purchasing the Transferred Shares (as defined in the Stock Purchase Agreement) from
the Sellers, all upon the terms and subject to the conditions set forth in the Stock Purchase
Agreement (the “Acquisition”).



E. Upon consummation of the Acquisition, Inure shall own 49% (forty-nine percent) of the
issued and outstanding shares of the Company and Buyer shall own 51% (fifty-one percent) of the
issued and outstanding shares of the Company.



F. The Company fully owns directly or indirectly all of the legal entities involved in the
Business (as defined below) listed on Exhibit A.



G. The Parties have determined that it is in their respective best interests to enter into
this Shareholders’ Agreement with respect to the operation and management of the Company and the
acquisition and disposition of all and any shares or other equity interest in the Company (the
"Shares”).



H. The Parties wish to establish: (i) certain rights and obligations of Buyer and Inure in
respect of their ownership of the Shares; and (ii) certain agreements with respect to the
management, control, funding, operation and ownership of the Company, the Subsidiaries (as defined
below), their Affiliates (as defined below), the Business and related matters.



NOW, THEREFORE, in consideration of the foregoing and the mutual terms, covenants and
conditions set forth below, the Parties agree as follows:



ARTICLE I




DEFINITIONS AND INTERPRETATION




1.1. Definitions. 



For the purposes of this Agreement and in addition to the terms defined in the Recitals and
Preamble hereof, the following terms shall have the following meanings:



"Acquisition” has the meaning set forth in Recital D.



"Advisor” has the meaning set forth in Section 6.2(d).



"Affiliate” means with respect to any Person, any other Person directly or indirectly
controlling, controlled by or under common control with such Person.



"Agreement” has the meaning set forth in the Preamble.



"Ansley” has the meaning set forth in Recital C.



"Auditor” has the meaning set forth in Section 4.6(b).



"Board” means the Board of Directors of the Company.



"Business” means the business of the Company and its Subsidiaries as carried out at the date
of this Agreement.



"Business Plan” means the indicative annual business plans for the years 2007 and 2008
attached as Exhibit B.



"Buyer” has the meaning set forth in the Preamble.



"Buyer Director” has the meaning set forth in Section 4.4(a).



"Capital Expenditures” means payments made, or obligations to make future payments, for
long-term assets, including property, plant and equipment and intangible assets delivered to a
Person or any of its subsidiaries, or pre-payments for such long-term assets less internal labor
and material costs associated with developing plant and equipment.



"Chairman” has the meaning set forth in Section 4.4(b).



"Charter” has the meaning set forth in Section 2.1.



"Closing Date” has the meaning set forth in the Stock Purchase Agreement.



"Company” has the meaning set forth in the Preamble.



"Confidential Information” has the meaning set forth in Section 11.2(e).



"Consolidation” has the meaning set forth in Section 4.3(c).



"Directors” has the meaning set forth in Section 4.4(a).



"Disclosing Party” has the meaning set forth in Section 11.2(e).



"DKL” has the meaning set forth in Recital B.



"EBITDA” means operating earnings before implementation of the adjustment described in
Financial Accounting Standards Board Staff Accounting Bulletin 101 and before interest, taxes,
depreciation and amortization, based upon the results of a Person prepared in accordance with US
GAAP and, in any case, after deducting any amounts resulting from capitalization of internal labor
and material costs associated with developing plant and equipment.



"Effective Date” has the meaning set forth in the Preamble.



"Fair Value” means the fair value of the Shares of which the fair value is to be determined in
the events provided for in this Agreement and in accordance with the procedure set forth in
Exhibit C.



"IFRS” means international financial reporting standards.



"Initial Period” has the meaning set forth in Section 1 of Exhibit C.



"Inure” has the meaning set forth in the Preamble.



"Inure Director” has the meaning set forth in Section 4.4(a).



"Inure Listing Shares” has the meaning set forth in Section 6.2(f).



"JSC Law” means the Russian Federation Law 1 208-FZ “On Joint Stock Companies,” dated December
26, 1995, as the same is amended from time to time.



"Lien” means any charge or claim, community property interest, condition, equitable interest,
lien (statutory or otherwise), encumbrance, option, proxy, pledge, security interest, mortgage,
right of first refusal, right of first offer, retention of title agreement, or restriction of any
kind or nature, including any restriction on use, voting, transfer, receipt of income or exercise
of any other attribute of ownership.



"Listing” has the meaning set forth in Section 6.2(a).



"Listing Notice” has the meaning set forth in Section 6.2(f).



"Offer Notice” has the meaning set forth in Section 5.1(b)(i).



"Offer Terms” has the meaning set forth in Section 5.1(b)(i)(5).



"Offeree Shareholders” has the meaning set forth in Section 5.1(a).



"Offering Shareholder” has the meaning set forth in Section 5.1(a).



"Offering Price” has the meaning set forth in Section 5.1(b)(i)(4).



"Ongoing Funding” means all funding requirements in respect of the Company and the
Subsidiaries.



"Organizational Documents” has the meaning set forth in Section 2.2.



"Panel” has the meaning set forth in Section 6.2(d).



"Parent” has the meaning set forth in the Preamble.



"Permitted Transferee” has the meaning set forth in Section 5.1(e).



"Person” means any individual, firm, partnership, joint venture, trust, corporation, limited
liability entity, unincorporated organization, estate or other entity (including any governmental
entity).



"Proposed Purchaser” has the meaning set forth in Section 5.1(b)(i)(2).



"Pro Rata Portion” has the meaning set forth in Section 5.2(a).



"RAS” has the meaning set forth in Section 4.6(a).



"Receiving Party” has the meaning set forth in Section 11.2(e).



"Recipient” has the meaning set forth in Section 11.2(b).



"Reserved Matters” has the meaning set forth in Section 4.3(a).



"Right of First Refusal” has the meaning set forth in Section 5.1(a).



"RML” has the meaning set forth in Recital A.



"SEC” means United States Securities and Exchange Commission.



"SFMT” has the meaning set forth in the Preamble.



"Shareholder Loan” has the meaning set forth in Section 3.4(b).



"Shareholders’ Agreement” has the meaning set forth in the Preamble.



"Stock Purchase Agreement” has the meaning set forth in Recital D.



"Shares” has the meaning set forth in Recital G.



"Subsidiaries” means the companies listed in Exhibit A and such other entities of
which more than fifty percent (50%) of the shares or interests are acquired by the Company after
the Effective Date.



"Surviving Provisions” means Article 1 and Sections 11.1 through 11.4 (inclusive), 11.10 and
11.15 through 11.18 (inclusive).



"Tag-Along Notice” has the meaning set forth in Section 5.2(a).



"Termination” has the meaning set forth in Section 10.2.



"Transfer” means any direct or indirect sale, exchange, transfer (including, without
limitation, any transfer by gift or operation of law, or any transfer of an economic interest in
any derivative security of any Share), assignment, distribution or other disposition, or issuance
or creation of any option or any voting proxy, voting trust or other voting agreement in respect of
any Person or instrument (including, without limitation, any of the Shares), whether in a single
transaction or a series of related transactions, including, without limitation, the direct or
indirect enforcement or foreclosure of any Lien, pledge, security interest or similar encumbrance.



"Trigger Date” means the date on which a decision to issue new Shares shall have been made by
the Company.



"US GAAP” means accounting principles generally accepted in the United States, consistently
applied.



"VTB” means OAO Vneshtorgbank, a commercial bank organized and existing as a open joint stock
company under Russian law.



1.2. Interpretation. 



In this Shareholders’ Agreement:



(a) The masculine, feminine and neuter genders and the singular and the plural shall be deemed
to include one another, as appropriate;



(b) a reference to an amount in US Dollars shall also mean a reference to an equivalent
thereof in any other currency;



(c) “control” (including, with correlative meanings, the terms “controlling”, “controlled by”
and “under common control with”), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through ownership of voting securities, by contract or otherwise;



(d) the captions used are for convenience of reference only and are not a part of this
Shareholders’ Agreement and do not in any way limit or amplify the terms and provisions hereof; and



(e) any references herein to a particular Section, Exhibit or Schedule means a Section of, or
an Exhibit or Schedule to, this Shareholders’ Agreement unless another agreement is specified.



ARTICLE II




GENERAL PROVISIONS




2.1. Status of the Company.



The Parties agree that the Company shall operate the Business, and shall be governed by (a)
the provisions of its charter, which shall be amended to reflect this Shareholders’ Agreement (the
"Charter”) as such may be amended from time to time in accordance with the provisions thereof and
hereof and (b) this Shareholders’ Agreement. Subject to compliance with applicable law, the
Shareholders shall cause the Company to take any and all actions necessary to effectuate the terms
and conditions of this Shareholders’ Agreement.



2.2. Subsidiaries.



(a) The Parties agree that the terms and conditions of this Shareholders’ Agreement, where
relevant, shall apply to the Subsidiaries and that no decision, corporate action or any transaction
shall be made, taken or entered into by any Subsidiary in breach of the terms of this Shareholders’
Agreement. The Parties acting through the Company and the relevant Subsidiaries shall procure that
the relevant changes or modifications are made to the articles of association, charters, foundation
or partnership agreements and any other organizational documents (“Organizational Documents”) of
the Company and the Subsidiaries to give full effect to the provisions and spirit of this
Shareholders’ Agreement.



(b) The voting and other rights attributable to the shares in the Subsidiaries shall be
exercised pursuant to the Board’s decision approved in accordance with its normal procedures.



ARTICLE III




BUSINESS AND MANAGEMENT OF BUSINESS




3.1. Management of Business.



The Parties agree to manage and finance the Business and the Company and the Subsidiaries as
reflected in the Business Plan. Any business plan or financing plan for any period after
expiration of the Business Plan or any modifications to the Business Plan shall be approved by the
Board in accordance with its standard procedures.



3.2. Agreement Concerning Provision of Services.



The Parties agree that the services purchased by (a) the Company and its Subsidiaries and (b)
Buyer and its Affiliates following the Effective Date from one another shall:



(a) be provided on an arm’s length basis on commercial terms; and



(b) be at the rates specified for each such type of service in the relevant interconnect
agreement(s) (subject to adjustments from time to time to take into account the then current market
prices and applicable rules and regulations).



Nothing in this Section 3.2 or in the Business Plan is intended to constitute any price fixing
or any restriction on competition in the relevant market.



3.3. Forecast.



The Parties agree that the expansion of the operation of the business of the Company following
the Effective Date shall include the matters set forth in the Business Plan and the Parties agree
to use their respective reasonable efforts to cause the Company to achieve the objectives set forth
in the Business Plan.



3.4. Financing.



(a) The Shareholders shall procure that the Company shall, and the Company shall, apply any
contributions made by the Shareholders in connection with Ongoing Funding solely for the benefit of
the business of the Company and each Subsidiary and in accordance with the provisions of the
Business Plan to achieve financial objectives.



(b) Shareholders are not obliged to provide any Ongoing Funding (by means of equity
contributions, or loans provided by the Shareholder (each, a “Shareholder Loan”), or security with
respect to third parties’ financing) unless such Ongoing Funding is agreed by the Shareholders
according to the relevant corporate governance rules or provided for in the Business Plan.



(c) Ongoing Funding shall be met as follows:




(i) first, from the Company and relevant Subsidiary’s available cash in the
relevant calendar year;




(ii) second, if funds obtained under clause (i) are insufficient to cover
Ongoing Funding as provided in the Business Plan, then from unsecured third-party debt,
provided that in the event any third-party unsecured debt is offered to the Company
as contemplated in this Section 3.4(c)(ii), then upon receiving from a potential lender a
termsheet or similar description of the terms of the proposed debt financing and prior to
the Company entering into any binding agreement with respect to such debt, each Shareholder
shall have the right (exercisable within five (5) Business Days after notice of the proposed
unsecured borrowing by the Company is provided by the Company to each Shareholder) to extend
all or a portion of such debt to the Company on substantially the same terms. In the event
more than one Shareholder desires to extend such debt to the Company, such debt shall be
allocated pro rata between the Shareholders based on their holdings in the Company;




(iii) third, if funds obtained under clauses (i) and (ii) are insufficient to
cover Ongoing Funding as provided in the Business Plan, then from Shareholder Loans,
provided that (A) the Buyer and Inure shall have the option to participate pro
rata (based on their holdings in the Company) in such Shareholder Loans to the extent
necessary to meet the Ongoing Funding of the Company set out in the Business Plan, and any
Shareholder Loans in excess of such amount shall be at the sole discretion of the relevant
Shareholder; (B) the terms of the Shareholder Loans shall be substantially similar to the
terms of the latest unsecured debt obtained by the Company from a third party on an arm’s
length basis, and (C) the terms and conditions for each such Shareholder Loan entered into
in connection with the same Ongoing Funding shall be on the same commercial terms; and




(iv) fourth, if funds obtained under clauses (i), (ii) and (iii) are
insufficient to cover the amount of Ongoing Funding (but only when Ongoing Funding exceeds
the amount provided for in the Business Plan), then through equity contributions by the
Shareholders pro rata to their shareholdings in the Company, provided,
however, that both Buyer and Inure shall have extended Shareholder Loans under
clause (iii) above.



(d) If it is agreed by the Shareholders that Ongoing Funding is to be provided by equity
contributions, and a Shareholder fails to subscribe or pay for the newly issued Shares prior to the
expiration of the relevant subscription period subject to applicable Russian company laws, such
unsubscribed or unpaid for Shares (or any part thereof) may be acquired by the other Shareholder,
failing which, the Board, in accordance with its standard procedures, may authorize the sale of
such Shares to a third Person, approved by a non-defaulting Shareholder. The defaulting
Shareholder shall have no rights under Sections 5.1 or 6.1 in respect of the Shares it shall have
failed to subscribe or pay for.



(e) Other than in accordance with Section 5.3, no Shareholder shall be entitled to establish
any Lien on the subscribed Shares.



ARTICLE IV




CORPORATE GOVERNANCE




4.1. Shareholders’ Meetings; Board’s Meetings.



Meetings of the Shareholders and the Board shall be held as necessary but not less frequently
than required by Russian company laws. The matters related to the convocation, notice and agenda
of such meetings shall be as provided for in the Charter, provided that to the extent consistent
with Russian company laws, the participation of at least one Inure Director and one Buyer Director
shall be required for any meeting of the Board to be quorate and if any such Director has been duly
notified of the meeting but fails to participate for any reason, the meeting shall be deemed
quorate when reconvened with or without the participation of at least one Inure Director.



4.2. Voting.



Except as set forth in Section 4.3, the decisions of the Board shall be taken by majority vote
of Directors present at any duly convened meeting having a quorum.



4.3. Reserved Matters.



(a) Subject to any mandatory provisions of Russian law, the following decisions (“Reserved
Matters”) shall require either (i) the affirmative vote of holders of seventy percent (70%) of the
Shares entitled to vote on the matter at a general or extraordinary meeting of shareholders at
which a quorum is represented or (ii) the affirmative vote of at least five (5) Directors:



(i) changes to the Charter or other Organizational Documents of the Company or the
Subsidiaries (except where the equity contributions are required to be provided by operation of
Section 3.4(c)(iv), in which case the necessary changes to the Charter should not qualify as a
Reserved Matter and each Shareholder shall vote its shares to authorize such change (to the extent
required));



(ii) any proposal to wind up the Company or any Subsidiary or initiation of any other
voluntary proceeding seeking liquidation or reorganization thereof;



(iii) any material change in the nature or scope of the Business;



(iv) any “major transaction” of the Company or any Subsidiary as this term is defined under
the JSC Law;



(v) any issuance of shares or securities convertible into shares, creation of any options to
subscribe for or acquire such shares or redemption of shares, any increase or decrease of the
charter capital or other change in the capital structure in each case relating to the Company or
the Subsidiaries, including in each case the terms of each such change;



(vi) any distribution of dividends by the Company;



(vii) the merger or any corporate reorganization or restructuring of the Company or the
Subsidiaries, any joint venture or partnership or acquisition of a material part of the assets of
the Company or the Subsidiaries or any transaction for the acquisition of equity interest in
another company; and



(viii) any transaction by the Company or any Subsidiary with any Shareholder or any Affiliate
(other than the Company and its Subsidiaries) of any of the Shareholders and any “interested party
transaction” of the Company or any Subsidiary as this term is defined under the JSC Law.



(b) In determining whether any of the Reserved Matters described above requires the approval
of the Shareholders as aforesaid, a series of related transactions that, when aggregated, exceed
the figure specified in the relevant paragraph above shall be construed as a single transaction
requiring such Shareholder approval.



(c) The Parties agree that in no event shall Reserved Matters include any matter that would
disallow Parent from fully consolidating the Company and its Subsidiaries in Parent’s financial
statements in accordance with US GAAP and/or SEC rules (the "Consolidation”).



4.4. Board of Directors.



(a) Board Composition. The Board shall be comprised of seven (7) directors (“Directors”).
The Directors shall be elected by cumulative vote, and removed by the Shareholders in accordance
with Russian company laws. For so long as their shareholding remain unchanged from the closing of
the Acquisition, each Shareholder agrees to take all actions necessary from time to time
(including, without limitation, the voting of Shares, the execution of written consents, the
calling of special meetings, the removal of Directors, the filling of vacancies on the Board, the
waiving of notice of and attendance at meetings, the amendment of the Charter and the like) to
procure that four (4) Directors are elected from the candidates nominated by the Buyer (each
Director so nominated and elected, a “Buyer Director”) and three (3) Directors are elected from the
candidates nominated by Inure (each Director so nominated and elected, an “Inure Director”).



(b) Chairman of the Board. The Parties shall procure that the first chairman of the Board
(the “Chairman”) shall for the first year be Mr. Alexander Mamut.



(c) Shareholder Information. Each Director shall be permitted to pass any information it
obtains in its capacity as a Director to its nominating Shareholder. Each Shareholder shall be
required to keep such information confidential.



4.5. Executive Officers.



The Company, its Subsidiaries and the Business shall be run by respective executive officers,
including a president and a general director. The nomination, election, removal and authorities of
the executive officers shall be in accordance with the Charter and, where applicable, the
Organizational Documents and applicable Russian company laws.



4.6. Books and Records.



(a) The books and records of the Company and the Subsidiaries shall be maintained, and the
financial statements of the Company shall be prepared, in accordance with (1) generally accepted
accounting principles in the Russian Federation (“RAS”) and (2) US GAAP, consistently applied.



(b) The Board or its audit committee shall appoint an independent licensed public accounting
firm (the “Auditor”) to perform an annual audit of the Company and its Subsidiaries’ consolidated
financial statements and quarterly reviews of the Company and its Subsidiaries’ consolidated
financial statements in accordance with US GAAP. If required by the Board, the Auditor will
perform an audit and/or quarterly reviews of the financial statements prepared in accordance with
RAS.



(c) Buyer shall procure that the Company shall, and the Company shall, provide Inure (at no
expense to Inure) and Inure’s Permitted Transferees (provided that Inure or such Permitted
Transferee owns more than twenty percent (20%) of the Shares) with all information which Inure or
such Permitted Transferee reasonably requires (including, without limitation, reconciliation from
US GAAP to IFRS) to prepare its annual IFRS financial statements.



ARTICLE V




SHARE TRANSFERS




A Shareholder may only Transfer its Shares in accordance with the provisions of this Article V
(except that if any Shareholder is including its shares in the Listing, such Transfer shall not be
subject to this Article V):



5.1. Right of First Refusal.



(a) Right of First Refusal. Subject to mandatory provisions of Russian company laws,
before any Shares held by any Shareholder (the "Offering Shareholder”) may be sold to any third
party, the other Shareholders or their assignees (the "Offeree Shareholders”) shall have a right of
first refusal (the “Right of First Refusal”) to purchase the Shares at the Offering Price in
accordance with the terms and conditions set forth in this Article V.



(b) Notice of Proposed Sale. Upon the receipt of an arm’s length bona fide offer from
a third party, the Offering Shareholder shall:



(i) deliver to the Offeree Shareholder a written notice (the “Offer Notice”) stating




	 	(1)	 	the bona fide intention of the Offering
Shareholder to sell the Shares;






	 	(2)	 	the name of each proposed purchaser (the
“Proposed Purchaser”) and their beneficial owners (save where a
proposed transferee is a publicly traded company);






	 	(3)	 	the number of Shares to be sold to each
Proposed Purchaser;






	 	(4)	 	the price for which the Offering Shareholder
proposes to sell the Shares (the “Offering Price”), which Offering
Price shall be a cash offer in a freely convertible currency; and






	 	(5)	 	all other terms and conditions of the proposed
sale (“Offer Terms”); and





(ii) irrevocably offer the Shares at the Offering Price and on the Offer Terms to the Offeree
Shareholders.



(c) Exercise of Right of First Refusal. At any time within forty-five (45) days after
receipt of the Offer Notice, the Offeree Shareholders may, by giving written notice to the Offering
Shareholder, elect to purchase and, within forty-five (45) days of such notice, enter into a
binding agreement or obtain a waiver and take all measures required to purchase all, but not less
than all, of the Shares proposed to be transferred to any one or more of the Proposed Purchasers.
The purchase price for the Shares purchased shall be the Offering Price, and the terms and
conditions shall be identical in all material respects, to the extent possible, to the Offer Terms.



(d) Offering Shareholder’s Right to Sell. If all of the Shares proposed in the Offer
Notice are not purchased by the Offeree Shareholders and/or their assignees as provided in this
Section 5.1, then the Offering Shareholder may sell such Shares to the Proposed Purchaser at the
Offering Price and on the Offer Terms, provided that such sale shall be made subject to Section 5.2
and is consummated within one hundred eighty (180) days after the date of the Offer Notice and
provided further that any such sale is effected in accordance with any applicable law or regulation
and, upon the remaining Shareholders’ request, the Proposed Purchaser agrees in writing that the
provisions of this Shareholders’ Agreement shall apply to the Proposed Purchaser. If the Shares
described in the Offer Notice are not transferred to the Proposed Purchaser within said one hundred
eighty (180) day period, a new Offer Notice shall be required and the Offeree Shareholder shall
again be offered the Right of First Refusal before any Shares held by the Offering Shareholder may
be sold. All Shareholders hereby agree to make any and all modifications to the Charter if
required to effectuate the provisions of this Article V.



(e) Exception for Certain Sales. Anything to the contrary contained in this Section
5.1 notwithstanding, the Parties agree that the Offeree Shareholder shall not exercise its Right of
First Refusal and shall grant the Offering Shareholder its duly executed waiver of the Right of
First Refusal in compliance with Russian company laws to the sale of any or all of the Shares to an
Affiliate of the Offering Shareholder (“Permitted Transferee”) provided that



(i) such Affiliate executes a counterpart of this Shareholders’ Agreement,



(ii) such Affiliate shall assume joint and several liability with such Offering Shareholder
under the Stock Purchase Agreement, and



provided further that if such Affiliate ceases to be an Affiliate of the Offering Shareholder, it
shall be required to immediately transfer the Shares back to the Offering Shareholder.



(f) Reorganization Into an Open Joint Stock Company. If and when the Company is
reorganized into an open joint stock company and if, at the time such reorganization becomes
effective, the JSC Law does not permit the Right of First Refusal to be established in an open
joint stock company, then the preceding provisions of this Section 5.1 shall no longer apply.



5.2. Tag-Along Rights.



(a) If the Buyer or any of its Permitted Transferees issues an Offer Notice to Inure in
respect of the proposed Transfer by Buyer or its Permitted Transferees, and if the Transfer of the
Shares proposed in such Offer Notice will (in the aggregate with prior Transfers of the Shares by
Buyer or its Permitted Transfers) be equal to or greater than fifty percent (50%) plus one (1)
Share out of all the issued and outstanding Shares, then Inure shall have the right, in the
alternative to exercising its rights under Section 5.1(c) above, at any time within forty-five (45)
days after receipt of the Offer Notice, to give written notice to Buyer and any relevant Permitted
Transferee (a “Tag-Along Notice”) requesting that the Proposed Purchaser purchase the same
percentage of the Shares held by Inure as constitute the percentage of Shares proposed to be
transferred by Buyer or any of its Permitted Transferees (as the case may be) to the total number
of the Shares held by Buyer and its Permitted Transferees (as the case may be) (a “Pro Rata
Portion”).



(b) The Tag-Along Notice shall specify the number of Shares that Inure desires to include in
the proposed Transfer (but not in excess of the Pro Rata Portion of Inure’s Shares).



(c) If Inure does not give Buyer the Tag Along Notice in the forty-five (45) day time period
prescribed above, Buyer or its Permitted Transferees (as the case may be) may Transfer the Shares
specified in the Offer Notice to the Proposed Purchaser identified in, and on the same terms and
conditions as are set forth in, the Offer Notice. If Inure does give Buyer the Tag Along Notice in
the forty-five (45) day time period prescribed above, Buyer shall use commercially reasonable
efforts to cause Inure’s Pro Rata Portion to be acquired by the Proposed Purchaser at the same time
and on the same terms and conditions as are set forth in the Offer Notice. If the Proposed
Purchaser is unwilling or unable to acquire such additional Shares upon such terms, then Buyer and
its Permitted Transferees (as the case may be) may elect either to cancel such proposed Transfer or
to allocate the maximum number of Shares that such transferee is willing to purchase pro
rata between Buyer and Inure (but pro rata to their holdings in the Shares) up to the
number that Inure has identified in the Tag-Along Notice but not in excess of Inure’s Pro Rata
Portion.



5.3. Liens.



(a) No Shareholder shall be permitted to establish or grant any Lien in respect of its Shares
except for Liens given with the consent of the other Shareholder, which consent shall not be
unreasonably withheld or delayed, and except for Liens granted to VTB or in connection with an
initial (but no subsequent) refinancing by a reputable financial institution or institutions of the
loans issued by VTB, provided that such exception shall be subject to prior written notice
to each other Shareholder containing the identity of the proposed lender and a summary of the
principal terms.



(b) No Liens over Shares nor any enforcement action related thereto entitle its holder to any
rights under this Agreement.



5.4. Transfers Void.



(a) No Transfer of the Shares shall be permitted except as provided for in this Article V.



(b) Any purported sale or other Transfer of, the creation of any Lien upon, or the permitting
of any Lien to subsist on, any Shares or any shares of capital stock of any Subsidiary that is in
violation of the provisions of this Shareholders’ Agreement shall be void and of no force or effect
whatsoever, and, to the extent within the Shareholder’s control, the Shareholder shall not permit,
and shall procure that neither the Company nor any Subsidiary shall permit, the Organizational
Documents to be amended, or the members’ register of the Company to be modified, to reflect any
such event or treat any transferee as the owner or pledgee of such Shares (as applicable) or any
shares of capital stock of any Subsidiary for any purpose.



ARTICLE VI




PRE-EMPTION RIGHTS AND LISTING




6.1. Pre-emption Rights. 



(a) The Shareholders shall have the pre-emptive right to acquire any new Shares or securities
convertible into Shares pro rata to their holdings of the Shares on the terms provided for
in the Charter and relevant provisions of the applicable Russian company laws (but in any event for
the subscription price which shall be no less than (x) in the case of equity contributions, the
Fair Value of such Shares or other securities convertible into Shares or (y) the market price, in
the case of a Listing or public offering of Shares or securities convertible into Shares). For the
avoidance of doubt, such right shall be available to the Shareholders where the Company, if
recommended by the Advisor, is issuing new Shares for their inclusion into the Listing.



(b) The pre-emptive rights shall not apply to any issuance of new Shares or instrument
convertible into Shares that are issued in connection with any Board approved employee benefit
plan.



6.2. Listing. 



(a) Subject to this Section 6.2, Buyer shall to the extent of its voting rights, and the
Company shall, cause Shares representing at least ten percent (10%) of the issued and outstanding
Shares of the Company on the initial offering date to be listed and offered in an underwritten
public offering on at least one of the Moscow, London or any U.S. stock market on or before
December 31, 2008 (the “Listing”), provided that, unless otherwise agreed by Buyer in its sole
discretion, only Inure’s Shares shall be included in the Listing and in no event shall Buyer or the
Company be obligated to include any Shares in the Listing. For the avoidance of doubt, under this
Section 6.2 the Buyer shall be obligated to take any action, including, without limitation, voting
to approve and authorize any action necessary or advisable in order for the Company to fulfill its
obligations under this Section 6.2, including, without limitation, the replacement of the Board and
general director of the Company.



(b) The Company’s and Buyer’s obligations set forth in Section 6.2(a) may only be postponed:



(i) by the mutual agreement of Buyer and Inure that the Listing is not timely or feasible due
to unfavorable market conditions; or



(ii) if a reputable counsel for the Company produces a formal written legal opinion (concurred
in material respects by counsel for Buyer if Buyer elects to obtain such an opinion) opining that
in such counsel’s good faith professional judgment the Listing would reasonably be prevented from
taking place on each of the Moscow, London and U.S. stock markets due to non-compliance by the
Company or any Subsidiary with any applicable rules or regulations of the United States Foreign
Corrupt Practices Act, the SEC, NASDAQ or any other applicable rules or regulations of the relevant
stock market.



(c) If the Listing is postponed as provided in Section 6.2(b) above, the Company and the Buyer
shall endeavor to rectify the circumstances on which such postponement is based as soon as
reasonably possible. The Company’s and Buyer’s obligations set forth in Section 6.2(a) shall be
reinstated and become current as soon as the event or matter giving basis for the postponement of
the Listing pursuant to Section 6.2(b) ceases to exist, and upon such reinstatement, subject to
this Section 6.2 the Listing shall be conducted as soon as reasonably possible.



(d) A decision as to the best timing, place, structure, and feasibility of the Listing shall
be made based on a recommendation from a reputable equity market advisor (“Advisor”) to be retained
by the Company and selected as follows: (i) Buyer shall first select a panel of three advisors
(the “Panel”) from the following list: Morgan Stanley, UBS, JP Morgan, HSBC, or Deutsche Bank, and
others as agreed among the Parties, and (ii) Inure shall then select the Advisor from among the
advisors on the Panel, and the Shareholders shall procure that so selected Advisor be retained by
the Company. The Advisor shall also advise as to which Shares shall be included in the Listing and
the type of offering (e.g., secondary or primary Shares).



(e) In connection with the Listing, the Shareholders agree that the Shares will be included
into the Listing in the following order of priority:



(i) Inure and its Permitted Transferees shall include Shares in the Listing representing at
least ten percent (10%) of the issued and outstanding Shares immediately prior to issuance of any
new Shares (if any) by the Company for the Listing; then



(ii) in the event that not all Shares are Listed, Inure shall have a priority right over
Parent and Buyer and their Permitted Transferees to include up to twenty-five percent (25%) of the
total then outstanding Shares in the Listing (provided such Shares are at such time held by Inure)
in priority to the Listing of the Shares held by Parent/Buyer and their Permitted Transferees;
then



(iii) the Company shall be entitled (but only where Buyer agrees to such issuance in its sole
discretion) to include newly issued Shares, in such amount, as advised by the Advisor,
provided that if a Shareholder has exercised its pre-emptive rights in respect of the newly
issued Shares, the proceeds of the sale of such Shares offered in the Listing acquired by such
Shareholder shall be applied by the Company first towards repayment of the Company’s outstanding
indebtedness to such Shareholder or its Affiliates, if any.



(f) The right of Inure and its Permitted Transferees under Section 6.2(e)(ii)
above may be exercised by Inure by sending to the Company with a copy to Parent and to
Buyer, an irrevocable written notice (“Listing Notice”) no later than twenty (20) days prior to the
Listing date (as such date is determined in the Listing prospectus, or if there is no such date, a
date reasonably determined by the Board), specifying the number of Inure’s Shares of the Company
that Inure intends to sell through Listing (the "Inure Listing Shares”).



ARTICLE VII




CHANGES IN SHARES




Subject to the Charter and this Agreement, if, from time to time during the term of this
Agreement, there is a dividend of any Shares, stock split or other change in the character or
amount of any of the outstanding Share, or any shares of capital stock of the Subsidiary, or there
is a consolidation, merger or sale of all, or substantially all, of the assets of the Company or
any Subsidiary, then, in all such events, any and all new, substituted or additional shares of the
Company or any Subsidiary or other property, to which the holders of the Shares are entitled by
reason of ownership of the Shares, shall be immediately subject to the full provisions of this
Shareholders’ Agreement.



ARTICLE VIII




REPRESENTATIONS AND WARRANTIES OF INURE




	 	 	 
	Inure hereby represents and warrants to each of Buyer and SFMT as follows:

	 
	 	 
	8.1.

	 	Organization; Standing.
	
 
	 	 






The Company is a closed joint stock limited liability company duly organized, validly existing
and in good standing under the laws of the Russian Federation, having all requisite corporate or
other power and authority to carry on its business as it is currently conducted. Inure is a
limited liability company duly organized, validly existing and in good standing under the laws of
Cyprus, with full power and capacity to enter into this Agreement and perform its obligations
hereunder.



8.2. Power and Authority.



Inure has the requisite power and authority to sign, deliver and perform its obligations under
this Shareholders’ Agreement. The execution, delivery, and performance of their respective
obligations hereunder by Inure of this Shareholders’ Agreement have been duly authorized by their
respective governing bodies and all requisite corporate and governmental approvals have been
obtained.



8.3. Authorization. 



Inure has obtained all necessary authorizations from third parties, including governmental
permits and licenses to enter into this Shareholders’ Agreement and to perform the activities and
transactions contemplated thereby.



8.4. Binding Obligation. 



This Shareholders’ Agreement constitutes a valid and binding obligation of Inure, enforceable
in accordance with its terms, except to the extent that such enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the rights of creditors generally.



8.5. Non-Contravention. 



The execution, delivery and performance of this Shareholders’ Agreement by Inure will not
breach or conflict with (1) any judgment, order or injunction issued by any court or arbitration
any other governmental authority or (2) any contract or other obligation binding upon it or any of
their respective assets.



ARTICLE IX




REPRESENTATIONS AND WARRANTIES OF BUYER




Buyer and SFMT hereby, jointly and severally, each represent and warrant to Inure as follows:



9.1. Organization, Standing and Authority.  



It is company duly organized, validly existing and in good standing under the laws of
jurisdiction of its organization with full power and capacity to enter into this Shareholders’
Agreement and perform its obligations hereunder.



9.2. Power and Authority.



It has the requisite power and authority to sign, deliver and perform its obligations under
this Shareholders’ Agreement. The execution and delivery by it of this Shareholders’ Agreement and
the performance by it of its obligations hereunder, have been duly authorized by its governing body
and all requisite corporate and governmental actions.



9.3. Binding Obligation.



This Shareholders’ Agreement constitutes a valid and binding obligation of it, enforceable in
accordance with its terms, except to the extent that such enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the rights of creditors generally



9.4. Authorization. 



It is not required to obtain any authorizations from third parties, including governmental
permits and licenses, in order to enter into this Shareholders’ Agreement and to perform the
activities and transactions contemplated thereby.



9.5. Non-Contravention. 



The execution, delivery and performance of this Shareholders’ Agreement by it will not breach
or conflict with (1) any judgment, order or injunction issued by any court or arbitration any other
governmental authority or (2) any contract or other obligation binding upon it or any of its
respective assets.



ARTICLE X




TERM AND TERMINATION




10.1. Term.



	 	 	 
	This Shareholders’ Agreement becomes effective on the Closing Date.

	 
	 	 
	10.2.

	 	Termination.
	
 
	 	 






This Shareholders’ Agreement shall terminate (“Termination”) upon the occurrence of any of the
following:



(a) the unanimous written agreement of the Shareholders;



(b) the dissolution of the Company;



(c) the appointment of a receiver to take possession of all or substantially all of the assets
of the Company, a general assignment by the Company for the benefit of creditors, or any action
voluntarily taken by the Company under any applicable insolvency or bankruptcy act;



(d) any action involuntarily suffered by the Company under any insolvency or bankruptcy act,
which continues for a period of ninety (90) calendar days;



(e) any Shareholder commits a material breach of this Agreement and such breach continues
unremedied for a period of thirty (30) days after notice thereof has been served by a non-breaching
Shareholder on the breaching Shareholder, in which case the non-breaching Shareholder may terminate
this Shareholders’ Agreement;



(f) any Shareholder commits a material breach of its Title Representations and Warranties, as
defined in the Stock Purchase Agreement, in which case the non-breaching Shareholder may terminate
this Shareholders’ Agreement;



(g) either of Buyer or Inure together with their respective Permitted Transferees collectively
own less than twenty-five percent (25%), or either of Buyer or Inure or its respective Permitted
Transferee owns less than ten percent (10%) of the Shares, and in such case this Shareholders’
Agreement shall terminate with respect to the Party whose shareholding in the Company became less
than ten percent (10%) of the issued and outstanding Shares, provided, however,
that such termination shall only apply if there are more than two (2) Shareholders;



(h) nationalization of the assets, real property of the Company or the Subsidiaries or the
Business by any governmental authority; or



(i) the Listing in which Inure had the opportunity to include all its Shares owned by it at
the time of the Listing in the Listing regardless of whether or not Inure included all such Shares
in such Listing.



10.3. New Shareholders’ Agreement.



Notwithstanding anything to the contrary contained in this Agreement, Inure shall have a right
to effect the transfer of title to all or part of its Shares to DKL and/or Ansley at any time. The
Parties agree not to exercise any rights of first refusal they may have under this Agreement and/or
under Russian Law in connection with any transfer of Shares from Inure to DKL and/or Ansley. Upon
Inure’s written request made in connection with Inure’s contemplated or actual transfer of title to
all or part of its Shares to DKL and/or Ansley (or to any other Person, upon Buyer having received
evidence to its satisfaction that such other Person has beneficial owners identical to those of DKL
and/or Ansley), the Parties shall negotiate in good faith and use their respective best efforts to
agree to amend this Agreement to allow DKL and Ansley to become parties to this Agreement on
substantially the same terms as Inure and collectively to have substantially the same rights under
this Agreement as Inure, provided that any and all undertakings or liabilities of Inure under the
Stock Purchase Agreement or preexisting obligations hereunder shall be assumed in full by DKL
and/or Ansley and the revised shareholder ownership structure of the Company shall not (1) in any
way affect the ability of the Parent to fully consolidate the Company and its Subsidiaries in
Parent’s financial statement in accordance with US GAAP and/or SEC Rules; (2) diminish the rights
of Buyer or SFMT hereunder.



ARTICLE XI




MISCELLANEOUS




11.1. Entire Agreement. 



This Shareholders’ Agreement, the Stock Purchase Agreement and the Registration Rights
Agreement and other documents referred to herein and therein, as well as other documents and
agreements executed and entered into pursuant hereto or thereto, supersede all other agreements,
oral or written, made between the Parties with respect to the subject matter hereof and thereof.
All prior or contemporaneous agreements, representations and understandings of the Parties are
hereby superseded and merged herein and therein.



11.2. Confidentiality. 



(a) During the term of this Agreement and for a period of two (2) years after the date of
termination or expiration of this Agreement for any reason whatsoever the Receiving Party shall:



(i) keep the Confidential Information confidential;



(ii) not disclose the Confidential Information to any other person other than with the prior
written consent of the Disclosing Party or in accordance with Sections (b) and (c); and



(iii) not use the Confidential Information for any purpose other than the performance of its
obligations under this Agreement.



(b) During the term of this Agreement the Receiving Party may disclose the Confidential
Information to its employees, agents or professional advisors (including legal advisers) (the
"Recipient”) to the extent that it is necessary for the purposes of this Agreement.



(c) The Receiving Party shall procure that each Recipient is made aware of and complies with
all the Receiving Party’s obligations of confidentiality under this Agreement as if the Recipient
were a party to this Agreement.



(d) The obligations contained in Sections (a) to (c) shall not apply to any Confidential
Information which:



(i) is at the date of this Agreement or at any time after the date of this Agreement comes
into the public domain other than through breach of this Agreement by the Receiving Party or any
Recipient;



(ii) is disclosed to professional advisers (including legal advisers) and consultants of the
Disclosing Party whose duties in relation to the Disclosing Party or under this Agreement
necessarily require the disclosure;



(iii) can be shown by the Receiving Party, to the reasonable satisfaction of the Disclosing
Party, to have been known to the Receiving Party prior to it being disclosed by the Disclosing
Party to the Receiving Party;



(iv) subsequently comes lawfully into the possession of the Receiving Party from a third
party; or



(v) is disclosed in connection with the Listing or in connection with a possible sale to a
third party and the recipient agrees to be bound by substantially the same terms or is disclosed by
Buyer or Parent in any regulatory filings that, in Buyer’s or Parent’s reasonable determination,
required such disclosure.



(e) For the purposes of this Section 11.2, “Confidential Information” means all information of
a confidential nature relating to any of the Company, its Subsidiaries or a Party or its respective
Affiliates disclosed (whether in writing, verbally or by any other means and whether directly or
indirectly) by one Shareholder (the “Disclosing Party”) to the other Shareholder (the “Receiving
Party”) whether before or after the date of this Agreement.



11.3. Notices. 



Any notice given under the terms of this Shareholders’ Agreement shall be in writing in
English and shall be given by personal delivery to the other Parties by facsimile or by depositing
such notice in the mail, registered or certified, postage prepaid and return receipt requested, as
follows:



If to Inure:




Inure Enterprises Limited




Registered office:


Diagorou 4,            


Kermia House, 6th floor, Flat/Office 601,


P.C. 1097, Nicosia, Cyprus




Fax:     




Telephone:     



If to Buyer:




EDN SOVINTEL LLC


1, Kozhevnichesky Proezd, 2nd Floor


Moscow 115114, Russia


Attention: General Counsel


Fax: +7 (495) 797-9306


Telephone: +7 (495) 967-1323



	 	 	 
	with copies to:

	 	

	 
	 	 
	Moscow Representative Office of Golden TeleServices, Inc.

	 
	 	 
	1, Kozhevnichesky Proezd, 2nd floor

Moscow, 115114, Russia

Attn:

	 	



General Counsel







Fax: +7 (495) 797-9306


Telephone: +7 (495) 967-1323



	 	 	 
	If to SFMT:

	 	

	SFMT CIS Inc

	 	

	 
	 	 
	2831 29th Street, NW Washington, D.C. 20008, USA

	 
	 	 
	Attn:

	 	Julia Marx







Fax: +1 (202) 332-4877


Telephone: +1 (202) 332-5997



	 	 	 
	with copies to:

	 	

	 
	 	 
	Moscow Representative Office of Golden TeleServices, Inc.

	 
	 	 
	1, Kozhevnichesky Proezd, 2nd floor

Moscow, 115114, Russia

Attn:

	 	



General Counsel







Fax: +7 (495) 797-9306


Telephone: +7 (495) 967-1323



Any address may be changed by giving notice to the Parties hereto in the manner provided for
in this Section 11.3. The date of receipt of any notice hereunder shall be the date of personal
delivery or receipt of a facsimile (with confirmation of transmission).



11.4. Successors and Assigns; No Agency. 



This Shareholders’ Agreement shall be binding upon and inure to the benefit of the heirs,
personal representatives, transferees, donees, legatees, devisees, successors and assignees of the
Parties. Nothing contained in or relating to this Shareholders’ Agreement shall be deemed to
constitute a partnership or agency relationship between any of the Parties. No Shareholder may
assign its rights or obligations under this Shareholders’ Agreement except as provided for herein.



11.5. Performance by Affiliates of the Parties. 



(a) Each Party shall procure the performance by its Affiliates of all obligations under this
Shareholders’ Agreement which are expressed to be performed by such Affiliates of a Shareholder
(whether as a Shareholder or otherwise) and of all obligations under any agreement entered into by
any Affiliate of a Shareholder pursuant to this Shareholders’ Agreement.



(b) SFMT shall procure the performance by Buyer of all obligations under this Shareholders’
Agreement which are expressed to be performed by the Buyer (whether as a Shareholder or otherwise)
and of all obligations under any agreement entered into by the Buyer pursuant to this Shareholders’
Agreement. In addition to the foregoing, SFMT shall be a joint and several obligor with Buyer in
respect of the obligations of the Buyer under Sections 5.2 and 6.2 of this Agreement.



11.6. Specific Performance. 



The obligations undertaken pursuant to this Shareholders’ Agreement may be enforced by
specific performance by any of the Parties, the events of breach not being remedied by payment of
damages. Notwithstanding the foregoing, the Parties do not waive, and may commence any lawsuit,
arbitration or action (including for collecting damages) to which they are entitled, pursuant to
the applicable legislation and this Shareholders’ Agreement, and hereby expressly undertake to be
bound by any judgment, court orders or any similar acts, which purpose is to prevent any of the
Parties from breaching this Shareholders’ Agreement.



11.7. Further Assurances. 



Each Party agrees to perform any further acts and to execute and deliver any further documents
reasonably necessary to or in furtherance of the intent and purposes of this Shareholders’
Agreement.



11.8. Amendment. 



This Shareholders’ Agreement may not be amended or modified unless by the unanimous written
agreement of the Parties.



11.9. Breach. 



Each provision of this Shareholders’ Agreement to be performed by a Party shall be deemed both
a covenant and a condition and shall be a material consideration for the performance of each other
Party’s obligations hereunder.



11.10. Remedies. 



All rights, remedies, undertakings, obligations, options, covenants, conditions and agreements
contained in this Shareholders’ Agreement or provided by law shall be cumulative and no one of them
shall be exclusive of any other. A Party may pursue any one or more of its rights, options or
remedies hereunder or may seek damages or specific performance in the event of any other Party’s
breach hereunder, or may pursue any other remedy by law, whether or not stated in this
Shareholders’ Agreement.



11.11. Non-waiver. 



No failure by a Party to take action by reason of any default by any other Party, whether in a
single instance or repeatedly, shall constitute a waiver of any such default or of the performance
required of the defaulting Party. No express waiver by a Party of any provision of this
Shareholders’ Agreement or a default by a Party in any one instance shall be construed as a waiver
of the same provision or default hereunder.



11.12. Attorneys’ Fees. 



If any litigation or arbitration is commenced to enforce any of the provisions of this
Shareholders’ Agreement, or to obtain declaratory, injunctive or specific relief, the prevailing
Party shall be entitled to recover actual attorneys’ fees and costs, including expert witness fees
and associated expenses, and all other costs of litigation or arbitration.



11.13. Indemnification for Breach of Representations and Warranties. 



Each Shareholder agrees to indemnify, defend, and hold harmless the other Shareholder and its
Affiliates and their respective officers, directors and employees from and against any debts,
liabilities, obligations, judgments, claims, losses, damages or deficiency (including interest,
penalties, and reasonable attorneys’ fees) arising out of or resulting from any breach of any
representation and warranty given or made by such Shareholder in this Shareholders’ Agreement or in
any certificate delivered under this Shareholders’ Agreement or the noncompliance with or
nonperformance of any agreement, obligation or covenant of such Shareholder under this
Shareholders’ Agreement.



11.14. Indemnification of Parties. 



The Shareholders shall take all necessary corporate actions to ensure that the Company
indemnifies to the extent of its assets each Shareholder and its Affiliates against any and all
judgments, fines, claims, debts, obligations, losses, damages or deficiency (including amounts paid
in settlement, interest, penalties, and reasonable attorneys’ fees) recovered against or imposed
upon such Shareholder by any third party which arise out of any negligent, reckless, or intentional
act or failure to act by the Company or any Subsidiary.



11.15. Conflict with Organizational Documents.



The Shareholders hereby agree that to the extent there are any conflicts between the provision
of the Charter and this Shareholders Agreement, they shall, to the extent permitted by applicable
Russian law, amend the Charter to comply with the terms agreed in this Agreement. The Shareholders
agree not to invoke against each other the provisions of applicable corporate governance law in
Russia, any provisions of the Charter, resolutions or any provisions of any agreement, offer,
promise or understanding, which may conflict with this Shareholders’ Agreement.



11.16. Governing Law. 



This Shareholders’ Agreement is entered into and shall be construed and enforced in accordance
with the laws of the State of New York, excluding any such legislation which may direct the
application of the laws of any other jurisdiction.



11.17. Dispute Resolution. 



Any dispute, controversy or claim arising out of or relating to this Agreement, or the breach,
termination or invalidity hereof, shall be settled by arbitration in accordance with the UNCITRAL
Arbitration Rules (the “Rules”) as at present in force. There shall be three arbitrators, with
Parent and Buyer (or either of them if only one is a party to the arbitral proceedings) having the
right to appoint one arbitrator, and Sellers having the right to jointly appoint one arbitrator,
with the third arbitrator being selected by the two Party appointed arbitrators, or upon any
failure to select the third arbitrator within thirty (30) days from the date that the second of the
Party appointed arbitrators has been selected, then the third arbitrator shall be appointed as
provided in the Rules. The seat and place of arbitration shall be New York City, New York, USA and
the English language shall be used throughout the arbitral proceedings. Any arbitral award shall
be final and may not be challenged in any other arbitral tribunals located in any other
jurisdictions. The successful party shall have the right to enforce such arbitral award in any
court of competent jurisdiction. The arbitral tribunal shall have authority to consider and
include in any proceeding, decision or award any further dispute properly brought before it by the
parties to the arbitration insofar as such dispute arises out of this Agreement, but, subject to
the foregoing, no other parties or other disputes shall be included in, or consolidated with, the
arbitral proceedings. All expenses connected with the arbitration, including legal fees and other
fees, incurred by the parties when resolving disputes under this Agreement shall be payable in
accordance with the arbitral award of the tribunal.



11.18. Severability. 



If any provision of this Shareholders’ Agreement as applied to any Party or to any
circumstance shall be adjudged by a court or tribunal of competent jurisdiction to be void or
unenforceable for any reason, the same shall in no way affect (to the maximum extent permissible by
law) any other provision of this Shareholders’ Agreement, the application of any such provision
under circumstances different from those adjudicated by the court or tribunal, or the validity or
enforceability of the Shareholders’ Agreement as a whole.



11.19. Counterparts.



This Shareholders’ Agreement may be executed in more than one counterpart, each of which shall
be deemed an original, but all of which together shall constitute but one and the same instrument.



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IN WITNESS WHEREOF, the Parties have entered into this Shareholders’ Agreement, as of the date
and year first written.



	 	 	 	 	 
	EDN SOVINTEL LLC







	 
	By: /s/ Jean-Pierre Vandromme

Name: Jean-Pierre Vandromme

Title: General Director

SFMT CIS INC.

	 

	By: /s/ Jean-Pierre Vandromme

Name: Jean-Pierre Vandromme

Title: Authorized Representative







	 
	INURE ENTERPRISES LTD.
	By: /s/ Marina Abramova
	Name: Marina Abramova
	Title: Authorized Representative
	ZAO CORTEC
	By: /s/ Alexander Malis
	Name: Alexander Malis
	Title: Acting General Director





4




Exhibit A




List of Entities used in Business




	 	 	 
	Ref. 1	 	Entity
	1.

	 	ZAO Investelectrosvyaz (Main State Registration Number

1027739249560)
	 
	 	 
	2.

	 	ZAO Kabelstroy (Main State Registration Number 1047796903175)






5




Exhibit B




INDICATIVE BUSINESS PLAN




	 	 	 	 	 	 	 	 	 
	 	 	2007	 	2008
	Revenue, thousands
	 	$	104,004	 	 	$	189,519	 
	 
	 	 	 	 	 	 	 	 
	HomeNet Users, thousands
	 	 	332	 	 	 	607	 
	 
	 	 	 	 	 	 	 	 
	EBITDA, thousands
	 	$	37,638	 	 	$	79,307	 
	 
	 	 	 	 	 	 	 	 
	Capital Expenditures, thousands
	 	$	53,099	 	 	$	46,648	 
	 
	 	 	 	 	 	 	 	 
	Ongoing Funding, thousands
	 	$	34,500	 	 	$	22,000	 
	 
	 	 	 	 	 	 	 	 






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Exhibit C




FAIR VALUE DETERMINATION PROCEDURE




(1) Initial Period. Upon the exercise of pre-emptive rights, the Shareholders shall
use their best reasonable efforts to mutually determine the value of the Shares and determine the
Fair Value within thirty (30) days (such 30-day period referred to as the “Initial Period”) after
the relevant Trigger Date (being the date on which a decision to issue new Shares shall have been
made by the Company).



(2) Appraisal Procedure. In the event that the Shareholders cannot agree upon the Fair
Value within the timeframe of the Initial Period, then:




	 	(a)	 	each Shareholder at its own expense shall select and appoint an Advisor from
the Panel within fourteen (14) days (the “Appointment Period”) after the expiration of
the Initial Period;






	 	(b)	 	within ninety (90) days (the “Determination Period”) after the expiration of
the Appointment Period, each Advisor appointed by each respective Party shall
independently determine the Fair Value, each having done so without consultation with
the other Advisor or having any knowledge of the determination of the other Advisor;






	 	(c)	 	the Fair Value shall be determined as of the Trigger Date according to
internationally accepted criteria and on the following assumptions: (i) the sale is on
a going concern basis between a willing seller and a willing buyer; (ii) the sale is
on the basis that each Share has the same value corresponding to its proportion of the
value of all the Shares of the same class taken as a whole; and (iii) no additional or
reduced value is attached to any holding of Shares by virtue only of that holding
comprising or after purchase conferring or giving rise to a majority or minority of the
total issued share capital of the Company.






	 	(d)	 	the Shareholders shall resolve a difference in valuation between the Advisor in
accordance with the procedures of paragraph 5 below.





(3) Failure to Appoint Advisor. If either Shareholder fails to appoint an Advisor
within the Appointment Period as prescribed above in paragraph 2, or an Advisor selected by either
Shareholder fails to complete a valuation or make a determination of the fair value within the
Determination Period, then the valuation of the fair value made by the other Advisor that has been
appointed by the other Shareholder shall be binding, final and enforceable on all of the
Shareholders and the Company.



(4) Difference in Valuation. If the determination of the fair value by the Advisors
under paragraph 2(b) differs and the higher value differs from the lower value by




	 	(a)	 	not more than fifteen percent (15%) from the lower valuation, then the Fair
Value shall be an amount equal to the average of both valuations and such amount shall
be binding, final and enforceable on the Parties; or






	 	(b)	 	more than fifteen percent (15%) from the lower valuation, then within fourteen
(14) days after the expiry of the Determination Period, the Advisors selected by the
Parties shall select and appoint a concluding Advisor (the “Concluding Advisor”) from
the Panel. If the Advisors fail to select a Concluding Advisor within fourteen (14)
days after the expiration of the Determination Period, such Concluding Advisor shall be
selected by Company at its own expense from among the Panel.





(5) Concluding Advisor. The Concluding Advisor shall determine the fair value of the
Shares as quickly as practical, but in any event, not later than ninety (90) days from the date of
the appointment of the Concluding Advisor. The appraisal of fair value by the Concluding Advisor
shall not be lower than the lowest valuation made by an Advisor under paragraph 2(b), nor higher
than the highest valuation made by an Advisor under paragraph 2(b). Where such valuation by the
Concluding Advisor falls beyond the range of the lowest valuation or the highest valuation made
during the Determination Period, then the Fair Value shall be equal to that value (either the
highest or the lowest), which is closest to the Concluding Advisor’s valuation. Such value shall
be the Fair Value, which shall be binding and final on the Parties.



(6) Access to Records. The Advisor, during the Determination Period, shall have
access to all financial information, as well as all books and records and such other information of
the Company and its Subsidiaries as may be required in order to conduct and complete a valuation.
The Advisor shall also have full access to all financial information and all books and records and
such other information as may be required in order to conduct and complete a valuation of the
Company and its subsidiaries.



(7) Validity. The determination of Fair Value shall be effective for ninety (90) days
(after its determination in accordance with this Exhibit).




7