**Exhibit 10.20**EXECUTION COPY**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
 

 
**TABLE OF CONTENTS**           Page ARTICLE I DEFINITIONS AND INTERPRETATION  2        1.1. Definitions  2        1.2. Interpretation  6        ARTICLE II GENERAL PROVISIONS  6        2.1. Status of the Company  6        2.2. Subsidiaries  7        ARTICLE III BUSINESS AND MANAGEMENT OF BUSINESS  7        3.1. Management of Business  7        3.2. Agreement Concerning Provision of Services  7        3.3. Forecast  7        3.4. Financing  8        ARTICLE IV CORPORATE GOVERNANCE  9        4.1. Shareholders’ Meetings; Board’s Meetings  9        4.2. Voting  9        4.3. Reserved Matters  9        4.4. Board of Directors  10        4.5. Executive Officers  11        4.6. Books and Records  11        ARTICLE V SHARE TRANSFERS  12        5.1. Right of First Refusal  12        5.2. Tag-Along Rights  13 
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           Page 5.3. Liens  14        5.4. Transfers Void  14        ARTICLE VI PRE-EMPTION RIGHTS AND LISTING  15        6.1. Pre-emption Rights  15        6.2. Listing  15        ARTICLE VII CHANGES IN SHARES  17        ARTICLE VIII REPRESENTATIONS AND WARRANTIES OF INURE  17        8.1. Organization; Standing  17        8.2. Power and Authority  17        8.3. Authorization  17        8.4. Binding Obligation  17        8.5. Non-Contravention  18        ARTICLE IX REPRESENTATIONS AND WARRANTIES OF BUYER  18        9.1. Organization, Standing and Authority  18        9.2. Power and Authority  18        9.3. Binding Obligation  18        9.4. Authorization  18        9.5. Non-Contravention  18        ARTICLE X TERM AND TERMINATION  19        10.1. Term  19        10.2. Termination  19        10.3. New Shareholders’ Agreement  20        ARTICLE XI MISCELLANEOUS  20        11.1. Entire Agreement  20        11.2. Confidentiality  20 
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           Page 11.3. Notices  21        11.4. Successors and Assigns; No Agency  23        11.5. Performance by Affiliates of the Parties  23        11.6. Specific Performance  23        11.7. Further Assurances  24        11.8. Amendment  24        11.9. Breach  24        11.10. Remedies  24        11.11. Non-waiver  24        11.12. Attorneys’ Fees  24        11.13. Indemnification for Breach of Representations and Warranties  25        11.14. Indemnification of Parties  25        11.15. Conflict with Organizational Documents  25        11.16. Governing Law  25        11.17. Dispute Resolution  25        11.18. Severability  26        11.19. Counterparts  26        Exhibit A: List of Entities used in Business           Exhibit B: Business Plan           Exhibit C: Fair Value Determination Procedure    
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**SHAREHOLDERS’ AGREEMENT**     **THIS SHAREHOLDERS’ AGREEMENT**(this “**Agreement**” or this “**Shareholders’ Agreement**”) is enteredinto as of February 22 , 2007 and shall become effective (the “**Effective Date**”) on the ClosingDate, as defined below, by and among     (i) EDN SOVINTEL LLC, a limited liability company organized and existing under the laws of theRussian 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 ofDelaware, 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 Republicof Cyprus (“**Inure**”), with its principal offices at Diagoru 4, Kermia Building, 6thfloor, office 601 Nicosia P.C. 1097, Cyprus;     (iv) ZAO CORTEC, a closed joint stock company organized and existing under the laws of theRussian 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 referredto collectively as the “**Shareholders**.”**RECITALS**     A. Immediately prior to the consummation of the Acquisition (as defined below), Inure was thelegal, record, and beneficial owner of 99 (ninety-nine) ordinary registered shares, with a nominalvalue 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 andRambert Management Limited, a company organized and existing under the laws of the British VirginIslands (“**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 VirginIslands (“**DKL**”), is the legal, record and beneficial owner of 21,682,830 (twenty one million sixtyhundred 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 ofInure;
 

 
     C. Ansley Financial Holdings Ltd., a company organized and validly existing under the laws ofthe 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 andoutstanding capital stock of Inure, representing on the Closing Date 28.89% (twenty-eight decimaleighty-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 Buyerand Buyer is purchasing the Transferred Shares (as defined in the Stock Purchase Agreement) fromthe Sellers, all upon the terms and subject to the conditions set forth in the Stock PurchaseAgreement (the “**Acquisition**”).     E. Upon consummation of the Acquisition, Inure shall own 49% (forty-nine percent) of theissued and outstanding shares of the Company and Buyer shall own 51% (fifty-one percent) of theissued and outstanding shares of the Company.     F. The Company fully owns directly or indirectly all of the legal entities involved in theBusiness (as defined below) listed on Exhibit A.     G. The Parties have determined that it is in their respective best interests to enter intothis Shareholders’ Agreement with respect to the operation and management of the Company and theacquisition 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 inrespect of their ownership of the Shares; and (ii) certain agreements with respect to themanagement, control, funding, operation and ownership of the Company, the Subsidiaries (as definedbelow), their Affiliates (as defined below), the Business and related matters.     **NOW, THEREFORE**, in consideration of the foregoing and the mutual terms, covenants andconditions 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 andPreamble 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 indirectlycontrolling, controlled by or under common control with such Person.
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     “**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 dateof this Agreement.     “**Business Plan**” means the indicative annual business plans for the years 2007 and 2008attached 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, forlong-term assets, including property, plant and equipment and intangible assets delivered to aPerson or any of its subsidiaries, or pre-payments for such long-term assets less internal laborand 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 inFinancial 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 USGAAP and, in any case, after deducting any amounts resulting from capitalization of internal laborand material costs associated with developing plant and equipment.
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     “**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 inthe events provided for in this Agreement and in accordance with the procedure set forth inExhibit 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).     “**JSCLaw**” means the Russian Federation Law No 208-FZ “On Joint Stock Companies,” dated December26, 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 anykind or nature, including any restriction on use, voting, transfer, receipt of income or exerciseof 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 theSubsidiaries.     “**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.
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     “**Permitted Transferee**” has the meaning set forth in Section 5.1(e).     “**Person**” means any individual, firm, partnership, joint venture, trust, corporation, limitedliability entity, unincorporated organization, estate or other entity (including any governmentalentity).     “**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 ofwhich more than fifty percent (50%) of the shares or interests are acquired by the Company afterthe Effective Date.     “**Surviving Provisions**” means Article 1 and Sections 11.1 through 11.4 (inclusive), 11.10 and11.15 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, withoutlimitation, any transfer by gift or operation of law, or any transfer of an economic interest inany derivative security of any Share), assignment, distribution or other disposition, or issuanceor
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creation of any option or any voting proxy, voting trust or other voting agreement in respectof any Person or instrument (including, without limitation, any of the Shares), whether in a singletransaction or a series of related transactions, including, without limitation, the direct orindirect 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 bythe Company.     “**US GAAP**” means accounting principles generally accepted in the United States, consistentlyapplied.     “**VTB**” means OAO Vneshtorgbank, a commercial bank organized and existing as a open joint stockcompany 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 deemedto include one another, as appropriate;          (b) a reference to an amount in US Dollars shall also mean a reference to an equivalentthereof 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 andpolicies 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 thisShareholders’ 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, oran 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
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provisions thereof and hereof and (b) this Shareholders’ Agreement. Subject to compliancewith applicable law, the Shareholders shall cause the Company to take any and all actions necessaryto 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, whererelevant, shall apply to the Subsidiaries and that no decision, corporate action or any transactionshall 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 thatthe relevant changes or modifications are made to the articles of association, charters, foundationor partnership agreements and any other organizational documents (“**Organizational Documents**”) ofthe Company and the Subsidiaries to give full effect to the provisions and spirit of thisShareholders’ Agreement.          (b) The voting and other rights attributable to the shares in the Subsidiaries shall beexercised 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 asreflected in the Business Plan. Any business plan or financing plan for any period afterexpiration of the Business Plan or any modifications to the Business Plan shall be approved by theBoard 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 interconnectagreement(s) (subject to adjustments from time to time to take into account the then current marketprices and applicable rules and regulations).     Nothing in this Section 3.2 or in the Business Plan is intended to constitute any price fixingor any restriction on competition in the relevant market.          3.3. Forecast.
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               The Parties agree that the expansion of the operation of the business of the Company followingthe Effective Date shall include the matters set forth in the Business Plan and the Parties agreeto use their respective reasonable efforts to cause the Company to achieve the objectives set forthin the Business Plan.               3.4. Financing.               (a) The Shareholders shall procure that the Company shall, and the Company shall, apply anycontributions made by the Shareholders in connection with Ongoing Funding solely for the benefit ofthe business of the Company and each Subsidiary and in accordance with the provisions of theBusiness Plan to achieve financial objectives.               (b) Shareholders are not obliged to provide any Ongoing Funding (by means of equitycontributions, or loans provided by the Shareholder (each, a “**Shareholder Loan**”), or security withrespect to third parties’ financing) unless such Ongoing Funding is agreed by the Shareholdersaccording 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 therelevant calendar year;     (ii) second, if funds obtained under clause (i) are insufficient to coverOngoing 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 Companyas contemplated in this Section 3.4(c)(ii), then upon receiving from a potential lender atermsheet or similar description of the terms of the proposed debt financing and prior tothe Company entering into any binding agreement with respect to such debt, each Shareholdershall have the right (exercisable within five (5) Business Days after notice of the proposedunsecured borrowing by the Company is provided by the Company to each Shareholder) to extendall or a portion of such debt to the Company on substantially the same terms. In the eventmore than one Shareholder desires to extend such debt to the Company, such debt shall beallocated pro rata between the Shareholders based on their holdings in the Company;     (iii) third, if funds obtained under clauses (i) and (ii) are insufficient tocover 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 prorata (based on their holdings in the Company) in such Shareholder Loans to the extentnecessary to meet the Ongoing Funding of the Company set out in the Business Plan, and anyShareholder Loans in excess of such amount shall be at the sole discretion of the relevantShareholder; (B) the terms of the Shareholder Loans shall be substantially similar to theterms of the latest unsecured debt obtained by the Company from a third party on an arm’slength basis, and (C) the terms and conditions for each such Shareholder Loan entered intoin connection with the same Ongoing Funding shall be on the same commercial terms; and
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     (iv) fourth, if funds obtained under clauses (i), (ii) and (iii) areinsufficient to cover the amount of Ongoing Funding (but only when Ongoing Funding exceedsthe amount provided for in the Business Plan), then through equity contributions by theShareholders pro rata to their shareholdings in the Company, provided,however, that both Buyer and Inure shall have extended Shareholder Loans underclause (iii) above.          (d) If it is agreed by the Shareholders that Ongoing Funding is to be provided by equitycontributions, and a Shareholder fails to subscribe or pay for the newly issued Shares prior to theexpiration of the relevant subscription period subject to applicable Russian company laws, suchunsubscribed 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 ofsuch Shares to a third Person, approved by a non-defaulting Shareholder. The defaultingShareholder shall have no rights under Sections 5.1 or 6.1 in respect of the Shares it shall havefailed to subscribe or pay for.          (e) Other than in accordance with Section 5.3, no Shareholder shall be entitled to establishany 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 frequentlythan required by Russian company laws. The matters related to the convocation, notice and agendaof such meetings shall be as provided for in the Charter, provided that to the extent consistentwith Russian company laws, the participation of at least one Inure Director and one Buyer Directorshall be required for any meeting of the Board to be quorate and if any such Director has been dulynotified of the meeting but fails to participate for any reason, the meeting shall be deemedquorate 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 voteof 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 (“**ReservedMatters**”) shall require either (i) the affirmative vote of holders of seventy percent (70%) of theShares entitled to vote on the matter at a general or extraordinary meeting of shareholders atwhich a quorum is represented or (ii) the affirmative vote of at least five (5) Directors:
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          (i) changes to the Charter or other Organizational Documents of the Company or theSubsidiaries (except where the equity contributions are required to be provided by operation ofSection 3.4(c)(iv), in which case the necessary changes to the Charter should not qualify as aReserved Matter and each Shareholder shall vote its shares to authorize such change (to the extentrequired));          (ii) any proposal to wind up the Company or any Subsidiary or initiation of any othervoluntary 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 underthe JSC Law;          (v) any issuance of shares or securities convertible into shares, creation of any options tosubscribe for or acquire such shares or redemption of shares, any increase or decrease of thecharter capital or other change in the capital structure in each case relating to the Company orthe 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 theSubsidiaries, any joint venture or partnership or acquisition of a material part of the assets ofthe Company or the Subsidiaries or any transaction for the acquisition of equity interest inanother 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 partytransaction” 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 approvalof the Shareholders as aforesaid, a series of related transactions that, when aggregated, exceedthe figure specified in the relevant paragraph above shall be construed as a single transactionrequiring such Shareholder approval.          (c) The Parties agree that in no event shall Reserved Matters include any matter that woulddisallow Parent from fully consolidating the Company and its Subsidiaries in Parent’s financialstatements 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 accordancewith Russian company laws. For so long as their shareholding remain unchanged from the closing ofthe Acquisition, each Shareholder agrees to take all
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actions necessary from time to time (including, without limitation, the voting of Shares, theexecution of written consents, the calling of special meetings, the removal of Directors, thefilling of vacancies on the Board, the waiving of notice of and attendance at meetings, theamendment of the Charter and the like) to procure that four (4) Directors are elected from thecandidates nominated by the Buyer (each Director so nominated and elected, a “**Buyer Director**”) andthree (3) Directors are elected from the candidates nominated by Inure (each Director so nominatedand 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 itobtains in its capacity as a Director to its nominating Shareholder. Each Shareholder shall berequired 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 ofthe executive officers shall be in accordance with the Charter and, where applicable, theOrganizational 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 thefinancial statements of the Company shall be prepared, in accordance with (1) generally acceptedaccounting 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 accountingfirm (the “**Auditor**”) to perform an annual audit of the Company and its Subsidiaries’ consolidatedfinancial statements and quarterly reviews of the Company and its Subsidiaries’ consolidatedfinancial statements in accordance with US GAAP. If required by the Board, the Auditor willperform an audit and/or quarterly reviews of the financial statements prepared in accordance withRAS.          (c) Buyer shall procure that the Company shall, and the Company shall, provide Inure (at noexpense to Inure) and Inure’s Permitted Transferees (provided that Inure or such PermittedTransferee owns more than twenty percent (20%) of the Shares) with all information which Inure orsuch Permitted Transferee reasonably requires (including, without limitation, reconciliation fromUS GAAP to IFRS) to prepare its annual IFRS financial statements.
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**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 besubject 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 thirdparty, the other Shareholders or their assignees (the “**Offeree Shareholders**”) shall have a right offirst refusal (the “**Right of First Refusal**”) to purchase the Shares at the Offering Price inaccordance 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 froma 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 OfferingShareholder to sell the Shares;  (2) the name of each proposed purchaser (the“**Proposed Purchaser**”) and their beneficial owners (save where aproposed transferee is a publicly traded company);  (3) the number of Shares to be sold to eachProposed Purchaser;  (4) the price for which the Offering Shareholderproposes to sell the Shares (the “**Offering Price**”), which OfferingPrice shall be a cash offer in a freely convertible currency; and  (5) all other terms and conditions of the proposedsale (“**Offer Terms**”); and          (ii) irrevocably offer the Shares at the Offering Price and on the Offer Terms to the OffereeShareholders.          (c) Exercise of Right of First Refusal. At any time within forty-five (45) days afterreceipt of the Offer Notice, the Offeree Shareholders may, by giving written notice to the OfferingShareholder, elect to purchase and, within forty-five (45) days of such notice, enter into abinding agreement or obtain a waiver and take all measures required to purchase all, but not lessthan 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
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terms and conditions shall be identical in all material respects, to the extent possible, tothe Offer Terms.          (d) Offering Shareholder’s Right to Sell. If all of the Shares proposed in the OfferNotice are not purchased by the Offeree Shareholders and/or their assignees as provided in thisSection 5.1, then the Offering Shareholder may sell such Shares to the Proposed Purchaser at theOffering Price and on the Offer Terms, provided that such sale shall be made subject to Section 5.2and is consummated within one hundred eighty (180) days after the date of the Offer Notice andprovided further that any such sale is effected in accordance with any applicable law or regulationand, upon the remaining Shareholders’ request, the Proposed Purchaser agrees in writing that theprovisions of this Shareholders’ Agreement shall apply to the Proposed Purchaser. If the Sharesdescribed in the Offer Notice are not transferred to the Proposed Purchaser within said one hundredeighty (180) day period, a new Offer Notice shall be required and the Offeree Shareholder shallagain be offered the Right of First Refusal before any Shares held by the Offering Shareholder maybe sold. All Shareholders hereby agree to make any and all modifications to the Charter ifrequired to effectuate the provisions of this Article V.          (e) Exception for Certain Sales. Anything to the contrary contained in this Section5.1 notwithstanding, the Parties agree that the Offeree Shareholder shall not exercise its Right ofFirst Refusal and shall grant the Offering Shareholder its duly executed waiver of the Right ofFirst Refusal in compliance with Russian company laws to the sale of any or all of the Shares to anAffiliate 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 Shareholderunder the Stock Purchase Agreement, andprovided further that if such Affiliate ceases to be an Affiliate of the Offering Shareholder, itshall 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 isreorganized into an open joint stock company and if, at the time such reorganization becomeseffective, the JSC Law does not permit the Right of First Refusal to be established in an openjoint 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 inrespect of the proposed Transfer by Buyer or its Permitted Transferees, and if the Transfer of theShares proposed in such Offer Notice will (in the aggregate with prior Transfers of the Shares byBuyer 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 thealternative 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 PermittedTransferee (a “**Tag-Along Notice**”) requesting that the Proposed Purchaser purchase
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the same percentage of the Shares held by Inure as constitute the percentage of Sharesproposed to be transferred by Buyer or any of its Permitted Transferees (as the case may be) to thetotal number of the Shares held by Buyer and its Permitted Transferees (as the case may be) (a “**ProRata Portion**”).          (b) The Tag-Along Notice shall specify the number of Shares that Inure desires to include inthe 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 periodprescribed above, Buyer or its Permitted Transferees (as the case may be) may Transfer the Sharesspecified in the Offer Notice to the Proposed Purchaser identified in, and on the same terms andconditions as are set forth in, the Offer Notice. If Inure does give Buyer the Tag Along Notice inthe forty-five (45) day time period prescribed above, Buyer shall use commercially reasonableefforts to cause Inure’s Pro Rata Portion to be acquired by the Proposed Purchaser at the same timeand on the same terms and conditions as are set forth in the Offer Notice. If the ProposedPurchaser is unwilling or unable to acquire such additional Shares upon such terms, then Buyer andits Permitted Transferees (as the case may be) may elect either to cancel such proposed Transfer orto allocate the maximum number of Shares that such transferee is willing to purchase prorata between Buyer and Inure (but pro rata to their holdings in the Shares) up to thenumber that Inure has identified in the Tag-Along Notice but not in excess of Inure’s Pro RataPortion.          5.3. Liens.          (a) No Shareholder shall be permitted to establish or grant any Lien in respect of its Sharesexcept for Liens given with the consent of the other Shareholder, which consent shall not beunreasonably withheld or delayed, and except for Liens granted to VTB or in connection with aninitial (but no subsequent) refinancing by a reputable financial institution or institutions of theloans issued by VTB, provided that such exception shall be subject to prior written noticeto each other Shareholder containing the identity of the proposed lender and a summary of theprincipal terms.          (b) No Liens over Shares nor any enforcement action related thereto entitle its holder to anyrights 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 permittingof any Lien to subsist on, any Shares or any shares of capital stock of any Subsidiary that is inviolation of the provisions of this Shareholders’ Agreement shall be void and of no force or effectwhatsoever, 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 OrganizationalDocuments to be amended, or the members’ register of the
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Company to be modified, to reflect any such event or treat any transferee as the owner orpledgee of such Shares (as applicable) or any shares of capital stock of any Subsidiary for anypurpose.**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 securitiesconvertible into Shares pro rata to their holdings of the Shares on the terms provided forin the Charter and relevant provisions of the applicable Russian company laws (but in any event forthe subscription price which shall be no less than (x) in the case of equity contributions, theFair Value of such Shares or other securities convertible into Shares or (y) the market price, inthe case of a Listing or public offering of Shares or securities convertible into Shares). For theavoidance of doubt, such right shall be available to the Shareholders where the Company, ifrecommended 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 instrumentconvertible into Shares that are issued in connection with any Board approved employee benefitplan.          6.2. Listing.           (a) Subject to this Section 6.2, Buyer shall to the extent of its voting rights, and theCompany shall, cause Shares representing at least ten percent (10%) of the issued and outstandingShares of the Company on the initial offering date to be listed and offered in an underwrittenpublic offering on at least one of the Moscow, London or any U.S. stock market on or beforeDecember 31, 2008 (the “**Listing**”), provided that, unless otherwise agreed by Buyer in its solediscretion, only Inure’s Shares shall be included in the Listing and in no event shall Buyer or theCompany be obligated to include any Shares in the Listing. For the avoidance of doubt, under thisSection 6.2 the Buyer shall be obligated to take any action, including, without limitation, votingto approve and authorize any action necessary or advisable in order for the Company to fulfill itsobligations under this Section 6.2, including, without limitation, the replacement of the Board andgeneral 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 dueto unfavorable market conditions; or          (ii) if a reputable counsel for the Company produces a formal written legal opinion (concurredin material respects by counsel for Buyer if Buyer elects to obtain such an opinion) opining thatin such counsel’s good faith professional judgment the Listing would reasonably be prevented fromtaking place on each of the Moscow, London and U.S. stock
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markets due to non-compliance by the Company or any Subsidiary with any applicable rules orregulations of the United States Foreign Corrupt Practices Act, the SEC, NASDAQ or any otherapplicable 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 Buyershall endeavor to rectify the circumstances on which such postponement is based as soon asreasonably possible. The Company’s and Buyer’s obligations set forth in Section 6.2(a) shall bereinstated and become current as soon as the event or matter giving basis for the postponement ofthe Listing pursuant to Section 6.2(b) ceases to exist, and upon such reinstatement, subject tothis 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 shallbe made based on a recommendation from a reputable equity market advisor (“**Advisor**”) to be retainedby 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, andothers as agreed among the Parties, and (ii) Inure shall then select the Advisor from among theadvisors on the Panel, and the Shareholders shall procure that so selected Advisor be retained bythe Company. The Advisor shall also advise as to which Shares shall be included in the Listing andthe type of offering (e.g., secondary or primary Shares).          (e) In connection with the Listing, the Shareholders agree that the Shares will be includedinto the Listing in the following order of priority:          (i) Inure and its Permitted Transferees shall include Shares in the Listing representing atleast ten percent (10%) of the issued and outstanding Shares immediately prior to issuance of anynew 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 overParent and Buyer and their Permitted Transferees to include up to twenty-five percent (25%) of thetotal 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 solediscretion) 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 newlyissued Shares, the proceeds of the sale of such Shares offered in the Listing acquired by suchShareholder shall be applied by the Company first towards repayment of the Company’s outstandingindebtedness 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 beexercised by Inure by sending to the Company with a copy to Parent and to Buyer, an irrevocablewritten notice (“**Listing Notice**”) no later than twenty (20) days prior to the Listing date (as suchdate is determined in the Listing prospectus, or if there is no such date, a date reasonablydetermined by the Board), specifying the number of Inure’s Shares of the Company that Inure intendsto sell through Listing (the “**Inure Listing Shares**”).
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**ARTICLE VII****CHANGES IN SHARES**          Subject to the Charter and this Agreement, if, from time to time during the term of thisAgreement, there is a dividend of any Shares, stock split or other change in the character oramount of any of the outstanding Share, or any shares of capital stock of the Subsidiary, or thereis a consolidation, merger or sale of all, or substantially all, of the assets of the Company orany Subsidiary, then, in all such events, any and all new, substituted or additional shares of theCompany or any Subsidiary or other property, to which the holders of the Shares are entitled byreason of ownership of the Shares, shall be immediately subject to the full provisions of thisShareholders’ 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 existingand in good standing under the laws of the Russian Federation, having all requisite corporate orother power and authority to carry on its business as it is currently conducted. Inure is alimited liability company duly organized, validly existing and in good standing under the laws ofCyprus, with full power and capacity to enter into this Agreement and perform its obligationshereunder.          8.2. Power and Authority.          Inure has the requisite power and authority to sign, deliver and perform its obligations underthis Shareholders’ Agreement. The execution, delivery, and performance of their respectiveobligations hereunder by Inure of this Shareholders’ Agreement have been duly authorized by theirrespective governing bodies and all requisite corporate and governmental approvals have beenobtained.          8.3. Authorization.           Inure has obtained all necessary authorizations from third parties, including governmentalpermits and licenses to enter into this Shareholders’ Agreement and to perform the activities andtransactions contemplated thereby.          8.4. Binding Obligation.           This Shareholders’ Agreement constitutes a valid and binding obligation of Inure, enforceablein accordance with its terms, except to the extent that such enforceability may be limited bybankruptcy, insolvency or similar laws affecting the rights of creditors generally.
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          8.5. Non-Contravention.           The execution, delivery and performance of this Shareholders’ Agreement by Inure will notbreach or conflict with (1) any judgment, order or injunction issued by any court or arbitrationany other governmental authority or (2) any contract or other obligation binding upon it or any oftheir 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 ofjurisdiction 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 underthis Shareholders’ Agreement. The execution and delivery by it of this Shareholders’ Agreement andthe performance by it of its obligations hereunder, have been duly authorized by its governing bodyand all requisite corporate and governmental actions.          9.3. Binding Obligation.          This Shareholders’ Agreement constitutes a valid and binding obligation of it, enforceable inaccordance with its terms, except to the extent that such enforceability may be limited bybankruptcy, 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 governmentalpermits and licenses, in order to enter into this Shareholders’ Agreement and to perform theactivities and transactions contemplated thereby.          9.5. Non-Contravention.           The execution, delivery and performance of this Shareholders’ Agreement by it will not breachor conflict with (1) any judgment, order or injunction issued by any court or arbitration any othergovernmental authority or (2) any contract or other obligation binding upon it or any of itsrespective assets.
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**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 thefollowing:          (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 assetsof the Company, a general assignment by the Company for the benefit of creditors, or any actionvoluntarily 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 continuesunremedied for a period of thirty (30) days after notice thereof has been served by a non-breachingShareholder on the breaching Shareholder, in which case the non-breaching Shareholder may terminatethis Shareholders’ Agreement;          (f) any Shareholder commits a material breach of its Title Representations and Warranties, asdefined in the Stock Purchase Agreement, in which case the non-breaching Shareholder may terminatethis Shareholders’ Agreement;          (g) either of Buyer or Inure together with their respective Permitted Transferees collectivelyown less than twenty-five percent (25%), or either of Buyer or Inure or its respective PermittedTransferee 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 lessthan 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 theBusiness by any governmental authority; or
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          (i) the Listing in which Inure had the opportunity to include all its Shares owned by it atthe time of the Listing in the Listing regardless of whether or not Inure included all such Sharesin such Listing.          10.3. New Shareholders’ Agreement.          Notwithstanding anything to the contrary contained in this Agreement, Inure shall have a rightto effect the transfer of title to all or part of its Shares to DKL and/or Ansley at any time. TheParties agree not to exercise any rights of first refusal they may have under this Agreement and/orunder Russian Law in connection with any transfer of Shares from Inure to DKL and/or Ansley. UponInure’s written request made in connection with Inure’s contemplated or actual transfer of title toall or part of its Shares to DKL and/or Ansley (or to any other Person, upon Buyer having receivedevidence to its satisfaction that such other Person has beneficial owners identical to those of DKLand/or Ansley), the Parties shall negotiate in good faith and use their respective best efforts toagree to amend this Agreement to allow DKL and Ansley to become parties to this Agreement onsubstantially the same terms as Inure and collectively to have substantially the same rights underthis Agreement as Inure, provided that any and all undertakings or liabilities of Inure under theStock Purchase Agreement or preexisting obligations hereunder shall be assumed in full by DKLand/or Ansley and the revised shareholder ownership structure of the Company shall not (1) in anyway affect the ability of the Parent to fully consolidate the Company and its Subsidiaries inParent’s financial statement in accordance with US GAAP and/or SEC Rules; (2) diminish the rightsof Buyer or SFMT hereunder.**ARTICLE XI****MISCELLANEOUS**          11.1. Entire Agreement.           This Shareholders’ Agreement, the Stock Purchase Agreement and the Registration RightsAgreement and other documents referred to herein and therein, as well as other documents andagreements 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 arehereby 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 oftermination or expiration of this Agreement for any reason whatsoever the Receiving Party shall:          (i) keep the Confidential Information confidential;
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          (ii) not disclose the Confidential Information to any other person other than with the priorwritten 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 itsobligations under this Agreement.          (b) During the term of this Agreement the Receiving Party may disclose the ConfidentialInformation 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 withall the Receiving Party’s obligations of confidentiality under this Agreement as if the Recipientwere a party to this Agreement.          (d) The obligations contained in Sections (a) to (c) shall not apply to any ConfidentialInformation which:          (i) is at the date of this Agreement or at any time after the date of this Agreement comesinto the public domain other than through breach of this Agreement by the Receiving Party or anyRecipient;          (ii) is disclosed to professional advisers (including legal advisers) and consultants of theDisclosing Party whose duties in relation to the Disclosing Party or under this Agreementnecessarily require the disclosure;          (iii) can be shown by the Receiving Party, to the reasonable satisfaction of the DisclosingParty, to have been known to the Receiving Party prior to it being disclosed by the DisclosingParty to the Receiving Party;          (iv) subsequently comes lawfully into the possession of the Receiving Party from a thirdparty; or          (v) is disclosed in connection with the Listing or in connection with a possible sale to athird party and the recipient agrees to be bound by substantially the same terms or is disclosed byBuyer 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 ofa confidential nature relating to any of the Company, its Subsidiaries or a Party or its respectiveAffiliates disclosed (whether in writing, verbally or by any other means and whether directly orindirectly) by one Shareholder (the “**Disclosing Party**”) to the other Shareholder (the “**ReceivingParty**”) whether before or after the date of this Agreement.          11.3. Notices. 
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          Any notice given under the terms of this Shareholders’ Agreement shall be in writing inEnglish and shall be given by personal delivery to the other Parties by facsimile or by depositingsuch notice in the mail, registered or certified, postage prepaid and return receipt requested, asfollows:**If to Inure:****Inure Enterprises Limited**Registered office: