Document:

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                                                                   EXHIBIT 10.33

                                                                  EXECUTION COPY

                              EMPLOYMENT AGREEMENT

      EMPLOYMENT AGREEMENT (this "AGREEMENT"), dated September 12, 2000, by and
between Khanty Mansiysk Oil Corporation, a Delaware corporation (the "COMPANY"),
and Ms. Gail Coleman (the "EXECUTIVE").

      WHEREAS, in recognition of the Executive's experience and abilities, the
Company desires to assure itself of the employment of the Executive in
accordance with the terms and conditions provided herein; and

      WHEREAS, the Executive wishes to perform services for the Company in
accordance with the terms and conditions provided herein.

      NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:

1.    EMPLOYMENT. The Company hereby agrees to employ the Executive, and the
      Executive hereby agrees to perform services for the Company, on the terms
      and conditions set forth herein.

2.    TERM. This Agreement is for the two year period (the "TERM") commencing on
      May 22, 2000 (the "COMMENCEMENT DATE"), and terminating on May 21, 2002 or
      upon the Executive's earlier death, disability or other termination of
      employment pursuant to Section 7 hereof; PROVIDED, HOWEVER, that on May
      22, 2002, and on each anniversary thereafter, the Term shall automatically
      be extended for one additional year unless, not later than 90 days prior
      to such dates, either party hereto shall have notified the other party
      hereto in writing that such extension shall not take effect. This
      Agreement shall be deemed to have been effective as of the Commencement
      Date.

3.    POSITION. During the Term, the Executive shall hold the title of Executive
      Vice President and Chief Financial Officer.

4.    DUTIES. Subject to the direction and control of the Chief Executive
      Officer of the Company (the "CEO"), the Executive shall render services
      during the Term to the best of her abilities in supervising, conducting
      and being primarily responsible for the financial affairs of the Company,
      and performing such other duties as may be requested by the CEO from time
      to time. During the Term, the Executive shall devote all of her working
      time to such employment, shall devote her best efforts to advance the
      interests of the Company and shall not engage in any other business
      activities, as an employee, director, consultant or in any other capacity,
      whether or not she receives any compensation therefore, without the prior
      written consent of the CEO. It shall not be a violation of this Agreement
      for the Executive to serve on civic or charitable boards or committees, or
      on those corporate boards or committees on which the Executive is serving
      as of the Commencement Date (provided that each shall have been disclosed
      by the Executive to the Company in writing), provided that such activities
      do not materially interfere with the performance of the Executive's duties
      hereunder.

5.    PLACE OF PERFORMANCE. The Executive shall perform her duties and conduct
      her business at the offices of the Company in New York City; PROVIDED,
      HOWEVER, that the Executive may, from time to time, be required to perform
      her duties and conduct her business at other locations to the extent
      reasonable and necessary in connection with the business of the Company.

6.    COMPENSATION AND RELATED MATTERS.

      (a)   ANNUAL BASE SALARY. The Company shall pay to the Executive an annual
            base salary (the "BASE SALARY") of $180,000 or such higher salary as
            may from time to time be determined by the Company, such salary to
            be paid in conformity with the Company's payroll policies (which
            policy

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            shall provide for payment of such annual base salary in no fewer
            than 12 equal monthly installments).

      (b)   BONUS AND INCENTIVE PLANS. During the Term, the Executive shall be
            eligible to participate in stock option, bonus, economic incentive
            and other compensation plans, programs and arrangements that are
            available to other employees of the Company (the "INCENTIVE PLANS").
            The Executive shall be provided benefits under the Incentive Plans
            which, as determined by the Board of Directors of the Company or the
            Compensation Committee thereof (the "BOARD") in its sole discretion,
            acting in good faith, are reasonable after considering the status
            and responsibilities of the Executive. Any awards granted to the
            Executive under the Incentive Plans shall be evidenced by agreements
            containing terms and conditions established by the Board in its sole
            discretion.

      (c)   PENSION AND WELFARE BENEFITS. During the Term, the Executive shall
            be eligible to participate in the pension, retirement and health and
            welfare plans ("BENEFIT PLANS") provided to other employees of the
            Company. The Executive shall be provided benefits under the Benefit
            Plans, which, as determined by the Board in its sole discretion,
            acting in good faith, are reasonable after considering the status
            and responsibilities of the Executive. Without limiting the
            generality of the foregoing, the Executive shall be entitled to
            receive a level of benefits under the Benefit Plans no less
            favorable in the aggregate than those described on Annex A hereto.

      (d)   BUSINESS EXPENSES. The Executive shall be reimbursed for all
            ordinary and necessary business expenses incurred by the Executive
            in connection with her employment upon submission by the Executive
            and approval by the Company of receipts and other documentation in
            accordance with the Company's normal reimbursement procedures.

      (e)   INDEMNIFICATION. During the Term, the Company will, to the extent
            permitted by applicable law, indemnify the Executive against any
            claims arising in connection with the Executive's employment with
            the Company. Notwithstanding the foregoing, the Company shall not
            have any obligation to the Executive under this section for any acts
            of the Executive that constituted malfeasance, a knowing and willful
            violation of applicable law, or were otherwise outside the scope of
            the Executive's employment hereunder.

      (f)   D&O INSURANCE. The Company will maintain for the benefit of the
            Executive Directors and Officers insurance on a basis no less
            favorable than that provided in respect of other senior executives
            of the Company.

7.    TERMINATION. The Executive's employment hereunder may be terminated under
      the following circumstances:

      (a)   DEATH. The Executive's employment hereunder shall terminate upon the
            Executive's death.

      (b)   DISABILITY. If, as a result of the Executive's incapacity due to
            physical or mental illness (as certified in writing by a physician
            mutually satisfactory to the Executive and the Company), the
            Executive shall have been absent from her duties hereunder for the
            entire period of eight consecutive weeks, the Company may terminate
            the Executive's employment hereunder for "DISABILITY."

      (c)   CAUSE. The Company may terminate the Executive's employment
            hereunder for "CAUSE". For purposes of this Agreement, the Company
            shall have "CAUSE" to terminate the Executive's employment hereunder
            (i) upon the Executive's conviction for the commission of an act or
            acts constituting a felony, or (ii) upon the executive's willful and
            continued failure to substantially perform her duties hereunder
            (other than any such failure resulting from the Executive's
            incapacity due to physical or mental illness), after written notice
            has been delivered to the Executive by the Company, which notice
            specifically identifies the manner in which the Executive has not
            substantially

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            performed her duties, and the Executive's failure to substantially
            perform her duties is not cured within ten business days after
            notice of such failure has been given to the Executive.

      (d)   TERMINATION NOT FOR CAUSE; VOLUNTARY TERMINATION. The Company may
            terminate the Executive's employment for any reason at any time. The
            Executive may terminate her employment hereunder at any time upon 60
            days' notice.

      (e)   TERMINATION BY THE EXECUTIVE. The Executive may terminate her
            employment hereunder for "GOOD REASON". "GOOD REASON" for
            termination by the Executive of the Executive's employment shall
            mean the occurrence (without the Executive's consent) of any one of
            the following acts by the Company, or failures by the Company to
            act: (i) a material failure to comply with its obligations under
            Section 6 of this Agreement; (ii) a substantial and continued
            diminution in the nature or status of the Executive's
            responsibilities, duties, offices, or titles; or (iii) the
            relocation of the Executive's principal place of employment to a
            location more than 25 miles from the Company's offices in New York
            City.

      (f)   NOTICE OF TERMINATION. Any termination of the Executive's employment
            by the Company or by the Executive (other than termination under
            Section 7(a) hereof) shall be communicated by written notice of
            termination to the other party hereto in accordance with Section 13
            hereof.

      (g)   DATE OF TERMINATION. "DATE OF TERMINATION" shall mean (i) if the
            Executive's employment is terminated by her death, the date of her
            death and (ii) if the Executive's employment is terminated pursuant
            to Section 7(b), (c) (d) or (e) hereof, the date specified in the
            notice of termination.

8.    COMPENSATION UPON TERMINATION OR DURING DISABILITY.

      (a)   DISABILITY OR DEATH. During any period in which the Executive fails
            to perform her duties hereunder as a result of Disability, the
            Executive shall continue to receive her full Base Salary, as well as
            other applicable employee benefits, until her employment is
            terminated pursuant to Section 7(b) hereof. In the event the
            Executive's employment is terminated pursuant to Section 7(a) or
            7(b) hereof, then, as soon as practicable thereafter, the Company
            shall pay the Executive or the Executive's Beneficiary (as defined
            in Section 12(b) hereof), as the case may be, (i) all unpaid
            amounts, if any, to which the Executive was entitled as of the Date
            of Termination under Section 6(a) hereof and (ii) all unpaid amounts
            to which the Executive was then entitled under the Incentive Plans,
            the Benefit Plans and any other unpaid employee benefits,
            perquisites, vacation pay or other reimbursements (the amounts set
            forth in clauses (i) and (ii) above being hereinafter referred to as
            the "ACCRUED OBLIGATIONS"). In the event the Executive's employment
            is terminated pursuant to Section 7(b) hereof, then the Company also
            shall pay premiums for COBRA benefits on behalf of the Executive for
            a period of six months following the Date of Termination.

      (b)   TERMINATION FOR CAUSE; VOLUNTARY TERMINATION WITHOUT GOOD REASON. If
            the Executive's employment is terminated (i) by the Company for
            Cause or (ii) by the Executive other than for Good Reason, then the
            Company shall pay all unpaid amounts, if any, to which the Executive
            was entitled as of the Date of Termination under Section 6(a) hereof
            to the Executive, within thirty (30) days after the Date of
            Termination, and the Company shall have no further obligations to
            the Executive under this Agreement.

      (c)   TERMINATION WITHOUT CAUSE: TERMINATION FOR GOOD REASON.

            If (i) the Company shall terminate the Executive's employment for
            any reason other than for Disability or for Cause, or (ii) the
            Executive shall terminate her employment for Good Reason, then the
            Company shall pay to the Executive, as the Executive's sole and
            exclusive remedy hereunder, within thirty (30) days after the Date
            of Termination:

            (1)   the Accrued Obligations;

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            (2)   premiums for COBRA benefits on behalf of the Executive for a
                  period of six months following the Date of Termination; and
            (3)   a severance payment, the amount of which shall be determined
                  in accordance with the terms set forth on Annex A hereto.

9.    SPECIAL CHANGE IN CONTROL PROVISION.

      (a)   Notwithstanding any other provisions of this Agreement, in the event
            that any payment or benefit received or to be received by the
            Executive in connection with a Change in Control (as defined in the
            Khanty Mansiysk Oil Corporation 2000 Stock Plan (a "CHANGE IN
            CONTROL")) or the termination of the Executive's employment (whether
            pursuant to the terms of this Agreement or any other plan,
            arrangement or agreement with the Company, any Person (as defined in
            the Stock Plan (a "PERSON") whose actions result in a Change in
            Control or any Person affiliated with the Company or such Person)
            (all such payments and benefits, the "TOTAL PAYMENTS") would be
            subject (in whole or part), to the excise tax (the "EXCISE TAX")
            imposed under section 4999 of the Internal Revenue Code of 1986, as
            amended (the "CODE"), then, after taking into account any reduction
            in the Total Payments provided by reason of section 280G of the Code
            in such other plan, arrangement or agreement, the cash payments
            under this Agreement shall first be reduced, and the non-cash
            payments under this Agreement shall thereafter be reduced, to the
            extent necessary so that no portion of the Total Payments is subject
            to the Excise Tax but only if (I) the net amount of such Total
            Payments, as so reduced (and after subtracting the net amount of
            federal, state and local income taxes on such reduced Total
            Payments) is greater than or equal to (II) the net amount of such
            Total Payments without such reduction (but after subtracting the net
            amount of federal, state and local income taxes on such Total
            Payments and the amount of Excise Tax to which the Executive would
            be subject in respect of such unreduced Total Payments); provided
            that the Executive may elect to have the non-cash payments under
            this Agreement reduced (or eliminated) prior to any reduction of the
            cash payments under this Agreement.

      (b)   For purposes of determining whether and the extent to which the
            Total Payments will be subject to the Excise Tax, (i) no portion of
            the Total Payments the receipt or enjoyment of which the Executive
            shall have waived at such time and in such manner as not to
            constitute a "payment" within the meaning of section 280G(b) of the
            Code shall be taken into account, (ii) no portion of the Total
            Payments shall be taken into account which, in the opinion of tax
            counsel ("TAX COUNSEL") reasonably acceptable to the Executive and
            selected by the accounting firm (the "AUDITOR") which was,
            immediately prior to the Change in Control, the Company's
            independent auditor, does not constitute a "parachute payment"
            within the meaning of section 280G(b)(2) of the Code (including by
            reason of section 280G(b)(4)(A) of the Code) and, in calculating the
            Excise Tax, no portion of such Total Payments shall be taken into
            account which, in the opinion of Tax Counsel, constitutes reasonable
            compensation for services actually rendered, within the meaning of
            section 280G(b)(4)(B) of the Code, in excess of the Base Amount
            (within the meaning of section 280G(b)(3) of the Code) allocable to
            such reasonable compensation, and (iii) the value of any non-cash
            benefit or any deferred payment or benefit included in the Total
            Payments shall be determined by the Auditor in accordance with the
            principles of sections 280G(d)(3) and (4) of the Code.

10.   NON-DISCLOSURE; CONFIDENTIALITY. The parties hereto agree, recognize and
      acknowledge that during the Term the Executive will obtain knowledge of
      confidential information regarding the business and affairs of the
      Company. It is therefore agreed that the Executive shall respect and
      protect the confidentiality of all confidential information pertaining to
      the Company, not disclose in any fashion such confidential information to
      any person at any time during the Term unless doing so is reasonably
      required in the course of the Executive's employment hereunder or required
      by applicable law, rules, regulations or court, governmental or regulatory
      authority order or decree.

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11.   COVENANT NOT TO COMPETE.

      (a)   The Executive hereby agrees that in the event the Executive's
            employment with the Company is terminated (1) by the Company for
            Cause or (2) by the Executive other than for Good Reason, then for a
            period beginning on the date of such termination and ending on the
            second anniversary of the date of such termination (the "RESTRICTED
            PERIOD"), the Executive shall not, directly or indirectly, whether
            acting individually or through any person, firm, corporation,
            business or any other entity:

            (i)   engage in, or have any interest in any person, firm,
                  corporation, business or other entity (as an officer,
                  director, employee, agent, stockholder or other security
                  holder, creditor consultant or otherwise) that engages in any
                  business activity anywhere within the Russian Federation at
                  any time during the Restricted Period, which business activity
                  is the same as, similar to or competitive with the Company as
                  the same may be conducted or planned to be conducted from time
                  to time; provided, however, that the provisions of this clause
                  (i) shall not preclude the Executive from (x) being employed
                  during the Restricted Period as an officer or employee by any
                  person, firm, corporation, business or other entity that
                  engages in a business activity conducted or planned to be
                  conducted within the Russian Federation so long as the
                  Executive, at all times during the Restricted Period, is not
                  engaged or otherwise associated or active in such business
                  activity; or (y) holding an equity investment which represents
                  less than 5% ownership in a publicly registered company as
                  long as the investment is passive;

            (ii)  interfere with any contractual relationship of the Company
                  that may exist from time to time including, but not limited
                  to, any contractual relationship with any director, officer,
                  employee, or sales agent, or supplier of the Company; or

            (iii) solicit, induce or influence, or seek to induce or influence,
                  any person who currently is, or from time to time may be,
                  engaged or employed by the Company as an officer, director,
                  employee, agent or independent contractor, to terminate his or
                  her employment or engagement by the Company.

      (b)   The Executive acknowledges that the non-competition provisions
            contained in this Agreement are reasonable and necessary, in view of
            the nature of the Company and her knowledge thereof, in order to
            protect the legitimate interests of the Company.

      (c)   The Executive acknowledges that the services to be rendered by her
            hereunder are of a character giving them unique value, the loss of
            which cannot be adequately compensated for in damages, and in the
            event of a breach of this Agreement by the Executive, the Company
            shall be entitled to seek equitable relief by way of injunction or
            any other equitable remedies.

      (d)   The Executive and the Company agree that the foregoing covenants are
            reasonable and further agree that if in the opinion of any court of
            competent jurisdiction such restraint is not reasonable in any
            respect, such court shall have the right, power and authority to
            excise or modify such provision or provisions that to the court
            shall appear not reasonable and to enforce the remainder of the
            covenant as so amended.

12.   SUCCESSORS; BINDING AGREEMENT.

      (a)   The Company shall require any successor (whether direct or indirect,
            by asset purchase, stock purchase, merger, consolidation or
            otherwise) to all or substantially all of the business and/or assets
            of the Company, by agreement in form and substance reasonably
            satisfactory to the Executive, to expressly assume and agree to
            perform this Agreement in the same manner and to the same extent
            that the Company would be required to perform it if no such
            succession had taken place. As used in this Agreement, "COMPANY"
            shall mean the Company as hereinbefore defined

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            and any successor to its business and/or assets as aforesaid or that
            otherwise becomes bound by all the terms and provisions of this
            Agreement by operation of law.

      (b)   This Agreement and all rights of the Executive hereunder shall inure
            to the benefit of and be enforceable by the Executive's personal or
            legal representatives, executors, administrators, successors, heirs,
            distributees, devisees and legatees. If the Executive should die
            while any amounts would still be payable to her hereunder if she had
            continued to live, all such amounts, unless otherwise provided
            herein, shall be paid in accordance with the terms of this Agreement
            to the Executive's devisee, legatee, or other designee or, if there
            be no such designee, to the Executive's estate (the "BENEFICIARY").

13.   NOTICE. For the purposes of this Agreement, notices, demands and all other
      communications provided for in this Agreement shall be in writing and
      shall be deemed to have been duly given when delivered or (unless
      otherwise specified) mailed by United States certified or registered mail,
      return receipt requested, postage prepaid, addressed as follows:

      If to the Company:

                  Mr. John B. Fitzgibbons
                  Khanty Mansiysk Oil Corporation
                  152 West 57th Street, 29th Floor
                  New York, NY 10019

      If to the Executive:

                  Ms. Gail Coleman
                  300 Mercer Street #26M
                  New York, NY   10003-6741

      or to such other address as either party may have furnished to the other
      in writing in accordance herewith, except that notices of change of
      address shall be effective only upon receipt.

14.   MISCELLANEOUS. No provision of this Agreement may be modified, waived or
      discharged unless such waiver, modification or discharge is agreed to in
      writing signed by the Executive and the Chief Executive Officer of the
      Company. No waiver by either party hereto at any time of any breach by the
      other party hereto of, or compliance with, any condition or provision of
      this Agreement to be performed by such other party shall be deemed a
      waiver of similar or dissimilar provisions or conditions at the same or at
      any prior or subsequent time. No agreements or representations, oral or
      otherwise, express or implied, with respect to the subject matter hereof
      have been made by either party, which are not set forth expressly in this
      agreement.

15.   WITHHOLDING; PAYMENT. Notwithstanding any other provision of this
      Agreement, the Company may withhold from amounts payable under this
      Agreement (i) all federal, state, local, and foreign taxes that are
      required to be withheld by applicable laws or regulations and (ii)
      standard Company deductions. All cash amounts required to be paid
      hereunder shall be paid in United States dollars.

16.   GOVERNING LAW; ARBITRATION. The validity, interpretation, construction and
      performance of this Agreement shall be governed by the laws of the state
      of New York without regard to its conflicts of law principles. Any
      dispute, controversy or claim arising out of or relating to this
      Agreement, including the breach, validity or termination thereof, shall be
      finally settled by binding arbitration in New York, New York by one
      arbitrator in accordance with the Commercial Arbitration Rules of the
      American Arbitration Association then in effect. Judgment upon the award
      of the arbitrator may be entered in any court of competent jurisdiction.
      The arbitration shall be governed by the United States Arbitration Act, 9
      U.S.C.ss.1-16.

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

18.   COUNTERPARTS. This Agreement may be executed in one or more counterparts,
      each of which shall be deemed to be an original but all of which together
      will constitute one and the same instrument.

19.   ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of the
      parties hereto in respect of the subject matter contained herein and
      supersedes any and all other prior agreements, promises, covenants,
      arrangements, communications, representations or warranties, whether oral
      or written, by any officer, employee or representative of any party
      hereto; and any prior agreement of the parties hereto in respect of the
      subject matter contained herein is hereby terminated and cancelled.

20.   LEGAL FEES. The Company shall reimburse to the Executive reasonable legal
      fees and reasonable professional expenses incurred directly on behalf of
      the Executive (i) in disputing in good faith any issue hereunder relating
      to the termination of the Executive's employment or (ii) in seeking in
      good faith to obtain or enforce any benefit or right provided by this
      Agreement or (iii) in connection with any tax audit or proceeding to the
      extent attributable to the application of Section 4999 of the Code to any
      payment or benefit provided hereunder; provided, however, that such
      reimbursement shall be subject to a maximum of $5,000 unless it arises in
      an event described in clauses (i) or (ii) above and the Executive prevails
      in the matter at issue, in which case the maximum reimbursement shall be
      $200,000. Such payments shall be made within ten (10) business days after
      delivery of the Executive's written request(s) for payment accompanied by
      such evidence of fees and expenses incurred as the Company reasonably may
      require.

21.   NO MITIGATION. The Company agrees that, if the Executive's employment with
      the Company terminates during the Term, the Executive is not required to
      seek other employment or to attempt in any way to reduce any amounts
      payable to the Executive by the Company pursuant to this Agreement.
      Further, the amount of any payment or benefit provided for in this
      Agreement shall not be reduced by any compensation earned by the Executive
      as the result of employment by another employer or by retirement benefits.
      The amount of any payment or benefit provided for in this Agreement may,
      however, be reduced by the present value of any amount owed by the
      Executive to the Company or its affiliates, as determined by the Company
      in its sole discretion.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first above written.

                              KHANTY MANSIYSK OIL CORPORATION

                              By:     /s/ John B. Fitzgibbons
                                      -----------------------
                              Name:   Mr. John B. Fitzgibbons
                              Title:  President and Chief Executive Officer

                              EXECUTIVE

                              By:     /s/ Gail Coleman
                                      ----------------
                              Name:   Ms. Gail Coleman

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ANNEX A TO MS. COLEMAN'S EMPLOYMENT AGREEMENT

Pension and Welfare Benefits:

<TABLE>
<S>                                             <C>
         Vacation Time                           4 weeks annually

         Pension Benefits                        401(k) with applicable matching contributions

         Health Insurance                        100% of the premium for the Executive

         Life Insurance                          2x base salary

         Travel/Accident Insurance               $ 1 million

         Prepaid Bonus                           $ 20,000 at signing
</TABLE>

Severance Payment:

If the Executive terminates her employment for Good Reason or if the Company
terminates the employment of the Executive for any reason other than for
Disability or for Cause, the Company shall pay to the Executive, in a cash lump
sum, one and one half (1 1/2) times her Base Salary; PROVIDED, HOWEVER, that the
payment shall be two (2) times her Base Salary if such termination of employment
occurs within eighteen (18) months following a Change in Control.<PAGE>
                                                            Exhibit 10.34

APPROVED BY THE BOARD OF DIRECTORS
OF THE COMPANY ON OCTOBER 25, 2000

                         KHANTY MANSIYSK OIL CORPORATION
                              AMENDED AND RESTATED
                             1996 STOCK OPTION PLAN

 1.      PURPOSE

         The purpose of this Amended and Restated 1996 Stock Option Plan (the
"Plan") is to advance the interests of Khanty Mansiysk Oil Corporation (the
"Company") by enhancing the ability of the Company and its subsidiaries to
attract and retain directors, employees, consultants or advisers who are in a
position to make significant contributions to the success of the Company, to
reward them for their contributions and to encourage them to take into account
the long-term interests of the Company.

         The Plan provides for the award of options to purchase shares of the
Company's common stock ("Stock") and for the award of stock appreciation rights
("SARs") based on Stock. Options granted pursuant to the Plan may be incentive
stock options as defined in section 422 of the Internal Revenue Code of 1986 (as
from time to time amended, the "Code") (any option that is intended to qualify
as an incentive stock option being referred to herein as an "incentive option"),
or options that are not incentive options, or both. Options granted pursuant to
the Plan shall be presumed to be non-incentive options unless expressly
designated as incentive options.

2.       ELIGIBILITY FOR AWARDS

         Persons eligible to receive awards under the Plan shall be all
directors, including directors who are not employees, of the Company, all
executive officers, other employees, consultants and advisers of the Company and
its subsidiaries who, in the opinion of the Board, are in a position to make a
significant contribution to the success of the Company and its subsidiaries, and
any trust in which any such officer, director or employee has more than fifty
percent of the beneficial interest. A subsidiary for purposes of the Plan shall
be a corporation in which the Company owns, directly or indirectly, stock
possessing 50% or more of the total combined voting power of all classes of
stock. Persons selected for awards under the Plan are referred to herein as
"participants"; provided, that in the case of a trust, references in the Plan to
the lifetime and death of the participant shall be deemed to refer to the
beneficiary of the trust.

3.       ADMINISTRATION

         The Plan shall be administered by the Board of Directors (the "Board")
of the Company. The Board shall have authority, not inconsistent with the
express provisions of the Plan, (a) to grant awards consisting of options or
SARs, or both, to such participants as the Board may select; (b) to determine
the time or times when awards shall be granted and the number of shares of Stock
subject to each award; (c) to determine which options are, and which options are
not, incentive options; (d) to determine the terms and conditions of each award;
(e) to prescribe the form or forms of any instruments evidencing awards and any
other instruments required under the Plan and to change such forms from time to
time; (f) to adopt, amend and rescind rules and regulations for the
administration of the Plan; and (g) to interpret the Plan and to decide any
questions and settle all controversies and disputes that may arise in connection
with the Plan. Such determinations of the Board shall be conclusive and shall
bind all parties. Subject to Section 9 the Board shall also have the authority,
both generally and in particular instances, to waive compliance by a participant
with any obligation to be performed by the participant under an award, to waive
any condition or provision of an award, and to amend or cancel any award (and if
an award is canceled, to grant a new award on such terms as the Board shall
specify) except that the Board may not take any action with respect to an
outstanding award that would adversely affect the rights of the participant
under such award without such participant's consent. Nothing in the preceding
sentence shall be construed as limiting the power of the Board to make
adjustments required by Section 5(c).

<PAGE>

         The Board may, in its discretion, delegate some or all of its powers
with respect to the Plan to the Compensation Committee (the "Committee"), in
which event all references in this Plan (as appropriate) to the Board shall be
deemed to refer to the Committee. The Committee shall act in accordance with the
Regulations of the Committee, as approved by the Board and as such Regulations
may be amended from time to time.

4.       EFFECTIVE DATE AND TERM OF PLAN

         The Plan shall become effective on the date on which it is approved by
the Board of Directors of the Company. Grants of awards under the Plan made
prior to that date, but within the authorized number of shares subject to the
Plan, shall be effective and are expressly made subject to the Plan as of the
date of the approval of the Plan by the Board of Directors.

         No awards shall be granted under the Plan after the completion of ten
years from the date on which the Plan was adopted by the Board, but awards
previously granted may extend beyond that date.

5.       SHARES SUBJECT TO THE PLAN

         (a) NUMBER OF SHARES. Subject to adjustment as provided in Section
5(c), the aggregate number of shares of Stock that may be delivered upon the
exercise of awards granted under the Plan shall be eighty thousand (80,000). If
any award granted under the Plan terminates without having been exercised in
full, or upon exercise is satisfied other than by delivery of Stock, the number
of shares of Stock as to which such award was not exercised shall be available
for future grants within the limits set forth in this Section 5(a).

         The maximum number of shares for which options may be granted to any
individual over the life of the Plan shall be eighteen thousand (18,000). The
maximum number of shares subject to SARs granted to any individual over the life
of the Plan shall likewise be eighteen thousand (18,000). The per-individual
limitations described in this paragraph shall be construed and applied
consistent with the rules and regulations under Section 1 62(m) of the Code.

         (b) SHARES TO BE DELIVERED. Shares delivered under the Plan shall be
authorized but un-issued Stock or, if the Board so decides in its sole
discretion, previously issued Stock acquired by the Company and held in its
treasury. No fractional shares of Stock shall be delivered under the Plan.

         (c) CHANGES IN STOCK. In the event of a stock dividend, stock split or
combination of shares, re-capitalization or other change in the Company's
capital stock, the number and kind of shares of Stock subject to awards then
outstanding or subsequently granted under the Plan, the exercise price of such
awards, the maximum number of shares of Stock that may be delivered under the
Plan, and other relevant provisions shall be appropriately adjusted by the
Board, whose determination shall be binding on all persons.

         The Board may also adjust the number of shares subject to outstanding
awards and the exercise price and the terms of outstanding awards to take into
consideration material changes in accounting practices or principles,
extraordinary dividends, consolidations or mergers, acquisitions or dispositions
of stock or property or any other event if its is determined by the Board that
such adjustment is appropriate to avoid distortion in the operation of the Plan,
provided that no such adjustment shall be made in the case of an incentive
option, without the consent of the participant, if it would constitute a
modification, extension or renewal of the option within the meaning of section
424(h) of the Code.

6.       TERMS AND CONDITIONS OF OPTIONS AND SARS
         ----------------------------------------

         Except as otherwise provided in any applicable award agreement, the
following terms and conditions shall apply to options and SARs granted pursuant
to the Plan:

         (a) EXERCISE PRICE OF OPTIONS AND SARS. The exercise price of each
option or SAR shall be determined by the Board but in the case of an
incentive option shall not be less than 100% (110%, in the case of an
incentive option granted to a ten-percent shareholder) of the fair market
value of the Stock at the time the option is granted; nor shall the exercise
price be less, in the case of an original issue of authorized stock, than par
value. For this purpose, "fair market value" in the case of incentive options
shall have the same meaning as it does in the provisions of the Code and the
regulations thereunder applicable

                                       2
<PAGE>

to incentive options; and "ten-percent shareholder" shall mean any
participant who at the time of grant owns directly, or by reason of the
attribution rules set forth in section 424(d) of the Code, is deemed to own
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company or of any of its parent or subsidiary corporations.

         (b) DURATION OF OPTIONS AND SARS. Options and SARs shall be exercisable
during such period or periods as the Board may specify. The latest date on which
an option or SAR may be exercised (the "Final Exercise Date") shall be the date
that is ten years (five years, in the case of an incentive option granted to a
"ten-percent shareholder" as defined in (a) above) from the date the option or
SAR was granted or such earlier date as the Board may specify at the time the
option or SAR is granted.

         (c)      EXERCISE OF OPTIONS AND SARS.

                  (1)      Options and SARs shall become exercisable at such
                           time or times and upon such conditions as the Board
                           shall specify. In the case of an option or an SAR not
                           immediately exercisable in full, the Board may at any
                           time accelerate the time at which all or any part of
                           the option or SAR may be exercised.

                  (2)      Options and SARs may be exercised only in writing.
                           Written notice of exercise must be signed by the
                           proper person and furnished to the Company, together
                           with (i) such documents as the Board may require and
                           (ii) in the case of options, payment in full as
                           specified below in Section 6(d) for the number of
                           shares for which the option is exercised.

                  (3)      The delivery of Stock upon the exercise of an option
                           or an SAR shall be subject to compliance with (i)
                           applicable federal and state laws and regulations,
                           (ii) if the outstanding Stock is at the time listed
                           on any stock exchange, the listing requirements of
                           such exchange, and (iii) Company counsel's approval
                           of all other legal matters in connection with the
                           issuance and delivery of such Stock. If the sale of
                           Stock has not been registered under the Securities
                           Act of 1933, as amended, the Company may require, as
                           a condition to exercise of the option or SAR, such
                           representations or agreements as counsel for the
                           Company may consider appropriate to avoid violation
                           of such Act and may require that the certificates
                           evidencing such Stock bear an appropriate legend
                           restricting transfer. Without limiting the generality
                           of the foregoing, the Board may require that a
                           participant enter into a Shareholders Agreement,
                           substantially in the form attached hereto as Exhibit
                           A, with respect to any shares of Stock acquired upon
                           exercise of an option hereunder.

                  (4)      In the case of an SAR or an option that is not an
                           incentive option, the Board shall have the right to
                           require that the participant exercising the option or
                           SAR remit to the Company an amount sufficient to
                           satisfy any federal, state, or local withholding tax
                           requirements (or make other arrangements satisfactory
                           to the Company with regard to such taxes) prior to
                           the delivery of any Stock or cash pursuant to the
                           exercise of the option or SAR. If permitted by the
                           Board, either at the time of the grant of the option
                           or SAR or the time of exercise, the participant may
                           elect, at such time and in such manner as the Board
                           may prescribe, to satisfy such withholding obligation
                           by (i) delivering to the Company Stock (which in the
                           case of Stock acquired from the Company shall have
                           been owned by the participant for at least six months
                           prior to the delivery date) having a fair market
                           value equal to such withholding obligation, or (ii)
                           requesting that the Company withhold from the shares
                           of Stock to be delivered upon the exercise a number
                           of shares of Stock having a fair market value equal
                           to such withholding obligation.

                           In the case of an incentive option, if at the time
                           the option is exercised the Board determines that
                           under applicable law and regulations the Company
                           could be liable for the withholding of any federal or
                           state tax with respect to a disposition of the Stock
                           received upon exercise, the Board may require as a
                           condition of exercise that the participant exercising
                           the option agree (i) to inform the Company promptly
                           of any disposition (within the meaning of section
                           424(c) of the Code and the regulations thereunder) of
                           Stock received upon exercise, and (ii) to give such
                           security as the Board deems adequate to meet the
                           potential liability of the Company for the
                           withholding of tax, and to augment such security from
                           time to time in any amount reasonably deemed
                           necessary by the Board to preserve the adequacy of
                           such security.

                                       3
<PAGE>

                  (5)      If an option or an SAR is exercised by the executor
                           or administrator of a deceased participant, or by the
                           person or persons to whom the option has been
                           transferred by the participant's will or the
                           applicable laws of descent and distribution, the
                           Company shall be under no obligation to deliver Stock
                           pursuant to such exercise until the Company is
                           satisfied as to the authority of the person or
                           persons exercising the option or SAR.

               (d)         PAYMENT FOR AND DELIVERY OF STOCK. Stock purchased
upon exercise of an option under the Plan shall be paid for as follows:

         (i)      in cash or by personal check, certified check, bank draft or
                  money order payable to the order of the Company; or

         (ii)     if so permitted by the Board (which, in the case of an
                  incentive option, shall specify the method of payment at the
                  time of grant), (A) through the delivery of shares of Stock
                  (which, in the case of Stock acquired from the Company, shall
                  have been held for at least six months prior to delivery)
                  having a fair market value on the last business day preceding
                  the date of exercise equal to the purchase price or (B) by
                  delivery of an unconditional and irrevocable undertaking by a
                  broker to deliver promptly to the Company sufficient funds to
                  pay the exercise price or (C) by requesting that the Company
                  withhold from the shares of Stock to be delivered upon the
                  exercise a number of shares of Stock having a fair market
                  value on the last business day preceding the date of exercise
                  equal to the purchase price or (D) by any combination of the
                  permissible forms of payment; PROVIDED, that if the Stock
                  delivered upon exercise of the option is an original issue of
                  authorized Stock, at least so much of the exercise price as
                  represents the par value of such Stock shall be paid other
                  than by a personal check of the person exercising the option.

         (e) STOCK APPRECIATION RIGHTS. The Board in its discretion may grant
SARs either in tandem with or inder pendent of options awarded under the Plan.
Except as hereinafter provided, each SAR shall entitle the participant to
receive upon exercise, with respect to each share of Stock to which the SAR
relates, the excess of (i) the share's value on the date of exercise over (ii)
the share's fair market value on the date the SAR was granted. For purposes of
clause (i), "value" shall mean fair market value; PROVIDED, that the Board may
adjust such value to take into account dividends on the Stock and may also grant
SARs that provide, in such limited circumstances following a change in control
of the Company (as determined by the Board) as the Board may specify, that
"value" for purposes of clause (i) is to be determined by reference to an
average value for the Stock during a period immediately preceding the change in
control, as determined by the Board. The amount payable to a participant upon
exercise of an SAR shall be paid either in cash or in shares of Stock, as the
Board determines. Each SAR shall be exercisable during such period or periods
and on such terms as the Board may specify. In no event, however, shall an SAR
be exercisable after the dat that is ten years from the date of grant.

         (f) RIGHTS AS SHAREHOLDER. A participant shall not have the rights of a
shareholder with regard to awards under the Plan except as to Stock actually
received by the participant under the Plan.

         (g) NONTRANSFERABILITY OF AWARDS. Except as the Board may otherwise
determine, no award may be transferred other than by will or by the laws of
descent and distribution, and during a participant's lifetime an award may be
exercised only by the participant.

         (h) DEATH. If a participant dies, each option and SAR held by the
participant immediately prior to death may be exercised, to the extent it was
exercisable immediately prior to death, by the participant's executor or
administrator or by the person or persons to whom the option or SAR is
transferred by will or the applicable laws of descent and distribution, at any
time within the one-year period (or such longer or shorter period as the Board
may determine) beginning with the date of the participant's death but in no
event beyond the Final Exercise Date. All options and SARs held by a participant
immediately prior to death that are not then exercisable shall terminate on the
date of death.

         (i) TERMINATION OF SERVICE OTHER THAN BY DEATH. If an employee's
employment with the Company and its subsidiaries terminates for any reason other
than by death, all options and SARs held by the employee (or by a trust of which
the employee is the beneficiary) that are not then exercisable shall terminate.
Options and SARs that are exercisable on the date employment terminates shall
continue to be exercisable for a period of three months (or such longer or
shorter period as the

                                       4
<PAGE>

Board may determine, but in no event beyond the Final Exercise Date) unless the
employee was discharged for cause that in the opinion of the Board casts such
discredit on the employee as to justify termination of the employee's options
and SARs. After completion of the post-termination exercise period, such options
and SAR's shall terminate to the extent not previously exercised, expired or
terminated. For purposes of this Section 6(i), employment shall not be
considered terminated (i) in the case of sick leave or other bona fide leave of
absence approved for purposes of the Plan by the Board, so long as the
employee's right to reemployment is guaranteed either by statute or by contract,
or (ii) in the case of a transfer of employment between the Company and a
subsidiary or between subsidiaries, or to the employment of a corporation (or a
parent or subsidiary corporation of such corporation) issuing or assuming an
option or SAR in a transaction to which section 424(a) of the Code applies.

         In the case of a participant who is not an employee (or a trust of
which an employee is the beneficiary), provisions relating to the exercisability
of options and SARs following termination of service shall be specified in the
award. If not so specified, all options and SARs held by such participant that
are not then exercisable shall terminate upon termination of service. Options
and SARs that are exercisable on the date the participant's service as director,
consultant or adviser terminates shall continue to be exercisable for a period
of three months (or such longer period as the Board may determine, but in no
event beyond the Final Exercise Date) unless the director, consultant or adviser
was terminated for cause that in the opinion of the Board casts such discredit
on him or her as to justify termination of his or her options and SARs. After
completion of the post-termination exercise period, such options and SARs shall
terminate to the extent not previously exercised, expired or terminated.

         (j) SUBSTITUTE AWARDS. The Board may grant awards under the Plan in
substitution for awards held by directors, employees, consultants or advisers of
another corporation who concurrently become directors, employees, consultants or
advisers of the Company or a subsidiary of the Company as the result of a merger
or consolidation of that corporation with the Company or a subsidiary of the
Company, or as the result of the acquisition by the Company or a subsidiary of
the Company of property or stock of that corporation. The Company may direct
that substitute awards be granted on such terms and conditions as the Board
considers appropriate in the circumstances.

7.       CHANGE IN CONTROL

         (a) The provisions of this Section 7 will apply to all awards granted
under the Plan unless otherwise specified by the Board in an award agreement.

         (b) Upon a Change in Control, all options and SARs shall become vested
and exercisable, and all restrictions with respect thereto shall immediately
lapse.

         (c) A "CHANGE IN CONTROL" shall be deemed to have occurred if the event
set forth in any one of the following paragraphs shall have occurred:

         (i)      any Person is or becomes the Beneficial Owner, directly or
                  indirectly, of securities of the Company (not including in the
                  securities beneficially owned by such Person any securities
                  acquired directly from the Company or its affiliates)
                  representing 30% or more of the combined voting power of the
                  Company's then outstanding securities, excluding any Person
                  who becomes such a Beneficial Owner in connection with a
                  transaction described in clause (A) of paragraph (iii) below;
                  or

         (ii)     the following individuals cease for any reason to constitute a
                  majority of the number of directors then serving: individuals
                  who, on the date hereof, constitute the Board and any new
                  director (other than a director whose initial assumption of
                  office is in connection with an actual or threatened election
                  contest, including but not limited to a consent solicitation,
                  relating to the election of directors of the Company) whose
                  appointment or election by the Board or nomination for
                  election by the Company's shareholders was approved or
                  recommended by a vote of at least two-thirds (2/3) of the
                  directors then still in office who either were directors on
                  the date hereof or whose appointment, election or nomination
                  for election was previously so approved or recommended; or

         (iii)    there is consummated a merger or consolidation of the Company
                  or any direct or indirect subsidiary of the Company with any
                  other corporation, other than (A) a merger or consolidation
                  immediately following which the directors of the Company
                  immediately prior to such merger or consolidation continue to
                  constitute at least

                                       5
<PAGE>

                  a majority of the board of directors of the Company, the
                  surviving entity or any parent thereof or (B) a merger or
                  consolidation effected to implement a re-capitalization of the
                  Company (or similar transaction) in which no Person is or
                  becomes the Beneficial Owner, directly or indirectly, of
                  securities of the Company (not including in the securities
                  Beneficially Owned by such Person any securities acquired
                  directly from the Company or its affiliates) representing 30%
                  or more of the combined voting power of the Company's then
                  outstanding securities; or

         (iv)     the shareholders of the Company approve a plan of complete
                  liquidation or dissolution of the Company or there is
                  consummated an agreement for the sale or disposition by the
                  Company of all or substantially all of the Company's assets,
                  other than a sale or disposition to a company, at least a
                  majority of the directors of which were directors of the
                  Company immediately prior to such sale or disposition.

         (d)      "BENEFICIAL OWNER" shall have the meaning set forth in Rule
                  13d-3 under the Exchange Act.

         (e) "PERSON" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (i) the Company or any of its subsidiaries,
(ii) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company.

8.       EMPLOYMENT RIGHTS

         Neither the adoption of the Plan nor the grant of awards shall confer
upon any participant any right to continue as an employee or director of, or
consultant or adviser to, the Company or any parent or subsidiary or affect in
any way the right of the Company or parent or subsidiary to terminate them at
any time. Except as specifically provided by the Board in any particular case,
the loss of existing or potential profit in awards granted under this Plan shall
not constitute an element of damages in the event of termination of the
relationship of a participant even if the termination is in violation of an
obligation of the Company to the participant by contract or otherwise.

9.       EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION

         Neither adoption of the Plan nor the grant of awards to a participant
shall affect the Company's right to make awards to such participant that are not
subject to the Plan, to issue to such participant Stock as a bonus or otherwise,
or to adopt other plans or arrangements under which Stock may be issued.

         The Board may at any time discontinue granting awards under the Plan.
With the consent of the participant, the Board may at any time cancel an
existing award in whole or in part and grant another award for such number of
shares as the Board specifies. The Board may at any time or times amend the Plan
or any outstanding award for the purpose of satisfying the requirements of
section 422 of the Code or of any changes in applicable laws or regulations or
for any other purpose that may at the time be permitted by law, or may at any
time terminate the Plan as to further grants of awards, but no such amendment or
termination shall adversely affect the rights of any participant (without the
participant's consent) under any award previously granted.

10.      GOVERNING LAW

         The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of New York without giving effect to
the conflict of laws principles thereof.

                                       6

<PAGE>

                                                                       Exhibit A

================================================================================

                             SHAREHOLDERS AGREEMENT

                                   dated as of

                                 ___________,___

                                     between

                        KHANTY MANSIYSK OIL CORPORATION

                                       and

                               ------------------

================================================================================

<PAGE>

                                TABLE OF CONTENTS
                                                                           Page
                                                                           ----
                                    ARTICLE I
                                   Definitions
SECTION 1.1 ........................................................Definitions

                                   ARTICLE II
                               Third Party Offers
SECTION 2.1 .................................................Third Party Offers

                                   ARTICLE III
                              Transfer Restrictions
SECTION 3.1 .......................................................Restrictions
SECTION 3.2 ...............................................Right of First Offer
SECTION 3.3 .............................................................Legend
SECTION 3.4 .....................................Compliance with Applicable Law
SECTION 3.5 .............................................................Effect

                                   ARTICLE IV
                               Registration Rights
SECTION 4.1 ............................................Incidental Registration
SECTION 4.2 ............................................Registration Procedures
SECTION 4.3 ...................................................Indemnification.

                                    ARTICLE V
                                Voting Covenants
SECTION 5.1 ......................................................Voting Shares

                                   ARTICLE VI
                                   Termination
SECTION 6.1 ........................................................Termination

                                   ARTICLE VII
                                  Miscellaneous
SECTION 7.1 ......................................................Effectiveness
SECTION 7.2 ............................................................Notices
SECTION 7.3 .....................................................Interpretation
SECTION 7.4 .......................................................Severability
SECTION 7.5 .......................................................Counterparts

                                       i
<PAGE>
                                                                           Page
                                                                           ----
SECTION 7.6 .....................Entire Agreement; No Third Party Beneficiaries
SECTION 7.7 .................................................Further Assurances
SECTION 7.8 ..................................Governing Law; Equitable Remedies
SECTION 7.9 ................................................Amendments; Waivers
SECTION 7.10 ........................................................Assignment

                                      ii

<PAGE>

            SHAREHOLDER AGREEMENT, dated as of_______ among Khanty Mansiysk Oil
Corporation, a Delaware corporation ("KMOC") and __________________________ (the
"Grantee").

            WHEREAS KMOC has granted to the Grantee options to purchase ____
shares of common stock of KMOC pursuant to the Amended and Restated 1996 Stock
Option Plan of KMOC, approved by the Board of Directors of KMOC on October 20,
1999; and

            WHEREAS the parties hereto wish to set forth their agreement
concerning certain matters relating to the Grantees's ownership and disposition
of any shares of common stock, no par value, of KMOC acquired by the Grantee
pursuant to its exercise of such options or by any other means subsequent to the
Effective Date (collectively, the "Shares").

            NOW, THEREFORE, in consideration of the mutual agreements and
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

                                    ARTICLE I
                                   Definitions

            SECTION I.1. Definitions. As used in this Agreement, the following
terms shall have the following meanings:

            An "affiliate" of any Person means any other Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person. For purposes of the definition
of affiliate, "control" has the meaning specified in Rule 12b-2 under the
Exchange Act as in effect on the date of this Agreement.

            "Applicable Law" shall mean, with respect to any Person, any
statute, law, regulation, ordinance, rule, judgment, rule of common law, order,
decree, award, Governmental Approval, concession, grant, franchise, license,
agreement, directive, guideline, policy, requirement, or other governmental
restriction or any similar form of decision of, or determination by, or any
interpretation or administration of any of the foregoing by, any Governmental
Authority, whether in effect as of the date hereof or thereafter and in each
case as amended, applicable to such Person or its subsidiaries or their
respective assets.

<PAGE>

            A Person shall be deemed to "Beneficially Own", to have "Beneficial
Ownership" of, or to be "Beneficially Owning" any securities (which securities
shall also be deemed "Beneficially Owned" by such Person) that such Person is
deemed to "beneficially own" within the meaning of Rule 13d-3 under the Exchange
Act as in effect on the date of this Agreement.

            "best efforts" with respect to any action subject to such a best
efforts obligation shall mean all efforts to take such action as may be taken in
a commercially reasonable maimer.

            "Change of Control" with respect to KMOC shall be deemed to have
occurred at such time as a "person" or "group" (within the meaning of Section
13(d)(3) of the Exchange Act) (i) becomes the Beneficial Owner, directly or
indirectly, of more than 50% of the Voting Securities of KMOC or (ii) otherwise
obtains control of KMOC.

            "Effective Date" means the date of this Agreement.

            "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

            "First Offer Price" has the meaning set forth in Section 3.2(a).

            "Governmental Approval" means any action, order, authorization,
consent, approval, license, lease, ruling, permit, tariff, rate, certification,
exemption, filing or registration by or with any Governmental Authority.

            "Governmental Authority" means any government or political
subdivision thereof, governmental department, commission, board, bureau, agency,
regulatory authority, instrumentality, judicial or administrative body having
jurisdiction over the matter or matters in question.

            "Grantee" has the meaning set forth in the recitals to this
Agreement.

            A "group" has the meaning set forth in Section 13(d)(3) of the
Exchange Act as in effect on the date of this Agreement.

            "Indemnified Person" has the meaning set forth in Section 4.3(a).

                                        2

<PAGE>

            "KMOC" has the meaning set forth in the recitals to this Agreement.

            "KMOC Board" means the board of directors of KMOC.

            "KMOC Common Stock" means common stock, no par value, of KMOC.

            "KMOC Voting Securities" means KMOC Common Stock and any other
issued and outstanding securities of KMOC generally entitled to vote in the
election of directors of KMOC.

            "Offered Shares" has the meaning set forth in Section 3.2(a).

            "Other KMOC Holders" means the holders of the Other KMOC Shares.

            "Other KMOC Shares" means securities of KMOC not held by a
Shareholder.

            "Permitted Transferee" means any Person who acquires Shares pursuant
to Sections 3.1(b) or 3.1(c).

            "Person" means any individual, group, corporation, firm,
partnership, joint venture, trust, business association, organization,
governmental entity or other entity.

            "Public Offering" means any offering of stock registered under the
Securities Act.

            "Purchase Agreement" has the meaning set forth in the recitals to
this Agreement.

            "Response Period" has the meaning set forth in Section 3.2(b).

            "SEC" means the Securities and Exchange Commission or any successor
governmental entity.

                                        3

<PAGE>

             "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.

             "Shares" has the meaning set forth in the recitals to this
Agreement.

             "Shareholder" means the Grantee at such time as the Grantee
Beneficially Owns Shares or any Permitted Transferee that holds Shares.

             "Third Party Offer" means a bona fide offer to enter into a
transaction by a Person other than the Grantee or any of the Grantee's
affiliates or any other Person acting on behalf of the Grantee or any of the
Grantee's respective affiliates which would result in a Change of Control of
KMOC or a transfer of all or substantially all of the assets of KMOC.

             "Transfer" has the meaning set forth in Section 3.1.

             "Transfer Notice" has the meaning set forth in Section 3.2(a).

             "Wholly Owned Subsidiary" means, with respect to any Person, as of
any date of determination, any other Person as to which such Person owns,
directly or indirectly, or otherwise controls, 100% of the voting shares or
other similar interests.

                                        4

<PAGE>

                                   ARTICLE II
                               Third Party Offers

             SECTION II.1. Third Party Offers. If, prior to the tenth
anniversary of the Effective Date, KMOC becomes the subject of a Third Party
Offer that is (a) approved by a majority of the KMOC Board and (b) supported by
the holders of a majority of the KMOC Voting Securities (i) in the event of a
Third Party Offer, the consummation of which does not require action by the
holders of the KMOC Voting Securities, that have taken a position on such
transaction, other than the Shareholders, or (ii) in the event of a Third Party
Offer, the consummation of which requires action of the holders of KMOC Voting
Securities, whether at a meeting or by written consent, that have voted in favor
of such Third Party Offer, other than the Shareholders, KMOC shall deliver a
written notice to the Grantee, briefly describing the material terms of such
Third Party Offer, and the Grantee shall, within ten business days after receipt
of such notice, either (x) offer to acquire all or substantially all of the
assets of KMOC or the Other KMOC Shares, as the case may be, on terms at least
as favorable to the Other KMOC Holders as those contemplated by such Third Party
Offer or (y) confirm in writing that it will support, and at the appropriate
time support, such Third Party Offer, including by voting and causing each of
the Shareholders to vote all Shares Beneficially Owned by such Shareholder
eligible to vote thereon in favor of such Third Party Offer or, if applicable,
tendering or selling and causing each of the Shareholders to tender or sell all
of the Shares Beneficially Owned by it to the Person making such Third Party
Offer. For purposes of (b)(i) of the foregoing sentence of this Section 2.1, in
order to determine whether a Third Party Offer is supported by other holders of
KMOC Voting Securities, KMOC may use any reasonable method, taking into account
confidentiality concerns, including engaging the services of a proxy solicitor
or similar firm. The notice referred to in the first sentence of this Section
2.1 shall be delivered promptly after the approval of the Third Party Offer by
the KMOC Board and the determination of the support by the holders of a majority
of the KMOC Voting Securities who have taken a position on such transaction or
the approval by the holders of a majority of the KMOC Voting Securities that
have voted in favor of such Third Party Offer, as the case may be.

                                        5

<PAGE>

                                   ARTICLE III
                              Transfer Restrictions

            SECTION III.1. Restrictions. Except in connection with (i) a Third
Party Offer as provided in Section 2.1 or (ii) a registered Public Offering
pursuant to Article IV, no Shareholder shall, sell, pledge, assign, grant a
participation interest in, encumber or otherwise transfer or dispose of any
Shares to any other Person, whether directly, indirectly, voluntarily,
involuntarily, by operation of law, pursuant to judicial process or otherwise (a
"Transfer") without the prior written consent of KMOC, which shall not be
unreasonably withheld, except in accordance with one of the following:

            (a) subject to compliance with the provisions of Section 3.2,
pursuant to a sale to any one Person or group in an amount less than 5% of the
outstanding securities of any class of KMOC; provided, however, that the
aggregate of such sales made by the Shareholders as a group in any one year
shall not exceed 10% of the outstanding securities of any class of KMOC;

            (b) pursuant to a Transfer of Shares by the Grantee to a Wholly
Owned Subsidiary, from a Wholly Owned Subsidiary of the Grantee to the Grantee
or between Wholly Owned Subsidiaries of the Grantee (any such transferee shall
be referred to herein as a "Permitted Transferee"), provided that in the case of
any such Transfer, the Grantee shall have provided KMOC with written notice of
such proposed Transfer at least 15 days prior to consummating such Transfer
stating the name and address of the Permitted Transferee, the relationship
between the Grantee and the Permitted Transferee, and the Permitted Transferee
shall have executed a copy of this Agreement as a shareholder of KMOC. If any
Permitted Transferee to whom Shares have been Transferred pursuant to this
Section 3.1 by the Grantee ceases to be a Permitted Transferee, such Shares
shall be Transferred back to the Grantee immediately prior to the time such
Person ceases to be a Permitted Transferee of the Grantee. The Grantee and such
Permitted Transferee shall be jointly and severally liable for any breach of
this Agreement by such Permitted Transferee; or

            (c) upon the death of any Shareholder who is an individual, the
Shares held by such Shareholder may be distributed by will or other instrument
taking effect at death or by applicable laws of decent and distribution to such
Shareholder's estate, executors, administrators and personal representatives,
and then to such Shareholder's heirs, legatees or distributees; provided,
however, that

                                        6

<PAGE>

no such Transfer shall be effective until the recipient has delivered to KMOC a
written acknowledgment and agreement in form and substance reasonably
satisfactory to KMOC that the Shares to be received by such recipient are
subject to all the provisions of this Agreement and that such recipient is bound
hereby and party hereto to the same extent as the Shareholder from whom the
Shares were obtained. Each recipient of Shares pursuant to this paragraph (c)
shall also be deemed a "Permitted Transferee."

            SECTION III.2. Right of First Offer.

            (a) If a Shareholder desires to transfer any Shares to any Person
other than pursuant to the provisions of Sections 2.1, 3.1(b) or 3.1(c) or
Article IV, the Shareholder shall first give written notice (a "Transfer
Notice") to that effect to KMOC containing (i) the number of Shares proposed to
be transferred (the "Offered Shares"), and (ii) the purchase price (the "First
Offer Price") which the Shareholder proposes to be paid for the Offered Shares.

            (b) KMOC shall have a period of 30 days after the date of receipt of
the Transfer Notice (the "Response Period") to accept the offer made pursuant to
the Transfer Notice to purchase all of the Offered Shares (on its own behalf or
on the behalf of others) at the First Offer Price by delivering written notice
of acceptance to the Shareholder within the Response Period.

            (c) If KMOC elects to purchase (on its behalf or on the behalf of
others) all of the Offered Shares, the closing of the sale of the Offered Shares
will be held at KMOC's principal office in New York on a date to be specified by
KMOC which is not less than 10 days nor more than 60 days after the end of the
Response Period. At the closing, KMOC will deliver the consideration in
accordance with the terms of the offer set forth in the Transfer Notice, and the
Shareholder will deliver the Offered Shares to KMOC, duly indorsed for transfer,
free and clear of all liens, claims and encumbrances.

            (d) If, at the end of the Response Period, KMOC has not given notice
of its decision to purchase all of the Offered Shares, then the Shareholder
shall be entitled for a period of 90 days beginning the day after the expiration
of the Response Period to sell the Offered Shares at a price not lower than the
First Offer Price and on terms not more favorable to the transferee than were
contained in the Transfer Notice. Promptly after any sale pursuant to this
Section 3.2, the Shareholder shall notify KMOC of the consummation thereof and
shall furnish such evidence of the completion (including time of completion) of
such sale and of the

                                        7

<PAGE>

terms thereof as KMOC may request.

            (e) If, at the end of any such 90-day period provided for in this
Section 3.2, the Shareholder has not completed the sale of the Offered Shares,
the Shareholder shall no longer be permitted to sell any of such Offered Shares
pursuant to this Section 3.2 without again fully complying with the provisions
of this Section 3.2 and all the restrictions on sale, transfer, assignment or
other disposition contained in this Agreement shall again be in effect.

            SECTION III.3. Legend. Each certificate representing the Shares
shall be stamped or otherwise imprinted with a legend in substantially the
following form:

            RESTRICTIONS ON TRANSFER OF SECURITIES: THE SECURITIES REPRESENTED
            BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
            ACT OF 1933, AS AMENDED, OR UNDER STATE SECURITIES LAWS. THE
            TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
            SUBJECT TO THE CONDITIONS SPECIFIED IN A SHAREHOLDER AGREEMENT DATED
            _____, __. A COPY OF SUCH CONDITIONS WILL BE FURNISHED BY THE
            CORPORATION TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT
            CHARGE. THESE SECURITIES MAY NOT BE RESOLD OR TRANSFERRED UNLESS
            SUCH CONDITIONS ARE COMPLIED WITH AND UNLESS REGISTERED OR EXEMPT
            FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE
            STATE SECURITIES LAWS.

            SECTION III.4. Compliance with Applicable Law, Etc. The exercise of
the right of first offer set forth in Section 3.2 and the completion of any
transfer or sale of Shares contemplated hereunder shall be subject to compliance
with Applicable Law. KMOC and the Shareholders shall cooperate with each other
and shall take all such action, including, without limitation, obtaining all
Governmental Approvals required to comply with Applicable Law in connection with
the sale or transfer of the Shares pursuant to this Agreement. KMOC and the
transferring Shareholder shall bear its own costs and expenses in connection
with obtaining any such Governmental Approvals.

            SECTION III.5. Effect. Any purported transfer of securities that

                                        8

<PAGE>

is inconsistent with the provisions of this Article III shall be null and void
and of no force or effect and will not be registered on the stock transfer books
of KMOC.

                                   ARTICLE IV
                               Registration Rights

             SECTION IV.1. Incidental Registration. If KMOC proposes at any time
to register KMOC Common Stock under the Securities Act (other than pursuant to a
registration statement on Form S-8 or Form S-4 (or a similar successor form))
with respect to an offering of KMOC Common Stock for its own account or for the
account of any of its security holders, it will promptly give written notice
thereof to the Grantee (but in no event less than fifteen days before the
anticipated filing date), and offer the Shareholders the opportunity to register
such number of Shares as the Shareholders may request. Upon the written request
of the Grantee made within 20 days after the receipt of any such notice (which
request shall specify the Shares intended to be disposed of by each Shareholder
and the intended method of disposition thereof), KMOC will, subject to the terms
of this Agreement, use its best efforts to include the Shares which KMOC has
been requested to register in such registration.

             (a) If the proposed registration by KMOC is an underwritten Public
Offering of KMOC Common Stock, then KMOC will use its best efforts to cause the
managing underwriter or underwriters to include the Shares requested to be
included by the Grantee (including Shares to be included on behalf of other
Shareholders) among those securities to be distributed by or through such
underwriters (on the same terms and conditions as the KMOC Common Stock of KMOC
included therein to the extent appropriate). Notwithstanding the foregoing, if
in the reasonable judgment of the managing underwriters or underwriters, the
success of the Public Offering would be adversely affected by inclusion of the
Shares requested to be included, KMOC shall include in such registration the
number (if any) of Shares so requested to be included which in the opinion of
such underwriters can be sold, but (i) only after the inclusion in such
registration of KMOC Common Stock being sold by KMOC and (ii) only after the
inclusion in such registration of KMOC Common Stock being sold by persons
exercising any demand registration rights they may have in respect of KMOC. If,
in the opinion of such underwriters, some but not all of the Shares requested to
be included may be included in such registration, all Shareholders requested to
be included therein, and any other holders of KMOC Common Stock that have
substantially similar registration rights to the holders of Shares and have
requested registration of such

                                        9

<PAGE>

shares, shall share pro rata in the number of such shares requested to be
included therein based on the number of such shares so requested to be included
by such persons.

            (b) If, at any time after giving written notice of its intention to
register KMOC Common Stock and prior to the effective date of the registration
statement filed in connection with such registration, KMOC shall determine for
any reason either not to register, or to delay registration of, such securities,
KMOC may, at its election, give written notice of such determination to the
Grantee and, thereupon, (i) in the case of a determination not to register,
shall be relieved of its obligation to register any Shares in connection with
such registration or (ii) in the case of a determination to delay registering,
shall be permitted to delay registering any Shares, for the same period as the
delay in registering such other KMOC Common Stock.

            (c) The selection of the underwriters for any such offering shall be
at the sole discretion of KMOC.

            (d) KMOC will pay expenses associated with the registration and sale
of the Shares including without limitation legal, accounting, printing and
distribution fees and expenses, except for registration fees associated with the
Shares and commissions and underwriting discounts payable with respect to the
Shares, which shall be paid by the Grantee.

            SECTION IV.2. Registration Procedures.

            (a) If and whenever KMOC is required by the provisions of Section 4.
1 hereof to effect the registration of Shares, KMOC will as promptly as
practicable:

                   (i) furnish to the Grantee such number of conformed copies of
             such registration statement and of each such amendment and
             supplement thereto (in each case including all exhibits), such
             number of copies of the prospectus included in such registration
             statement (including each preliminary prospectus and any summary
             prospectus), in conformity with the requirements of the Securities
             Act, such documents incorporated by reference in such registration
             statement or prospectus, and such other documents, as the Grantee
             may reasonably request to facilitate the disposition of the Shares
             included in such registration by the Shareholders;

                                       10

<PAGE>

       (ii) use its best efforts to register or qualify the securities covered
by such registration statement under such state securities or blue sky laws of
such jurisdictions, if applicable, as shall be reasonably appropriate for
distribution of the Shares; provided, however, that KMOC shall not be required,
solely in order to accomplish the foregoing, to qualify to do business as a
foreign corporation in any jurisdiction where it would not otherwise be required
to qualify, subject itself to taxation in any such jurisdiction or consent to
general service of process in any such jurisdiction;

       (iii) advise the Grantee, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the SEC or any
state securities commission or agency suspending the effectiveness of such
registration statement or the initiation or threatening of any proceeding for
that purpose and use its best efforts to prevent the issuance of any stop order
to obtain its withdrawal if such stop order should be issued;

       (iv) notify the Grantee upon KMOC's discovery that, or upon the happening
of any event as a result of which any prospectus included in any registration
statement which includes Shares, as then in effect, includes an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing, and at the Grantee's request prepare and
furnish to the Grantee a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein necessary to make the statements therein not misleading in the
light of the circumstances then existing;

       (v) use its best efforts to cause all such Shares to be listed on each
securities exchange or inter-dealer quotation system on which the KMOC Common
Stock is then listed or will be listed following the Public Offering, provided
that the applicable listing requirements are satisfied.

                                       11

<PAGE>

            (b) If any registration pursuant to Section 4. 1 shall be in
connection with an underwritten Public Offering and regardless of whether the
Shareholders participate in such registration, the Grantee agrees and each of
the other Shareholders shall agree not to, unless agreed to in writing by the
managing underwriter or underwriters or KMOC, effect any public sale or
distribution, including any sale pursuant to Rule 144 of the Securities Act, of
any Shares (other than as part of such underwritten Public Offering) within the
period commencing on a date specified by the underwriter, not to exceed 30 days
prior to the effective date of such registration statement, and ending on a date
specified by the underwriter, not to exceed 180 days after the effective date of
such registration statement or such shorter period as any other holder of
securities of KMOC being sold pursuant to the registration statement has agreed
not to effect any public sale or distribution. The Grantee agrees, and each of
the other Shareholders shall agree, that KMOC may instruct its transfer agent to
place stop transfer notations in its records to enforce this Section 4.2(b).

            (c) The Grantee agrees, and each of the other Shareholders included
in such registration shall agree, that upon receipt of any notice from KMOC of
the occurrence of any event of the kind described in Section 4.2(a)(iv), it will
forthwith discontinue the disposition of Shares pursuant to the registration
statement relating to such Shares until its receipt of a supplemented or amended
prospectus from KMOC and, if so directed by KMOC, will deliver to KMOC all
copies, other than permanent file copies, then in such Shareholder's possession,
of the prospectus relating to such Shares at the time of receipt of such notice;
provided, that if the registration statement is for an underwritten Public
Offering, each Shareholder included in such registration will use its best
efforts to cause the underwriters of such Public Offering to discontinue the
disposition of Shares.

            (d) If any Shares are included in any registration pursuant to this
Article IV, the Grantee agrees, and each of the other Shareholders selling
Shares shall agree, to take such actions and furnish KMOC with such information
regarding itself and relating to the distribution of the Shares as KMOC may from
time to time reasonably request and as shall be required in connection with any
registration, qualification or compliance referred to in this Agreement,
including, without limitation, the following: (i) enter into an appropriate
underwriting agreement containing terms and provisions then customary in
agreements of that nature and cause each underwriter of the Shares to be sold to
agree in writing with KMOC to provisions with respect to indenmification and
contribution that are substantially the same as set forth in Section 4.3 hereof;
(ii) enter into such custody agreements, powers of attorney and related
documents at such time and on such terms and

                                       12

<PAGE>

conditions as may then be customarily required in connection with such offering;
and (iii) distribute the Shares in accordance with and in the manner of the
distribution contemplated by the applicable registration statement and
prospectus.

            SECTION IV.3. Indemnification.

            (a) Indemnification by KMOC. In the event of any registration of
Shares pursuant to Section 4.1, KMOC agrees to indemnify and hold harmless the
seller of Shares and its directors and officers and each other person, if any,
who controls the seller (each, an "Indeninified Person") from and against any
and all losses, claims, damages, liabilities and expenses (including reasonable
attorneys' fees and costs of investigation) to which such Indemnified Person
becomes subject under the Securities Act or otherwise, insofar as such losses,
claims, damages, liabilities or expenses arise out of or based upon (i) any
untrue statement or alleged untrue statement of material fact contained in any
registration statement under which such securities were registered or qualified
under the Securities Act or otherwise, any preliminary prospectus, final
prospectus or summary prospectus included therein, or any amendment or
supplement thereto, or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, provided that KMOC shall not be liable to such
Indenmified Person in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with information furnished by such
seller of Shares to KMOC.

            (b) Indemnification by the Shareholders. The Grantee agrees, and
each of the other Shareholders participating in a registration of shares
pursuant to this Article IV shall agree, to indemnify and hold harmless (in the
same manner and to the same extent as set forth in Section 4.3(a)), KMOC and its
directors and officers and each other person, if any, who controls KMOC within
the meaning of the Securities Act arising out of or based upon (i) any untrue
statement or alleged untrue statement of material fact contained in any
registration statement under which such securities were registered or qualified
under the Securities Act or otherwise, any preliminary prospectus, final
prospectus or summary prospectus included therein, or any amendment or
supplement thereto, or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading if such statement or

                                       13

<PAGE>

omission was made solely in reliance upon and in conformity with information
furnished to KMOC by such Shareholder for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement.

            (c) Defense of Claim. If any action or proceeding (including any
governmental investigation) shall be brought or directed against any party
hereto (or its officers, directors or agents), the party against whom
indemnification is sought shall be permitted to (or, if requested, shall) assume
the defense of such claim, including the employment of counsel and the payment
of all expenses, unless a conflict of interest may exist with respect to such
claim or differing or additional defenses may be available to the other party.
If defense of a claim is assumed by an indemnifying party, the indemnified party
shall not be liable for any settlement of such action or proceedings effected
without their prior written consent. No indemnifying party shall consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to the
indemnified party of release from all liability in respect to such claim or
litigation. Any party entitled to indemnification hereunder agrees to give
prompt written notice to the other party of any written notice of the
commencement of any action, suit, proceedings or investigation or threat thereof
for which such party may claim indemnification or contribution pursuant to this
Agreement; provided, however, that failure to give such notice shall not limit
any party's right to indemnification or contribution hereunder. Notwithstanding
the foregoing, an indemnified party hereunder shall always have the right to
employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such indemnified party.

            (d) Contribution. If the indemnification provided for in Sections
4.3(a) or 4.3(b) hereof is unavailable to a party that would have been an
indemnified party under any such Section in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) referred
to therein, then each party that would have been an indemnifying party
thereunder shall, in lieu of indemnifying such indemnified party, contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof) in
such proportion as is appropriate to reflect the relative fault of such
indemnifying party on the one hand and such indemnified party on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof).
The relative fault shall be determined by reference

                                       14

<PAGE>

to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by such indemnifying party or such indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid or
payable by a contributing party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to above in
this Section 4.3(d) shall include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.

                                    ARTICLE V
                                Voting Covenants

            SECTION V.1. Voting Shares. During the period commencing from the
date hereof and ending on the later to occur of (i) the sixth anniversary of the
Effective Date or (ii) the date of an initial Public Offering, each Shareholder
agrees to cause all Shares held by it to be present for quorum and other
purposes at all shareholder meetings of KMOC and to vote all Shares held by it
in favor of any director nomination recommended by the KMOC Board for approval
by shareholders of KMOC.

                                   ARTICLE VI
                                   Termination

            SECTION VI.1. Termination. Except with respect to Sections of this
Agreement which shall terminate on an earlier date as expressly provide herein,
this Agreement shall automatically terminate, with respect to each Shareholder,
on the date such Shareholder no longer Beneficially Owns any Shares; provided,
however, that the provisions of Section 4.3 shall survive the termination of
this Agreement with respect to each Shareholder.

                                       15

<PAGE>

                                   ARTICLE VII
                                  Miscellaneous

            SECTION VII. 1. Effectiveness.This Agreement shall be effective as
of the Effective Date.

            SECTION VII.2. Notices. All notices, requests and other
communications hereunder shall be in writing and shall be delivered by hand, by
nationally recognized courier service, by facsimile transmission, receipt
confirmed or certified mail (postage prepaid, return receipt requested, if
available):

            If to KMOC, to:

                   Khanty Mansiysk Oil Corporation
                   125 Park Avenue, 8th Floor
                   New York, New York 10017
                   Attention: John B. Fitzgibbons
                   Phone: (212) 479-2398
                   Fax:(212) 479-2505

            with a copy to:

                   Skadden, Arps, Slate, Meagher & Flom LLP
                   919 Third Avenue
                   New York, New York 10022
                   Attention: Eric L. Cochran
                   Phone: (212) 735-3000
                   Fax: (212) 735-2000

            If to the Grantee or any other Shareholder, to:

                   ______________________
                   ______________________
                   ______________________
                   ______________________

Each such notice, request or communication shall be effective (A) if delivered
by hand or by nationally recognized courier service, when delivered at the
address specified in this Section 7.2 (or in accordance with the latest
unrevoked written

                                       16

<PAGE>

direction from such party), (B) if given by fax, when such fax is transmitted to
the fax number specified in this Section 7.2 (or in accordance with the latest
unrevoked written direction from such party), and the appropriate confirmation
is received or (C) if by certified mail, upon mailing.

            SECTION VII.3. Interpretation. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "included,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."

            SECTION VII.4. Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for any
reason, the parties shall negotiate in good faith with a view to the
substitution therefor of a suitable and equitable solution in order to carry
out, so far as may be valid and enforceable, the intent and purpose of such
invalid provision; provided, however, that the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.

            SECTION VII.5. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed an original and all of which shall,
taken together, be considered one and the same agreement, it being understood
that both parties need not sign the same counterpart.

            SECTION VII.6. Entire Agreement; No Third Party Beneficiaries. This
Agreement (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof and (b) is not intended to confer upon any
Person, other than the parties hereto, any rights or remedies hereunder.

            SECTION VII.7. Further Assurances. Each party shall execute,
deliver, acknowledge and file such other documents and take such further actions
as may be reasonably requested from time to time by the other party hereto to
give effect to and carry out the transactions contemplated herein.

            SECTION VII. 8. Governing Law; Equitable Remedies. This Agreement
shall be governed by and construed in accordance with the laws of the

                                       17

<PAGE>

State of Delaware, regardless of the laws that might otherwise govern under
applicable principles of conflicts of law. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties hereto shall be
entitled to equitable relief, including in the form of injunctions, in order to
enforce specifically the provisions of this Agreement, in addition to any other
remedy to which they are entitled at law or in equity.

            SECTION VII.9. Amendments; Waivers.

            (a) No provision of this Agreement may be amended or waived unless
such amendment or waiver is in writing and signed, in the case of an amendment,
by the parties hereto, or in the case of a waiver, by the party against whom the
waiver is to be effective.

            (b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.

            SECTION VII.10. Assignment. Neither this Agreement nor any of the
rights or obligations hereunder shall be assigned by either of the parties
hereto without the prior written consent of the other party, except that either
party may assign all its rights and obligations to the assignee of all or
substantially all of the assets of such party including an acquisition through
merger, provided that such party shall in no event be released from its
obligations hereunder without the prior written consent of the other party.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns. Any attempted assignment in contravention hereof shall be null and
void.

                                       18

<PAGE>

            IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered, all as of the date first set forth above.

                   KHANTY MANSIYSK OIL CORPORATION

                   By:________________________
                      Name:
                      Title:

                   [Grantee]

                   By:_______________________
                       Name:

<PAGE>

                        KHANTY MANSIYSK OIL CORPORATION

                           Non-Statutory Stock Option
            Granted Under Amended and Restated 1996 Stock Option Plan

      Stock Option granted by Khanty Mansiysk Oil Corporation, a Delaware
corporation (the "Company"),[   ] to (the "Optionee") pursuant to the Company's
Amended and Restated 1996 Stock Option Plan, adopted by the Board of Directors
of KMOC on October 20, 1999 (the "Plan").

1. Grant of Option; Exercisability.

      This certificate evidences the grant by the Company on [ ] to the Optionee
of an option (the "Option") to purchase, in whole or in part, on the terms
herein provided, a total of shares of common stock of the Company (the "Shares")
at $ [ ] per Share, which is not less than the fair market value (as that term
is used in the Plan with regard to incentive stock options) of the Shares on the
date of grant of this Option. It is intended that the Option evidenced by the
certificate shall be a non-statutory Option.

      This Option shall be immediately exercisable as to [ ] Shares (the "First
Tranche") and shall, except as otherwise determined by the Company, become
exercisable as to the remaining Shares (the "Second Tranche") on [ ], provided
that the Optionee has remained in the continuous service of the Company as a
[director of the Company] [employee of the Company] through such date.

      The Final Exercise Date (as that term is used in the Plan) shall be [ ]
with respect to [ ] Shares of the First Tranche, [ ] with respect to an
additional [ ] Shares of the First Tranche, with respect to an additional [ ]
Shares of the First Tranche and [ ] with respect to the Second Tranche.

      Following the termination of [service] [employment] of the Optionee, the
Option shall remain exercisable during the [ ] - [year] [month] period following
the date of such termination (such period, the "Termination Exercise Period");
provided, however, that in no event shall any portion of the Option remain
exercisable beyond its Final Exercise Date; and provided further, that upon the
conclusion of the Termination Exercise Period for a portion of the Option, such
portion shall immediately terminate and be forfeited by the Optionee.

2.     Exercise of Option.

      Each Election to exercise this Option shall be in writing, signed by the
Optionee or the Optionee's executor or administrator or the person or persons to
whom this Option is transferred by will or the applicable laws of descent and
distribution (the "Legal Representative"), and received by the Company at its
principal office, accompanied by this certificate, and payment in full as
provided in the Plan. The purchase price may be paid by delivery of cash,
certified check, bank draft, money order, or common stock of the Company, or by
delivery of a combination of the foregoing, subject to the provisions of Section
6(d) of the Plan. In the event that this Option is exercised by the Optionee's
Legal Representative, the Company shall be under no obligation to deliver the
Shares hereunder

                                       1

<PAGE>

unless and until the Company is satisfied as to the authority of the person or
persons exercising this Option.

3.     Application of Shareholders Agreement.

       Shares acquired upon exercise of the Option shall automatically and
without further action be subject to the provisions of the Shareholders
Agreement attached as Exhibit A to the Plan.

4.     Withholding.

       No Shares will be transferred pursuant to the exercise of this Option
unless and until the person exercising this Option remits to the Company an
amount sufficient to satisfy any federal, state or local withholding tax
requirements, or makes other arrangements satisfactory to the Company with
regard to such taxes.

5.     Nontransferability of Option.

       This Option is not transferable by the Optionee other than by will or the
laws of descent and distribution, and is exercisable during the Optionee's
lifetime only by the Optionee.

6.     Provisions of the Plan.

       This Option is subject to the provisions of the Plan, a copy of which is
furnished to the Optionee with this certificate.

       IN WITNESS WHEREOF, the Company has caused this Option to be executed
under its corporate seal by its duly authorized officer. This Option shall take
effect as a sealed instrument.

                                          KHANTY MANSIYSK OIL CORPORATION

                                          By:___________________
                                          Chief Executive Officer

                                        2

<PAGE>

                         KHANTY MANSIYSK OIL CORPORATION

                           Non-Statutory Stock Option
                      Granted Under 2000 Stock Option Plan

       Stock Option granted by Khanty Mansiysk Oil Corporation, a Delaware
corporation (the "Company"), to [   ] (the "Optionee") pursuant to the Company's
Amended and Restated 1996 Stock Option Plan, adopted by the Board of Directors
of KMOC on March 13-14, 2000 (the "Plan").

1.     Grant of Option; Exercisability.

       This certificate evidences the grant by the Company on [   ] to the
Optionee of an option (the "Option") to purchase, in whole or in part, on the
terms herein provided, a total of [   ] shares of common stock of the Company
(the "Shares") at $[   ] per Share, which is not less than the fair market value
(as that term is used in the Plan with regard to incentive stock options) of the
Shares on the date of grant of this Option. It is intended that the Option
evidenced by the certificate shall be a non-statutory Option.

       This Option shall be [immediately] exercisable as to [   ] Shares (the
"First Tranche") and shall, except as otherwise determined by the Company,
become exercisable as to the remaining [   ] Shares (the "Second Tranche") on
[   ] provided that the Optionee has remained in the continuous service of the
Company as a [director of the Company] an [employee of the Company] through such
date.

       The Final Exercise Date (as that term is used in the Plan) shall be [   ]
with respect to [N;S]Shares of the First Tranche, with respect to an additional
[   ] Shares of the First Tranche, with respect to an additional [   ] Shares of
the First Tranche and [   ] with respect to the Second Tranche.

       Following the termination of [service] employment of the Optionee, the
Option shall remain exercisable during the [   ] - [year] [month] period
following the date of such termination (such period, the "Termination
Exercise Period"); provided, however, that in no event shall any portion of
the Option remain exercisable beyond its Final Exercise Date; and provided
further, that upon the conclusion of the Termination Exercise Period for a
portion of the Option, such portion shall immediately terminate and be
forfeited by the Optionee.

2.     Exercise of Option.

       Each election to exercise this Option shall be in writing, signed by the
Optionee or the Optionee's executor or administrator or the person or persons to
whom this Option is transferred by will or the applicable laws of descent and
distribution (the "Legal Representative"), and received by the Company at its
principal office, accompanied by this certificate, and payment in full as
provided in the Plan. The purchase price may be paid by delivery of cash,
certified check, bank draft, money order, or common stock of the Company, or by
delivery of a combination of the foregoing, subject to the provisions of Section
6(d) of the Plan. In the event that this Option is exercised by the Optionee's
Legal Representative, the Company shall be under no obligation to deliver the
Shares hereunder

                                       1

<PAGE>

unless and until the Company is satisfied as to the authority of the person or
persons exercising this Option.

3.     Application of Shareholders Agreement.

       Shares acquired upon exercise of the Option shall automatically and
without further action be subject to the provisions of the Shareholders
Agreement attached as Exhibit A to the Plan.

4.     Withholding.

       No Shares will be transferred pursuant to the exercise of this Option
unless and until the person exercising this Option remits to the Company an
amount sufficient to satisfy any federal, state or local withholding tax
requirements, or makes other arrangements satisfactory to the Company with
regard to such taxes.

5.     Nontransferability of Option.

       This Option is not transferable by the Optionee other than by will or the
laws of descent and distribution, and is exercisable during the Optionee's
lifetime only by the Optionee.

6.     Provisions of the Plan.

       This Option is subject to the provisions of the Plan, a copy of which is
furnished to the Optionee with this certificate.

       IN WITNESS WHEREOF, the Company has caused this Option to be executed
under its corporate seal by its duly authorized officer. This Option shall take
effect as a sealed instrument.

                              KHANTY MANSIYSK OIL CORPORATION

                              By:__________________________
                                 Chief Executive Officer

                                        2

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