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                                                                   EXHIBIT 10.26

                              SHAREHOLDER AGREEMENT

                                   dated as of

                               September 24, 1999

                                 by and between

                        KHANTY MANSIYSK OIL CORPORATION,

                     BRUNSWICK FITZGIBBONS TRUST COMPANY LLC

                      ENTERPRISE OIL OVERSEAS HOLDINGS LTD

                                       and

                         ENTERPRISE OIL EXPLORATION LTD

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            SHAREHOLDER AGREEMENT, dated as of September 24, 1999, by and
between Khanty Mansiysk Oil Corporation, a Delaware corporation ("KMOC"),
Brunswick Fitzgibbons Trust Company LLC, a Delaware limited liability company
("BFTC"), Enterprise Oil Overseas Holdings Ltd. ("Enterprise Holdings"), a
company organized and existing under the laws of England and Wales and a
wholly-owned subsidiary of Enterprise Oil plc, a public company organized and
existing under the laws of England and Wales (the "Parent"), and Enterprise Oil
Exploration Ltd., a public company organized and existing under the laws of
England and Wales, a wholly-owned subsidiary of the Parent ("Enterprise
Exploration").

            WHEREAS, KMOC and Enterprise Exploration are parties to a Note
Purchase Agreement (the "Note Purchase Agreement"), dated as of December 17,
1998, pursuant to which KMOC, in exchange for a US$ 5,000,000 capital investment
by Enterprise Exploration, issued to Enterprise Exploration one or more notes
(the "Notes"), convertible into fully paid and non-assessable shares of common
stock of KMOC, no par value, at a conversion price of US$ 450.00 per share,
which equates to a conversion ratio of 2.222 shares per US $1,000 principal
amount of the Notes, all upon the terms and conditions set forth in the Note
Purchase Agreement;

            WHEREAS, KMOC, BFTC and Enterprise Exploration have entered into a
Shareholder Agreement (the "Original Shareholder Agreement"), dated as of
December 17, 1998, concerning certain matters relating to Enterprise
Explorations ownership and disposition of any shares of common stock, no par
value, of KMOC acquired by Enterprise Exploration pursuant to its exercise of
its conversion rights with respect to the Notes or by any other means subsequent
to December 17, 1998 (collectively, the "Conversion Shares");

            WHEREAS, KMOC and Enterprise Holdings are parties to a Share
Purchase Agreement (the "Purchase Agreement"), dated as of September 24, 1999,
pursuant to which KMOC, in exchange for a payment by Enterprise Holdings of
US$ 20,000,000 (Twenty Million United States Dollars), agrees to sell, and
Enterprise Holdings agrees to purchase, 40,000 (Forty Thousand) shares of common
stock of KMOC, no par value (the "Additional Shares"), at a purchase price of
US$ 500.00 (Five Hundred United States Dollars) per share, all upon the terms
and conditions set forth in the Purchase Agreement; and

            WHEREAS the parties hereto wish to terminate the Original
Shareholder Agreement as of the effective date of this Shareholder Agreement and
set forth their agreement concerning certain matters relating to Enterprise
Exploration's ownership and disposition of the Conversion Shares and Enterprise
Holding's ownership and disposition of the Additional Shares or any other shares
of common stock of KMOC acquired by either Enterprise Holdings or Enterprise
Exploration (or any other wholly-owned subsidiary of Parent which executes a
counterpart to this Agreement) by any other means subsequent to the Effective
Date, unless otherwise agreed in writing by the Parties hereto, (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 1.1 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

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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.

            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 manner.

            "BFTC" shall mean Brunswick Fitzgibbons Trust Company LLC, a
Delaware limited liability company.

            "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 KMOC Voting Securities or (ii) otherwise
obtains control of KMOC.

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

            "Drag Along Sale" shall have the meaning set forth in Section 4.1.

            "Drag Along Notice" shall have the meaning set forth in Section 4.2.

            "Drag Along Purchaser" shall have the meaning set forth in Section
4.1.

            "Drag Along Sellers" shall have the meaning set forth in Section
4.1.

            "Effective Date" means the date of the closing of the transactions
contemplated by the Purchase Agreement.

            "Enterprise Director" shall have the meaning set forth in Section
8.1(a).

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

            "Enterprise Holdings" has the meaning set forth in the recitals to
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).

            "fully diluted" or "on a fully diluted basis" means, with respect to
any securities, the number of such securities outstanding assuming the exercise,
exchange or conversion, as the case may be, of all rights, options, warrants,
notes or other securities exercisable or exchangeable for or convertible into
such securities, provided that, except for stock options granted under KMOC's
management/employee stock option plan, the consideration required for the
exercise, exchange or conversion has been contributed to the Company as of the
date of the relevant calculation.

            "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.

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            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 6.5(a).

            "Initial Public Offering" means the initial public offering of KMOC
Common Stock.

            "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.

            "Note(s)" has the meaning set forth in the recitals to this
Agreement.

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

            "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.

            "Participating Seller" shall have the meaning set forth in Section
5.2.

            "Permitted Transferee" has the meaning set forth in Section 3.1(c).

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

            "Proposed Issuance" has the meaning set forth in Section 7.1.

            "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).

            "Sale" shall have the meaning set forth in Section 5.1.

            "Sale Percentage" shall have the meaning set forth in Section 5.1
(a).

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

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

            "Selling Holder" has the meaning set forth in Section 5.1.

            "Senior Financing" means the US$ 55,000,000 financing conducted by
KMOC as of October 10,1997 with the investors listed on Exhibit E to the Note
Purchase Agreement.

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

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            "Shareholder" means Enterprise Holdings or Enterprise Exploration at
such time as Enterprise Holdings or Enterprise Exploration Beneficially Owns
Shares or any Permitted Transferee thereof that holds Shares.

            "Tag Along Notice" shall have the meaning set forth in Section 5.1.

            "Tag Along Offeree" shall have the meaning set forth in Section 5.1.

            "Tag Along Purchase" shall have the meaning set forth in Section
5.1(a).

            "Third Party Offer" means a bona fide offer to enter into a
transaction by a Person other than the Shareholders or any of their respective
affiliates or any other Person acting on behalf of the Shareholders or any of
the Shareholders' 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).

            "Warrants" has the meaning set forth in Section 7.1.

            "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.

                                   ARTICLE II.
                               Third Party Offers

            SECTION 2.1 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 Shareholders, briefly describing the material terms of such Third
Party Offer, and if it is a condition of the Third Party Offer that the Shares
be included in the sale, the Shareholders 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 on the same terms as the 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.

                                  ARTICLE III.
                              Transfer Restrictions

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            SECTION 3.1 Restrictions. Except in connection with (i) a Third
Party Offer as provided in Section 2.1, (ii) a registered Public Offering
pursuant to Article VI, (iii) tag-along rights pursuant to Article V hereof or
(iii) drag-along rights pursuant to Article IV hereof, 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 (each, 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 and
Article V hereof, pursuant to a Transfer to any one Person or group in an amount
less than 5% (Five Percent) of outstanding securities of any class of KMOC;
provided, however, that the aggregate of such Transfers made by the Shareholders
as a group in any one year shall not exceed 10% (Ten Percent) of the outstanding
securities of any class of KMOC;

            (b) pursuant to a merger, consolidation or other business
combination involving the Shareholder or the Parent, where the Shareholder or
the Parent, as the case may be, is not the surviving entity, or a sale of all or
substantially all of the Shareholder's or the Parent's assets; provided,
however, that the surviving or purchasing entity agrees to be bound by the terms
of this Agreement; or

            (c) pursuant to a Transfer of Shares by the Shareholder to a Wholly
Owned Subsidiary, from a Wholly Owned Subsidiary of the Shareholder to the
Shareholder or between Wholly Owned Subsidiaries of the Shareholder (any such
transferee shall be referred to herein as a "Permitted Transferee"), provided
that in the case of any such Transfer, the Shareholder shall have provided KMOC
with written notice of such proposed Transfer at least 15 days prior to
consummating such Transfer (except in the event of a Transfer following the
delivery of a notice of a Third Party Offer, in which case at least 5 days prior
to consummating such Transfer) stating the name and address of the Permitted
Transferee and the relationship between the Shareholder 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 Shareholder ceases to
be a Permitted Transferee, such Shares shall be Transferred back to the
Shareholder immediately prior to the time such Person ceases to be a Permitted
Transferee of the Shareholder. The Shareholder and such Permitted Transferee
shall be jointly and severally liable for any breach of this Agreement by such
Permitted Transferee.

            SECTION 3.2 KMOC 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 VI, 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, but not less than 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 date of
KMOC's election to purchase. 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

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consummation thereof and shall furnish such evidence of the completion
(including time of completion) of such sale and of the 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.

            (f) Notwithstanding the foregoing, in the event that KMOC fails to
close the purchase of the Offered Shares on the date specified in its notice of
acceptance, the Shareholder shall be entitled, for a period of 120 days from the
closing date originally set by KMOC in its offer of acceptance, to sell the
Offered Shares at any reasonably negotiated price to any third party without
having to further comply with the provisions of this Section 3.2. However, in
the event that KMOC's failure to close the purchase is due to an order,
injunction or other similar mandate from a regulatory body of competent
jurisdiction and KMOC is using its best efforts to cause such order, injunction
or mandate, as the case may be, to not apply to the purchase of the Offered
Shares then KMOC shall have until the earlier of (i) the expiration of 30 days
from the closing date originally set by KMOC in its acceptance or (ii) such time
as the order, injunction or mandate becomes final and non-appealable, in which
to close the purchase of the Offered Shares before the provisions of the first
sentence of this clause (f) become applicable.

            SECTION 3.3 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
            SEPTEMBER 24, 1999. A COPY OF SUCH CONDITIONS WILL BE FURNISHED BY
            THE COMPANY 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 3.4 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
of Shares contemplated hereunder, including any Transfers under Section 3.1 (a),
(b) and (c), shall be subject to (a) compliance with Applicable Law and (b) the
transferees (or in the case of Section 3.1(b), the surviving entity's) agreement
in writing, in form and substance satisfactory to KMOC, to be bound by
substantially similar representations and warranties and restrictions on
Transfer applicable to the Shareholder contained in this Shareholder Agreement.
If KMOC so requests with respect to any Transfer of the Shares, the transferor
shall provide KMOC with an unqualified opinion of counsel that such Transfer may
be effected without registration under the Securities Act and any applicable
state securities laws. 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 each bear its own costs and expenses in
connection with obtaining any such Governmental Approvals.

            SECTION 3.5 Effect. Any purported transfer of securities that 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
                                Drag Along Rights

            SECTION 4.1. Drag Along. During the period commencing on the
Effective Date and

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ending on the later to occur of (i) the sixth anniversary of the Effective Date
or (ii) the date of an Initial Public Offering, the Shareholder hereby agrees,
if requested by BFTC, to participate on the same terms as BFTC in a Transfer to
a person other than BFTC or any of BFTCs affiliates (or any person acting on
behalf of such parties) (a "Drag Along Sale") of all of the KMOC Common Stock
and rights to acquire KMOC Common Stock Beneficially Owned by BFTC and its
affiliates to any Person not affiliated with BFTC (the "Drag Along Purchase") in
the manner and on the terms set forth in this Article IV; provided, however,
that (i) the amount of KMOC Common Stock being sold by BFTC and Other KMOC
Holders (the "Drag Along Sellers") in the Drag Along Sale must aggregate, on a
fully diluted basis, more than 50% of the outstanding KMOC Common Stock on a
fully diluted basis in order to make a request to cause a Drag Along Sale
pursuant to this Article IV and (ii) the sale price, if the Drag Along Sale
takes place prior to an Initial Public Offering, is equal to at least US$ 500
per share of KMOC Common Stock.

            SECTION 4.2. Procedure. If BFTC elects to exercise its rights under
this Article IV, a notice (the "Drag Along Notice") shall be furnished by BFTC
to the Shareholders, The Drag Along Notice shall set forth the principal terms
of the Drag Along Sale, the purchase price, the closing date and the name and
address of the Drag Along Purchaser. If the Drag Along Sellers consummate the
sale referred to in the Drag Along Notice, the Shareholders shall be bound and
obligated to sell all of the shares of KMOC Common Stock and rights to acquire
KMOC Common Stock (subject to Section 4.3 below) held by it and its affiliates
in the Drag Along Sale on the same terms and conditions. If at the end of the
90th day following the date of the effectiveness of the Drag Along Notice, the
Drag Along Sellers have not completed the Drag Along Sale, the Shareholders
shall be released from their obligations under the Drag Along Notice, the Drag
Along Notice shall be null and void, and it shall be necessary for a separate
Drag Along Notice to have been furnished and the terms and provisions of this
Article IV separately complied with, in order to consummate such Drag Along Sale
pursuant to this Article IV, unless the failure to complete such sale resulted
from any failure by the Shareholders to comply in any material respect with the
terms of this Article IV.

            SECTION 4.3. Enterprise Exploration Conversion Rights. If at the
time of the receipt of the Drag Along Notice by Enterprise Exploration pursuant
to Section 4.2 hereof, Enterprise Exploration is the holder of the Notes, then
Enterprise Exploration shall be deemed to request, and the Company required to
effect, the conversion of the Notes as set forth in Section 2.3 of the Note
Purchase Agreement; provided, however, that after such conversion, Enterprise
Exploration shall be bound by the provisions of this Article IV in respect of
such Drag Along Sale.

                                   ARTICLE V.
                                Tag Along Rights

            SECTION 5.1 Tag Along Offer. If at any time prior to the Initial
Public Offering, BFTC or the Shareholders and/or any of their respective
affiliates (collectively, the "Selling Holder") desires to sell any KMOC Common
Stock (i) representing more than 5% (Five Percent) of the outstanding shares of
KMOC Common Stock to any one person in a single transaction or in a series of
related transactions or (ii) representing more than 7.5% (Seven and One Half
Percent) of the shares of KMOC Common Stock outstanding on a cumulative basis of
all sales of KMOC Common Stock made by such Selling Holder subsequent to the
Effective Date (but excluding sales which are subject to the preceding clause
(i) above), then prior to the consummation of such sale (a "Sale"), the Selling
Holder shall provide written notice (the "Tag Along Notice") of the proposed
Sale to BFTC or the Shareholders, as the case may be (the "Tag-Along Offerees")
at least 45 days prior to the proposed date of the Sale. The Tag Along Notice
shall include:

            (a) The principal terms of the proposed Sale, including the number
of shares of KMOC Common Stock to be purchased from the Selling Holder, the
percentage such shares represent of the total number of shares of KMOC Common
Stock Beneficially Owned (on a fully diluted basis) by the Selling Holder (the
"Sale Percentage"), the purchase price and the name and address of the proposed
purchaser (the "Tag Along Purchaser"); and

            (b) An offer by the Selling Holder to include, at the option of each
Tag Along Offeree, in the Sale to the Tag Along Purchaser such number of shares
of KMOC Common Stock (not in any event to exceed the Sale Percentage of the
total number of shares of KMOC Common Stock Beneficially Owned, on a fully
diluted basis, by such Tag Along Offeree) owned by each Tag Along Offeree, on
the same terms and conditions, with respect to each share sold, as the Selling
Holder shall sell such of its shares. For purposes

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                  of determining the number of shares of KMOC Common Stock that
                  Enterprise Exploration is entitled to sell in the Sale and
                  under this Article V, (i) ownership of the Notes by Enterprise
                  Exploration shall be deemed to be ownership of the KMOC Common
                  Stock underlying such Notes. In addition, the exercise by the
                  Shareholders of tag along rights hereunder in respect of a
                  proposed Sale by BFTC shall be subordinate to the rights of
                  holders of tag along rights granted by BFTC prior to the
                  Effective Date and accordingly, the total number of shares of
                  KMOC Common Stock permitted to be sold by the Shareholders in
                  any Sale by BFTC hereunder shall be calculated following the
                  exercise of any tag-along rights by such parties, but prior to
                  the proposed Sale by BFTC.

            SECTION 5.2. Exercise. Each Tag Along Offeree desiring to accept the
offer contained in the Tag Along Notice shall send a written commitment to the
Selling Holder specifying the number of shares of KMOC Common Stock (not in any
event to exceed the Sale Percentage of the total number of shares of Common
Stock Beneficially Owned, on a fully diluted basis, by such Tag Along Offeree)
which such Tag Along Offeree desires to have included in the Sale within thirty
(30) days after the effectiveness of the Tag Along Notice (each a "Participating
Seller"). Each Tag Along Offeree who has not so accepted such offer shall be
deemed to have waived all of its rights with respect to the Sale, and the
Selling Holder and the Participating Sellers shall thereafter be free to sell to
the Tag Along Purchaser, at a price no greater than the purchase price set forth
in the Tag Along Notice and otherwise on terms not more favorable in any
material respect to them than those set forth in the Tag Along Notice, without
any further obligation to such non-accepting Tag Along Offerees. If, prior to
consummation, the terms of such proposed Sale shall change with the result that
the price shall be greater than the maximum price set forth in the Tag Along
Notice or the other terms of such Sale shall be more favorable to a Selling
Holder in any material respect than as set forth in the Tag Along Notice, it
shall be necessary for a separate Tag Along Notice to have been furnished, and
the terms and provisions of this Article V separately complied with, in order to
consummate such proposed Sale pursuant to this Article V; provided, however,
that in the case of such a separate Tag Along Notice, the applicable period
referred to in Section 5.1 shall be 20 days and the applicable period referred
to above in this Section 5.2 shall be 15 days.

            The acceptance of each Participating Seller shall be irrevocable
except as hereinafter provided, and each such Participating Seller shall be
bound and obligated to sell in the Sale the number of shares which it specified
in its written commitment, on the same terms and conditions specified in the Tag
Along Notice. In the event the Selling Holder shall be unable to obtain the
inclusion in the Sale of all shares of KMOC Common Stock which the Selling
Holder and each Participating Seller desire to have included in the Sale (as
evidenced in the case of the Selling Holder by the Tag Along Notice and in the
case of each Participating Seller, by its written commitment), the number of
shares to be sold in the Sale by the Selling Holder and each Participating
Seller shall be reduced on a pro rata basis according to the proportion which
the number of shares which each such seller desires to have included in the Sale
bears to the total number of shares desired by all such sellers to have included
in the Sale.

            If at the end of the ninetieth (90th) day following the date of the
effectiveness of the Tag Along Notice, the Selling Holder has not completed the
Sale as provided in the foregoing provisions of this Article V, each
Participating Seller shall be released from its obligations under its written
commitment, the Tag Along Notice shall be null and void, and it shall be
necessary for a separate Tag Along Notice to have been furnished, and the terms
and provisions of this Article V separately complied with, in order to
consummate such Sale pursuant to this Article V, unless the failure to complete
such Sale resulted from any failure by any Tag Along Offeree to comply in any
material respect with the terms of this Article V.

                                   ARTICLE VI.
                               Registration Rights

            SECTION 6.1 Eligible Shares. The Shares shall be subject to the
registration rights in this Article VI until (i) a Registration Statement
covering such Shares has been declared effective by the SEC and such Shares have
been disposed of pursuant to such effective Registration Statement, (ii) the
Shares are distributed to the public pursuant to Rule 144 (or any similar
provision then in force) under the Securities Act or (iii) the Shares have
otherwise been transferred and may be resold by such transferee without
registration under the Securities Act and without restriction under Rule 144.

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<PAGE>

            SECTION 6.2 Demand Registration.

            (a) At any time after an Initial Public Offering, the Shareholders
collectively shall have the right to make one written request (a "Demand") on
the Company to cause the Company to make reasonable efforts to file and cause to
be declared effective a Registration Statement on Form S-1 or any other
appropriate form under the Securities Act with respect to the Shares; provided,
that the expected offering price of the Shares requested to be registered is the
greater of at least (i) 25% of the Shareholders' aggregate Beneficial Ownership
interest in KMOC (including for purposes of this calculation, the KMOC Common
Stock underlying the Notes) or (ii) $25,000,000. This Section 6.2 (a) shall be
applicable for so long as the Shares cannot be freely transferred pursuant to
Rule 144 under the Securities Act without the imposition of volume, manner of
sale and holding period limitations.

            (b) The Demand will set forth the number of Shares proposed to be
sold by the Shareholders and the intended method of distribution of such shares.

            (c) If any offering or sale of Common Stock by the Shareholders
pursuant to a Registration Statement is not consummated due to any failure by
KMOC to perform its obligations under this Agreement or pursuant to Section
6.3(b) hereof, the Shareholders shall not be deemed to have made a Demand in
accordance with Section 6.2 (a) above with respect to which such Registration
Statement was filed.

            SECTION 6.3 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 Shareholders (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 Shareholders 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 Shareholders (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 included
therein to the extent appropriate). Notwithstanding the foregoing, if in the
reasonable judgment of the managing underwriters, the success of the Public
Offering of KMOC Common Stock 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 managing 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 managing 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 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
Shareholders 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.

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<PAGE>

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

            (d) KMOC will pay all 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 Shareholders.

            SECTION 6.4 Registration Procedures.

            (a) If and whenever KMOC is required by the provisions of Section
6.2 or 6.3 hereof to effect the registration of Shares, KMOC will as promptly as
practicable:

                  (1) prepare, file and cause to be declared effective a
            Registration Statement and necessary amendments;

                  (2) furnish copies thereof to the Shareholders before filing;

                  (3) furnish to the Shareholders 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
            Shareholders may reasonably request to facilitate the disposition of
            the Shares included in such registration by the Shareholders;

                  (4) 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 where it is not subject to taxation or consent to
            general service of process in any such jurisdiction where it is not
            subject to general service of process;

                  (5) advise the Shareholders, 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;

                  (6) notify the Shareholders 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 Shareholders' request
            prepare and furnish to the Shareholders 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;

                  (7) 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.

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<PAGE>

            (b) If any registration pursuant to Section 6.2 or 6.3 hereof shall
be in connection with an underwritten Public Offering and regardless of whether
the Shareholders participate in such registration, the Shareholders 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. The
Shareholders agree that KMOC may instruct its transfer agent to place stop
transfer notations in its records to enforce this Section 6.4 (b).

            (c) The Shareholders included in such registration agree, that upon
receipt of any notice from KMOC of the occurrence of any event of the kind
described in Section 6.4(a)(6), 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 Shareholders 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 VI, the Shareholders 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 and the Shareholders included in such
registration to provisions with respect to indemnification and contribution that
are substantially the same as set forth in Section 6.5 hereof; (ii) enter into
such custody agreements, powers of attorney and related documents at such time
and on such terms and 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 6.5 Indemnification.

            (a) Indemnification by KMOC. In the event of any registration of
Shares pursuant to Section 6.2 or 6.3, KMOC agrees to indemnify and hold
harmless each Shareholder and its directors and officers, employees and agents
and each other person, if any, who controls the Shareholders (each, an
"Indemnified 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 are 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 thereon not misleading,
provided that KMOC shall not be liable to such Indemnified 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 written information furnished by the Shareholders to KMOC
specifically for inclusion in the registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement.

            (b) Indemnification by the Shareholders. The Shareholders
participating in a registration of shares pursuant to this Article VI agree, to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 6.5(a)), KMOC and its directors and officers and each other
person, if any, who controls KMOC within the meaning of the Securities Act if
such statement or omission

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<PAGE>

was made solely in reliance upon and in conformity with written information
relating to such Shareholder furnished to KMOC by such Shareholder specifically
for inclusion in 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
6.5(a) or 6.5(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 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 6.4(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 VII
                                Preemptive Rights

            SECTION 7.1 Preemptive Rights. Prior to an Initial Public Offering,
the Shareholders shall be entitled to participate in all future sales or
issuances by KMOC of KMOC Common Stock (or rights to acquire KMOC Common Stock
or securities convertible into, or exchangeable for, KMOC Common Stock) to the
extent necessary to maintain their respective proportionate fully diluted equity
interest in KMOC as that interest exists at the time of such issuance. KMOC will
provide the Shareholders with at least 30 days advance written notice of any
such proposed sale or issuance (a "Proposed Issuance"), which notice shall
contain all relevant information pertaining thereto (including without
limitation the identity of the proposed beneficial and record owners of the KMOC
Common Stock to be issued or sold and the purchase price per share) and an offer
to the Shareholders to participate in the Proposed Issuance (at a price per
share and upon terms and conditions no less favorable than those provided to
other offerees or purchasers of KMOC Common Stock in the Proposed Issuance) to
the extent necessary for the Shareholders to maintain their proportionate fully
diluted equity interest in KMOC. At the Shareholders' sole option, the
Shareholders may participate in the Proposed Issuance by purchasing the full
number of KMOC Common Stock necessary to maintain their respective proportionate
fully diluted equity interest or any lesser number thereof. In the event

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<PAGE>

the terms of the Proposed Issuance change, KMOC will provide the Shareholders
with a new 20-day advance notice period prior to consummating the transaction
contemplated by the Proposed Issuance. All of the Shareholders' rights under
this Section 7.1 shall cease at such time as the Shareholders aggregate
Beneficial Ownership percentage of KMOC Voting Securities (including for
purposes of this calculation, the KMOC Common Stock underlying the Notes) is
less than five percent. These preemptive rights shall not apply to the following
sales or issuances (i) pursuant to an employee stock option plan, stock purchase
plan or similar benefit program, agreement or sale or issuance to directors,
employees or consultants which sales or issuances do not exceed in the aggregate
15%, on a fully diluted basis, of the then outstanding capitalization of KMOC;
(ii) as consideration for the acquisition by KMOC or any of its affiliates of
all or a part of another business or the merger of any business entity with or
into KMOC or any of its affiliates; (iii) in connection with the exercise of the
conversion rights granted pursuant to Section 2.6 of the Acquisition Agreement,
dated as of December 16, 1996, between Chelsea Corporation, R.H. Smith
International Corporation and Ural Petroleum Corporation; (iv) the issuance of
shares of KMOC Common Stock pursuant to the Senior Financing for purposes of (x)
the exercise of the warrants pursuant to Senior Financing (the "Warrants"), (y)
the issuance of additional warrants pursuant to the warrant adjustment mechanism
applicable thereto or (z) paying interest on the notes issued pursuant to the
Senior Financing.

                                  ARTICLE VIII.
           Board Representation; Voting Covenants; Management Nominees

            SECTION 8.1 Enterprise Nominees.

            (a) So long as the Shareholders hold an aggregate Beneficial
Ownership interest on a fully diluted basis in KMOC equal to or greater than 10%
(including for purposes of this calculation, the KMOC Common Stock underlying
the Notes but excluding the stock options granted under KMOC's
management/employee stock option plan), KMOC and BFTC shall exercise all
authority under applicable law to cause any slate of directors presented to the
shareholders for election to the KMOC Board to consist of such nominees that if
elected, would result in the KMOC Board consisting of one director nominated
jointly by the Shareholders (an "Enterprise Director").

            (b) Subject to Section 8.1(a), in the event that the Shareholders
hold an aggregate Beneficial Ownership interest on a fully diluted basis in KMOC
equal to or greater than 20% (including for purposes of this calculation, the
KMOC Common Stock underlying the Notes), KMOC and BFTC shall exercise all
authority under applicable law to cause any slate of directors presented to the
shareholders for election to the KMOC Board to consist of such nominees that if
elected, would result in the KMOC Board consisting of two Enterprise Directors.

            (c) KMOC reserves the right to reject a request for inclusion of any
candidate jointly nominated by the Shareholders if in the opinion of a majority
of the KMOC Board (excluding any Directors nominated by the Shareholders) the
appointment of such individual would not be in the best interest of KMOC. In
such event, the Shareholders will be promptly notified of such rejection and the
Shareholders shall have the right to jointly propose another nominee.

            SECTION 8.2 Removal of Enterprise Directors.

            (a) No Enterprise Director may be removed without the consent of the
Shareholders, provided, however, that the Shareholders agree to immediately
remove an Enterprise Director for cause as determined in good faith by unanimous
decision of all directors, other than the Enterprise Director(s).

            (b) If at any time the Shareholders aggregate percentage equity
ownership in KMOC decreases to a point at which the number of Enterprise
nominees entitled to be nominated to the KMOC Board in accordance with Section
8.1 in an election of directors presented to the shareholders would decrease,
within 10 days thereafter, the Shareholders shall cause a sufficient number of
Enterprise Directors to resign from the KMOC Board so that the number of
Enterprise Directors on the KMOC Board after such resignation(s) equals the
number of Enterprise nominees that the Shareholders would have been entitled to
designate had an election of directors taken place at such time. Any vacancy on
the KMOC Board created by the resignation of such Enterprise Director(s) shall
be filled in accordance with KMOC's Bylaws and

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<PAGE>

Charter.

            SECTION 8.3 Replacement of an Enterprise Director. In the event that
an Enterprise Director shall cease to serve for reasons other than as a result
of removal pursuant to Section 8.2(b), the Shareholders shall have the right to
nominate a successor Enterprise Director; provided, however, that no director
removed for cause shall be renominated or reelected. KMOC shall, upon receipt of
notice identifying such nominee, promptly take all action necessary to cause the
appointment of such nominee to the KMOC Board in accordance with KMOC's Bylaws
and Charter.

            SECTION 8.4 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, whether by
issuance of a proxy or otherwise, 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, provided
that the obligations of BFTC and KMOC under Section 8.1 above are being
fulfilled by such parties.

            SECTION 8.5 KMOC Management. So long as the Shareholders hold an
aggregate Beneficial Ownership interest on a fully diluted basis in KMOC equal
to or greater than 10% (including for purposes of this calculation, the KMOC
Common Stock underlying the Notes), the Shareholders shall have the right to
jointly offer candidates for any KMOC management position for consideration by
KMOC.

                                   ARTICLE IX.
                                   Termination

            SECTION 9.1 Termination. Except with respect to Sections of this
Agreement which shall terminate on an earlier date as expressly provided herein,
this Agreement shall automatically terminate, with respect to each Shareholder,
on the date such Shareholder no longer Beneficially Owns any Shares or Notes;
provided, however, that the provisions of Section 6.5 and 10.8 shall survive the
termination of this Agreement with respect to each Shareholder party hereto.

                                   ARTICLE X.
                                  Miscellaneous

            SECTION 10.1 Effectiveness; Termination of Original Shareholders
Agreement.

            (a) This Agreement shall be effective as of the Effective Date.

            (b) The parties hereto agree and acknowledge that as of the
            Effective Date, the Original Shareholder Agreement shall terminate.

            SECTION 10.2 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
                 152 W. 57th Street, 29th Floor
                 New York, New York 10019
                 Attention: John B. Fitzgibbons

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<PAGE>

                 Phone: (212) 245-5544
                 Fax: (212) 245-1932

            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 Shareholders to:

                 Enterprise Oil Exploration Ltd.
                 c/o Enterprise Oil Plc
                 Grand Buildings
                 Trafalgar Square
                 London, WC2N 5EJ
                 England
                 Attention: Director of Corporate Development
                 Phone: (44-171) 925-4000
                 Fax: (44-171) 925-4321

                 Enterprise Oil Overseas Holdings Ltd.
                 c/o Enterprise Oil Plc
                 Grand Buildings
                 Trafalgar Square
                 London, WC2N 5EJ
                 England
                 Attention: Director of Corporate Development
                 Phone: (44-171) 925-4000
                 Fax: (44-171) 925-4321

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 10.2 (or in accordance with the latest
unrevoked written direction from such party), (B) if given by fax, when such fax
is transmitted to the fax number specified in this Section 10.2 (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 10.3 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", unless otherwise expressly
indicated.

            SECTION 10.4 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 10.5 Counterparts. This Agreement may be executed in four
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 all parties need not sign the same counterpart.

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<PAGE>

            SECTION 10.6 Entire Agreement; No Third Party Beneficiaries. (a)
This Agreement, the Purchase Agreement, the Note Purchase Agreement, and the
Service Agreement, including any duly executed amendments thereto, (a)
constitute the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties to such agreements with
respect to the subject matter hereof and thereof (b) this Agreement is not
intended to confer upon any Person, other than the parties hereto, any rights or
remedies hereunder.

            SECTION 10.7 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 10.8 Governing Law; Equitable Remedies. This Agreement shall
be governed by and construed in accordance with the laws of the State of
Delaware, without regard to conflicts of law principles thereof. 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 10.9 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 10.10 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.

            SECTION 10.11 Consolidated Shareholder Agreement. Each Shareholder
hereby agrees, if requested by KMOC (without right to demand additional
compensation in connection therewith), to enter into a consolidated shareholder
agreement, which agreement shall replace this Shareholders Agreement and be on
terms no less favorable to such Shareholder than this Shareholders Agreement.
The consolidated shareholder agreement would consolidate all existing
shareholder agreements between KMOC and its shareholders and bind subsequent
shareholders.

            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: John B. Fitzgibbons
                    Title: Chief Executive Officer

17
<PAGE>

                 BRUNSWICK FITZGIBBONS TRUST LLC

                 By:__________________________
                    Name:
                    Title:

                 ENTERPRISE OIL EXPLORATION LTD

                 By:___________________________
                    Name:
                    Title:

                 ENTERPRISE OIL OVERSEAS HOLDINGS LTD

                 By:____________________________
                    Name:
                    Title:

18
<PAGE>

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

SECTION 1.1      Definitions                                                  2

                                   ARTICLE II.
                               Third Party Offers

SECTION 2.1      Third Party Offers                                           5

                                  ARTICLE III.
                              Transfer Restrictions

SECTION 3.1      Restrictions                                                 5
SECTION 3.2      KMOC Right of First Offer.                                   6
SECTION 3.3      Legend.                                                      7
SECTION 3.4      Compliance with Applicable Law                               7
SECTION 3.5      Effect                                                       7

                                   ARTICLE IV.
                                Drag Along Rights

SECTION 4.1.     Drag Along                                                   7
SECTION 4.2.     Procedure                                                    8
SECTION 4.3.     Enterprise Exploration Conversion Rights                     8

                                   ARTICLE V.
                                Tag Along Rights

SECTION 5.1      Tag Along Offer                                              8
SECTION 5.2      Exercise                                                     8

                                   ARTICLE VI.
                               Registration Rights

SECTION 6.1      Eligible Shares                                              9
SECTION 6.2      Demand Registration                                         10
SECTION 6.3      Incidental Registration                                     10
SECTION 6.4      Registration Procedures                                     10
SECTION 6.5      Indemnification.                                            12

                                  ARTICLE VII.
                                Preemptive Rights

SECTION 7.1      Preemptive Rights                                           13

                                  ARTICLE VIII.
          Board Representatives; Voting Covenants; Management Nominees

SECTION 8.1      Enterprise Nominees                                         13
SECTION 8.2      Removal of Enterprise Directors                             14
SECTION 8.3      Replacement of an Enterprise Director                       14

19
<PAGE>

SECTION 8.4      Voting Shares                                               14
SECTION 8.5      KMOC Management                                             14

                                   ARTICLE IX.
                                   Termination

SECTION 9.1      Termination                                                 14

                                   ARTICLE X.
                                  Miscellaneous

SECTION 10.1     Effectiveness; Termination of Original Shareholders
                 Agreement                                                   15
SECTION 10.2     Notices                                                     15
SECTION 10.3     Interpretation.                                             16
SECTION 10.4     Severability                                                16
SECTION 10.5     Counterparts                                                16
SECTION 10.6     Entire Agreement; No Third Party Beneficiaries              16
SECTION 10.7     Further Assurances.                                         16
SECTION 10.8     Governing Law; Equitable Remedies                           16
SECTION 10.9     Amendments; Waivers                                         16
SECTION 10.10    Assignment                                                  16
SECTION 10.11    Consolidated Shareholder Agreeement                         17

20<PAGE>
                                                                   EXHIBIT 10.27

                                                                  EXECUTION COPY

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

                         KHANTY MANSIYSK OIL CORPORATION

                            SHARE PURCHASE AGREEMENT

                                   DATED AS OF

                                  JUNE 29, 2000

                                 BY AND BETWEEN

                         KHANTY MANSIYSK OIL CORPORATION
                                       AND

                              WALDO SECURITIES S.A.

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

<PAGE>

                            SHARE PURCHASE AGREEMENT

This Share Purchase Agreement (THE "AGREEMENT") is made as of the 29th day of
June 2000, by and between Khanty Mansiysk Oil Corporation, a Delaware
corporation (the "COMPANY"), and Waldo Securities S.A. (the "SELLER"), an
international business company organized under the laws of the British Virgin
Islands.

                                    RECITALS

       WHEREAS, the Seller, the Company (formerly known as Ural Petroleum
Corporation), Khantymansiiskneftegazgeologiia, Benz Investments GmbH, AOZT
Iuridicheskaya Kompania "Graf I Sinovia", OOO "Tagaso", TOO "Orlis" are party to
the Investment Agreement, dated as of August 7, 1997 (the "INVESTMENT
AGREEMENT");

       WHEREAS, the Seller is the owner of 103,220 (One Hundred Three Thousand,
Two Hundred Twenty) shares of common stock, no par value per share, of the
Company;

       WHEREAS, the Seller and the Company are parties to the Voting and
Transfer Agreement (the "TRANSFER AGREEMENT"), dated as of October 15, 1997
among the Seller, the Company, Khanty Holdings LLC ("HOLDINGS") and Brunswick
Fitzgibbons Trust Company LLC ("BFTC");

       WHEREAS, the Seller, BFTC and the Company are parties to the Shareholder
Agreement (the "WALDO SHAREHOLDERS AGREEMENT"), dated as of October 17, 1997;
and

       WHEREAS, the Seller wishes to sell to the Company, and the Company wishes
to buy from the Seller, 44,223 (Forty Four Thousand, Two Hundred Twenty Three)
shares of common stock, no par value per share, of the Company, (the "COMMON
STOCK"), for an aggregate purchase price equal to US$ 21,005,925 (Twenty One
Million, Five Thousand, Nine Hundred Twenty Five United States Dollars), which
equates to US$475 (Four Hundred Seventy Five United States Dollars) per share,
all on terms and conditions as more specifically set forth herein.

       NOW, THEREFORE, in consideration of the premises and of the mutual
promises, representations, warranties, covenants, conditions and agreements
contained herein, the parties hereto, intending to be legally bound by the terms
hereof, agree as follows:

                                    AGREEMENT

                                    ARTICLE I
                                PURCHASE AND SALE

       SECTION 1.1 PURCHASE AND SALE OF THE COMMON STOCK. Upon the terms and
subject to the conditions set forth in this Agreement, the Seller agrees to sell
to Company, and the Company agrees to purchase from the Seller, 44,223 (Forty
Four Thousand, Two Hundred Twenty Three) shares of common stock, no par value,
of the Company, free and clear of all liens, mortgages, charges and other
security interests and encumbrances of any kind.

       SECTION 1.2 CONSIDERATION. Upon the terms and subject to the conditions
set forth in this Agreement, and in consideration of the sale and delivery of
the Common Stock to the Company pursuant to duly executed Stock Powers, the
Company shall pay to the Seller an aggregate purchase price in the amount of
US$21,005,925 (Twenty One Million, Five Thousand, Nine Hundred Twenty Five
United States Dollars), which equates to US$475 (Four Hundred Seventy Five
United States Dollars) per share (the "SHARE PURCHASE PRICE"), as follows:

                                       1

<PAGE>

       a.     One Million United States Dollars (US$1,000,000) (the "INITIAL
              PAYMENT") to be paid by the Company within 2 business days after
              the Closing Date (as defined in Section 1.3 below) to an account
              specified in writing by the Seller to the Company;

       b.     Ten Million, Five Thousand Nine Hundred Twenty Five United
              States Dollars (US$10,05,925) to be paid by the Company in the
              form of a promissory note (the "IPO NOTE") in the form of
              Attachment 1 hereto and dated as of the Closing Date; and

       c.     Ten Million United States Dollars (US$10,000,000) to be paid by
              the Company in the form of a promissory note, (THE "REMAINDER
              NOTE"; the IPO Note and the Remainder Note hereinafter
              collectively referred to as the "NOTES" and each individually, a
              "NOTE") in the form of Attachment 2 hereto and dated as of the
              Closing Date.

       SECTION 1.3 CLOSING. The consummation of the purchase and sale of the
Common Stock (the "CLOSING") shall occur, subject to the satisfaction or waiver
of the conditions set forth in Article IV, at the offices of the Company, 152
West 57th Street, 29th Floor, New York, New York 10019 on June 29, 2000 at 2:00
p.m. local time, or otherwise as the parties may agree (the "CLOSING DATE"). At
the Closing, the parties shall make the deliveries and take the other actions
contemplated by Article V.

                                   ARTICLE II
                                    THE NOTES

       SECTION 2.1 DESCRIPTION; RANKING. The Notes shall represent the
subordinated unsecured debt obligations of the Company and shall be subordinated
in right of payment of principal and interest to the notes issued by the Company
to the parties listed on Attachment 5 hereto pursuant to the US$55,000,000
financing conducted by the Company in October 1997 (the "SENIOR Financing") and
shall rank pari-passu in right of payment with all other current and future
unsecured indebtedness of the Company of similar size (being less than US$20
Million prior to the redemption of the IPO Note and less than US$10 Million
following such redemption) and tenor.

       SECTION 2.2 INTEREST; MATURITY.

       a.     IPO NOTE. No interest shall accrue or be payable at any time on
              the unpaid principal amount of the IPO Note, except where the
              Company fails to make a payment of the unpaid principal amount of
              the IPO Note on the agreed due date in accordance with this
              Agreement, in which case interest shall accrue as set forth in
              Section 2.8 hereof. The IPO Note shall mature on December 31,
              2000, unless previously redeemed as set forth below in Sections
              2.3 or 2.4.

       b.     REMAINDER NOTE. No interest shall accrue or be payable on the
              unpaid principal amount of the Remainder Note prior to December
              31, 2000. Commencing on January 1, 2001 and provided that the
              Remainder Note has not been previously redeemed in accordance with
              Section 2.4 hereof, the Company shall pay interest on the unpaid
              principal amount of the Remainder Note until such principal amount
              shall be paid in full, at a rate equal to 10% per annum; provided,
              however, that any unpaid principal amount outstanding under the
              Remainder Note after the maturity date shall accrue interest at
              the rate set forth in Section 2.8 hereof. Accrued interest on the
              unpaid principal amount of the Remainder Note shall be payable
              quarterly on September 30, December 31, March 31 and June 30 of
              each year to the holder thereof, as determined by the reference to
              the Company's note registration books on the first day of relevant
              month when payment is due, until the Remainder Note is paid in
              full with the first such payment due on March 31, 2001. The
              Company shall make each payment under the Remainder Note not later
              than 12:00 noon, New York City Time, on the day when due. All
              computations of interest shall be made on the basis of a year of
              365 or 366 days, as the case may be, in each case for the actual
              number of days (including the first day but excluding the last
              day) elapsed. Whenever any payment under the Note shall be stated
              to be due on a day other than a Business Day, such payment shall
              be made

                                       2
<PAGE>

              on the next succeeding Business Day, and such extension of time
              shall in such case be included in the computation of payment of
              interest. The Remainder Note shall mature on December 31, 2005,
              unless previously redeemed as set forth in Section 2.4 hereof.

       SECTION 2.3 MANDATORY REDEMPTION. In the event that prior to the maturity
date of the IPO Note, the Company consummates an initial public offering of the
Company's common stock that results in net proceeds to the Company of at least
US$80 million (an "IPO"), the Company shall redeem the IPO Note in accordance
with this Section 2.3 in cash at a price equal to the principal amount of the
IPO Note

       SECTION 2.4 OPTIONAL REDEMPTION.

       a.     The Company shall have the right to redeem each of the IPO Note
              and the Remainder Note at any time prior to the relevant maturity
              date thereof set forth in Section 2.2(a) and 2.2(b), at a price
              equal to the aggregate principal amount of the IPO Note or the
              Remainder Note, as the case may be, plus, in the case of the
              Remainder Note, accrued interest to the redemption date, if any,
              (the "NOTE REDEMPTION PRICE"); provided, however, that in the
              event the Board of Directors of the Company has resolved to not
              pursue an initial public offering prior to the maturity date of
              the IPO Note, the Company's right to redeem the IPO Note pursuant
              to this Section 2.4 shall expire within 30 days from the date of
              such Board of Director's decision. The Note Redemption Price shall
              be paid in cash; provided, however, that the Company shall have
              the option, except in the event of a mandatory redemption pursuant
              to Section 2.3, to redeem the IPO Note (i) in cash, (ii) in common
              stock of the Company equal in value to the Note Redemption Price
              at the time of such redemption (as adjusted pursuant to the last
              sentence of this Section 2.4(a)), or (iii) in any combination of
              cash and common stock of the Company as determined in the sole
              discretion of the Company and equal in value to the Note
              Redemption Price at the time of such redemption (as adjusted
              pursuant to the last sentence of this Section 2.4(a)); provided
              that, in connection with any such redemption in whole or in part
              in common stock of the Company, all consents, approvals,
              authorizations or other actions by, or filings with or
              notifications to, any third party or any governmental or
              regulatory authority required in connection with the issuance of
              such common stock (including any such requirement with respect to
              the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
              amended (the "HSR ACT ") shall have been obtained or made.
              Payments in cash shall be made in United States dollars by wire
              transfer in immediately available funds to the account specified
              in writing by the Seller or other holder of the IPO Note or the
              Remainder Note (the "HOLDER"), or, if in common stock, by delivery
              of stock certificates representing shares of common stock to the
              Holder. The Holder must surrender the IPO Note or the Remainder
              Note, as the case may be, to the Company at the time of payment of
              the Note Redemption Price. If all or any portion of the Note
              Redemption Price is made in common stock of the Company, (x) each
              share of common stock shall be valued for this purpose as being
              equal to the Share Purchase Price, subject to adjustment pursuant
              to Section 2.4(b) hereof and (y) the Note Redemption Price of the
              IPO Note shall be increased by an amount determined by multiplying
              the percentage of the Note Redemption Price being paid in common
              stock of the Company at the time of the redemption (and without
              giving effect to this adjustment) by the Initial Payment.

       b.     In the event of any changes in the common stock of the Company by
              reason of a stock split, reverse stock split, stock dividend
              (including any dividend or distribution of securities convertible
              into common stock), reorganization, re-capitalization, split up,
              division, combination, share exchange or like event, the class and
              number of securities to be paid to the Holder of the Notes
              pursuant to Section 2.4(a) above, shall be adjusted appropriately,
              and proper provisions shall be made in the agreements governing
              such transactions, so that Holder will receive, upon redemption of
              the Notes and the Company's election to pay the Note Redemption
              Price, in whole or in part, in common stock of the Company, the
              number and class of shares or other securities or property, cash
              or other form of consideration that the Holder would have received
              with respect to the

                                       3
<PAGE>

              common stock had such payment been made immediately prior to such
              event or the record date therefor, as applicable.

       SECTION 2.5 REDEMPTION PROCEDURE.

       a.     The Company shall give notice of the redemption to the Seller or
              the Holder of the Notes, by mailing notice of such redemption by
              first class mail, postage prepaid, at least 10 days and not more
              than 30 days prior to the date fixed for redemption. In the case
              of mandatory redemption pursuant to Section 2.3, the date fixed
              for redemption shall be 15 days following the date of the closing
              of the IPO. The notice of redemption shall specify (i) the Note
              Redemption Price, (ii) the date fixed for redemption, (iii) the
              amount of the Note Redemption Price to be paid in cash and/or
              common stock of the Company, (iv) the place or places of payment
              (at least one of which must be New York City), (v) that payment
              will be made upon presentation and surrender of the IPO Note or
              the Remainder Note, as the case may be, and (vi) that, in the case
              of the Remainder Note, interest, if any, accrued to the date fixed
              for redemption will be paid as specified in such notice.

       b.     If notice of redemption has been given as provided in Section 2.5
              (a) above, the IPO Note or the Remainder Note, as the case may be,
              shall become due and payable on the date and at the place or
              places stated in such notice at the Note Redemption Price, and on
              and after said date (unless the Company shall default in the
              payment of such notes at the Note Redemption Price), the Seller or
              the Holder, as the case may be, of the IPO Note or the Remainder
              Note, as the case may be, shall have no right in respect of such
              notes except the right to receive the Note Redemption Price. On
              presentation and surrender of the IPO Note or the Remainder Note,
              as the case may be, at a place of payment specified in the notice,
              such notes shall be paid and redeemed by the Company at the Note
              Redemption Price.

       c.     In the event of a redemption of the Notes pursuant to Section 2.4
              and the Seller (or the Holder) of the Notes is required to accept
              payment in common stock of the Company, such party as a condition
              to delivery of certificates representing such shares, executes and
              delivers to the Company (if it has not already done so) a
              Shareholder Agreement in the form attached hereto as Attachment 4
              ("SHAREHOLDER AGREEMENT"). Ownership in such shares shall not vest
              in the Seller (or the Holder) until such time as the Company
              receives the executed Shareholder Agreement.

       SECTION 2.6 PAYMENT OF PRINCIPAL OF NOTES. In the event that the Notes
have not been redeemed by the Company pursuant to Sections 2.3 or 2.4 above, the
aggregate principal amount, and in the case of the Remainder Note, accrued
interest, will become due and payable by the Company on the relevant maturity
date of each such note set forth above in Section 2.2(a) and 2.2(b); provided,
however, that in the event that the Company does not pay the aggregate principal
amount of the Notes on such dates (or on such earlier dates, if the notes are
called for redemption pursuant to Section 2.4 above), the outstanding amount
shall bear interest in accordance with Section 2.7 hereof.

       SECTION 2.7 SUBORDINATION.

       a.     The indebtedness of the Company evidenced by the Notes shall be
              junior and subordinate to all Senior Debt. As used in this
              Agreement, the term "SENIOR DEBT" means: (i) all securities issued
              by the Company pursuant to the Senior Financing and (ii) any
              refundings, renewals or extensions of any indebtedness described
              in clause (i) above.

       b.     In the event of any dissolution, winding up, liquidation,
              reorganization or other similar proceedings relative to the
              Company, its property or its operations (whether in bankruptcy,
              insolvency or receivership proceedings, or upon an assignment for
              the benefit of creditors, or any other marshalling of assets of
              the Company or otherwise), then all Senior Debt shall first be
              paid in full in cash or cash equivalents before the Seller shall
              be entitled to retain any payment or distribution of assets made
              after such event with respect to the Notes. In any such
              proceeding,

                                       4
<PAGE>

              any payment or distribution of assets to which the Seller would be
              entitled if the Notes were not subordinated to the Senior Debt
              shall be paid by the trustee or agent or other person making such
              payment or distribution, or by the Seller if received by it,
              directly to the holders of the Senior Debt (pro rata) to the
              extent necessary to make payment in full of all Senior Debt
              remaining unpaid, after giving effect to any concurrent payment or
              distribution to or for the holders of the Senior Debt.

       c.     The Company may from time to time (and with respect to payments of
              principal of the Notes, upon 30-days prior written notice to the
              holders of the Senior Debt), pay or cause to be paid to the Seller
              and the Seller may accept and retain scheduled payments in respect
              of interest and principal on the Notes, as originally executed and
              delivered, unless at the time of any such proposed payment or
              immediately after giving effect thereto, there shall exist any
              default with respect to the Senior Debt that permits holders of
              the Senior Debt as to which such default relates to accelerate its
              maturity (each, a "SENIOR EVENT OF DEFAULT") and the holders of
              the Senior Debt have notified the Company in writing of the
              existence of such Senior Event of Default prior to such payment.
              If the Seller receives payment from the Company pursuant to this
              Section 2.7 (c), such payment shall be deemed to constitute a
              representation by the Company to the holders of the Senior Debt
              and to the Seller that no Senior Event of Default exists, and that
              such payment is permitted to be paid to the Seller under the
              Notes; and the Seller shall be entitled to keep and retain such
              payments, unless the holders of the Senior Debt shall have
              notified the Company or the Seller of a Senior Event of Default in
              writing prior to such payment, in which case (if such Senior Event
              of Default in fact existed on the date of such payment) the Seller
              shall forthwith deliver such payment or an amount of cash equal
              thereto to the holders of the Senior Debt for application in
              payment of the Senior Debt.

       d.     In the event that the Seller shall receive any payment or
              distribution of assets which the Seller is not entitled to retain
              under the provisions of the Notes, the Seller shall hold any
              amount so received in trust for the holders of Senior Debt and,
              upon the request of any holder of Senior Debt, shall forthwith
              turn over such payment or distribution (without liability for
              interest thereon) to the holders of Senior Debt (pro rata) in the
              form received to be applied to Senior Debt. Any holder of Senior
              Debt may at any time and from time to time without the consent of
              or notice to the Seller (or the Holder); (i) extend, renew, modify
              or amend the terms of Senior Debt; (ii) sell, exchange, release or
              otherwise deal with any property pledged, mortgaged or otherwise
              securing Senior Debt; (iii) release any guarantor or any other
              person (except the Company) liable in any manner for the Senior
              Debt; (iv) exercise or refrain from exercising any rights against
              the Company or any other person; and (v) apply any sums by
              whomever paid or however realized to Senior Debt. Any and all of
              such actions set forth in this Section 2.7 may be taken by holders
              of Senior Debt without incurring responsibility to the Company and
              without impairing or releasing the obligations of the Seller (or
              the Holder) to the holders of Senior Debt.

       e.     No holder of Senior Debt shall be prejudiced in its right to
              enforce subordination of the Notes by any act or failure to act by
              the Company or anyone in custody of the Company's assets or
              property. No amendment or modification of the terms of this
              Section 2.7 shall be effective as against any holder of Senior
              Debt without the consent of such holder.

       SECTION 2.8 INTEREST AFTER DUE DATE. If the principal amount of the Notes
is not paid when due, as a result of redemption or otherwise in accordance with
this Agreement, the overdue amount shall bear interest from the maturity date
until paid at an annual rate of 12%.

       SECTION 2.9 REGISTRATION, EXCHANGE AND REPLACEMENT OF NOTES.

       a.     REGISTRATION OF NOTES; REGISTRATION OF TRANSFER AND EXCHANGE OF
              NOTES.

                                       5
<PAGE>

              (i)    All Notes issued from time to time under this Agreement
                     shall be registered on the Company's books and records and
                     the registration of transfers and exchanges of the Notes
                     shall be effected as provided in this Agreement. The
                     Company will keep at its office appropriate books and
                     records for the registration of the Notes and the transfer
                     and exchange of the Notes. The Company will register the
                     Notes and transfers and exchanges of the Notes under the
                     provisions of this Agreement at such office, but only if
                     such transfers are in compliance with Article VII hereof.

              (ii)   Whenever any Note or Notes shall be presented at such
                     office for exchange or registration of transfer, subject to
                     compliance with Article VII hereof, the Company at its
                     expense shall execute and, in exchange and upon
                     cancellation of the Notes, shall deliver a new Note or
                     Notes, registered in such name or names and in such
                     denominations of US$ 100,000 or any integral multiple
                     thereof as may be requested, in the same aggregate
                     principal amount and dated the date of the Note or Notes so
                     surrendered; PROVIDED, HOWEVER, that no transfer of any
                     Note shall be registered unless the transfer is evidenced
                     by a written instrument of transfer, in form reasonably
                     satisfactory to the Company, executed by the registered
                     owner of such Note or by his authorized attorney. All Notes
                     issued upon any exchange of Notes shall be the valid
                     obligations of the Company, evidencing the same debt, and
                     entitled to the same benefits under this Agreement, as the
                     Notes surrendered upon such exchange.

       b.     REPLACEMENT OF NOTES. Upon receipt by the Company of evidence
              reasonably satisfactory to it of the loss, theft, destruction or
              mutilation of any Note and of indemnity and security or bond
              satisfactory to it, the Company at its expense will execute and
              deliver in replacement of such Note a new Note of like tenor,
              registered in the same manner and in the unpaid principal amount
              and dated the date of such Note.

                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

       SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents
and warrants to the Company that each of the statements set forth below is true,
correct and complete:

       3.1.1. DUE INCORPORATION. Seller is an international business company,
       duly organized, validly existing and (to the extent applicable under the
       laws of its jurisdiction of incorporation) in good standing under the
       laws of the British Virgin Islands. Seller is duly qualified or licensed
       to do business in all jurisdictions in which it owns or leases property
       or proposes to own or lease property or in which the conduct of its
       business requires it to so qualify or be licensed, except for such
       jurisdiction where the failure to so qualify or be licensed would not
       have a material adverse effect on the business, operations, properties,
       assets, or condition (financial or otherwise) of Seller.

       3.1.2. BINDING AGREEMENT. This Agreement (and all other related
       agreements) has been duly executed and delivered by Seller, constitutes a
       legal, valid and binding obligation of Seller enforceable against Seller
       in accordance with its terms, except as enforcement may be limited by
       bankruptcy, insolvency, reorganization, moratorium or similar laws now or
       hereafter in effect affecting the enforcement of creditors' rights
       generally and by principles of equity (regardless of whether enforcement
       is brought in a proceeding in equity or at law). The execution and
       delivery of this Agreement (and all other related agreements) by Seller
       has been duly authorized by all necessary action on the part of Seller
       and no other proceedings (corporate or otherwise) on its part (or on the
       part of its shareholders) are necessary to authorize this Agreement.

                                       6
<PAGE>

       3.1.3. NO CONFLICT. The execution, delivery and performance by Seller of
       this Agreement does not and will not (a) conflict with or violate any
       law, rule, regulation, order, writ, judgment, injunction, decree,
       determination or award applicable to Seller or (b) conflict with, or
       result in a breach of or default under, any terms or conditions of the
       charter, articles of incorporation, or other constitutive document of
       Seller or any agreement entered into by Seller, including any shareholder
       or voting agreements, except for Article 7.1 of the Transfer Agreement
       and Section 3.3 of the Waldo Shareholder Agreement.

       3.1.4. NO REQUIRED APPROVALS. Except for the waiver by each of BFTC and
       Holdings of their tag-along rights pursuant to Section 7.1 of the
       Transfer Agreement and the waiver by BFTC of its right of first refusal
       pursuant to Section 3.3 of the Waldo Shareholder Agreement, the
       execution, delivery and performance of this Agreement by the Seller will
       not require any consent, approval, authorization or other action by, or
       filing with or notification to, any third party or any governmental or
       regulatory authority.

       3.1.5. TITLE; SENIORITY. Seller is the sole legal and beneficial owner of
       the Common Stock and no lien, mortgage, charge or other security interest
       or encumbrance of any kind exists or will exist upon the Common Stock on
       the Closing Date.

       3.1.6. TAX RETURNS. The Seller has filed or caused to be filed all tax
       returns and reports that are required to be filed by the Seller pursuant
       to applicable law and, to the best of the Seller's knowledge, the returns
       filed by the Seller are complete and correct and no material financial
       sanctions have been asserted by any central or local governmental
       authority against the Seller with respect to any such tax returns or
       reports filed or required to be filed by the Seller.

       3.1.7. FOREIGN CORRUPT PRACTICES ACT. Neither the Seller nor any person
       (including employees, directors, officers or agents thereof) acting at
       the direction of the Seller has offered, promised, authorized or made any
       payment or gift in violation of applicable law (including, without
       limitation, the United States Foreign Corrupt Practices Act (the "FCPA"),
       to any governmental official, political party or official thereof, or
       candidate for political office for the purpose of influencing any act or
       omission in violation of a lawful duty in order to assist in obtaining
       advantages of any kind for the Seller or in conducting the transactions
       herein contemplated.

       3.1.8. NO PUBLIC SOLICITATION. The offering of the Common Stock by the
       Seller to the Company was made only through direct, personal
       communication between the Company and a representative of the Seller and
       not through public solicitation or advertising.

       3.1.9. BROKERS' FEES. The Seller has no liability or obligation to pay
       any fees or commissions to any broker, finder, or agent with respect to
       the transactions contemplated by this Agreement.

       3.1.10. INFORMATION. As a shareholder of the Company with representatives
       on the Board of Directors of the Company, the Seller has knowledge of,
       and understands, the business of the Company, and in addition, has
       received or has had access to all information concerning the Company and
       the transactions contemplated hereby which it has requested.

       3.1.11. INVESTMENT EXPERIENCE. The Seller has such knowledge and
       experience in financial and business matter as to be able to evaluate the
       merits and risks associated with the transactions contemplated by this
       Agreement.

                                       7
<PAGE>

       3.1.12. ADDITIONAL INVESTMENT REPRESENTATIONS.

          a.   The Seller hereby acknowledges and agrees that each
               representation and warranty made in this Section 3.1.14 is made
               with respect to the Notes and the shares of common stock of the
               Company which the Company may issue upon a redemption of the
               Notes under Section 2.4 (the Notes and such shares of common
               stock are referred to as the "SECURITIES" for the purposes of
               this Section 3.1.14).

          b.   The Securities will be acquired by the Seller for its own account
               and not as a nominee or agent and not with a view to the sale or
               distribution of any part thereof in violation of applicable
               federal and state securities laws. The Seller has no current
               intention of selling, granting participation in or otherwise
               distributing the Securities in violation of applicable federal
               and state securities laws. By executing this Agreement, the
               Seller further represents that it does not have any contract,
               undertaking, agreement or arrangement with any person to sell,
               transfer or grant participation to such person, or to any third
               person, with respect to any of the Securities in violation of
               applicable federal and state securities laws.

          c.   The Seller understands that the Securities have not been
               registered under the Securities Act of 1933, as amended (the
               "SECURITIES ACT") on the basis that the sale provided for in this
               Agreement and the issuance of securities hereunder are exempt
               from registration under the Securities Act pursuant to Section
               4(2) thereof and the regulations issued thereunder, and that the
               Company's reliance on such exemption is predicated on the
               representations and warranties of the Seller set forth herein.

          d.   The Seller understands that no federal or state agency has passed
               upon the transactions contemplated by this Agreement or upon the
               Company, nor has any such agency made any finding or
               determination as to the fairness of the transaction contemplated
               by this Agreement.

          e.   The Seller represents that it will not sell, transfer or
               otherwise dispose of the Securities without registration under
               the Securities Act and applicable state securities laws, or an
               exemption therefrom. The Seller understands that, in the absence
               of an effective registration statement covering the Securities or
               an available exemption from registration under the Securities Act
               and applicable state securities laws, the Securities must
               (unless, in the case of the Notes, paid in accordance with their
               terms or redeemed in accordance with Sections 2.3 or 2.4 hereof)
               be held indefinitely. The Seller represents that, in the absence
               of an effective registration statement covering the Securities or
               an exemption from registration under the Securities Act, it will
               sell, transfer or otherwise dispose of the Securities only in a
               manner consistent with its representations set forth herein and,
               upon consummation of the transactions contemplated by this
               Agreement, only in accordance with the terms of this Agreement.

          f.   The Seller represents that it (i) is capable of bearing the
               economic risk of holding the unregistered Securities and has
               adequate means for providing for its current needs and
               contingencies, (ii) can afford to suffer a complete loss of the
               Securities, and (iii) understands all risk factors related to the
               Securities.

          g.   The Seller understands that the Securities involves a high degree
               of risk, that there is no established market for the Securities
               and that it is not likely that any public market for the
               Securities will develop in the near future.

       SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Seller that each of the statements set forth below is
true, correct and complete:

                                       8
<PAGE>

       3.2.1. DUE INCORPORATION. The Company is a corporation, duly organized,
       validly existing and in good standing under the laws of the State of
       Delaware, USA. The Company is duly qualified or licensed to do business
       in all jurisdictions in which it owns or leases property or proposes to
       own or lease property or in which the conduct of its business requires it
       to so qualify or be licensed, except for such jurisdiction where the
       failure to so qualify or be licensed would not have a material adverse
       effect on the business, operations, properties, assets, or condition
       (financial or otherwise) of the Company.

       3.2.2. BINDING AGREEMENT. This Agreement has been duly executed and
       delivered by the Company, constitutes a legal, valid and binding
       obligation of the Company enforceable against the Company in accordance
       with its terms, except as enforcement may be limited by bankruptcy,
       insolvency, reorganization, moratorium or similar laws now or hereafter
       in effect affecting the enforcement of creditors' rights generally and by
       principles of equity (regardless of whether enforcement is brought in a
       proceeding in equity or at law). The execution and delivery of this
       Agreement by the Company have been duly authorized by all necessary
       action on the part of the Company and no other proceedings (corporate or
       otherwise) on its part (or on the part of its shareholders) are necessary
       to authorize this Agreement.

       3.2.3. NO CONFLICT. The execution, delivery and performance by the
       Company of this Agreement and each of the Notes does not and will not (a)
       conflict with or violate any law, rule, regulation, order, writ,
       judgment, injunction, decree, determination or award applicable to the
       Company or (b) conflict with, or result in a breach of or default under,
       any terms or conditions of the charter or constitutive documents of the
       Company or any agreement to which it is a party.

       3.2.4. NO REQUIRED APPROVALS. Except for the waivers by Holdings of
       certain negative covenants applicable to the Company under Section 7.1 of
       the Note and Warrant Purchase Agreement, dated October 10, 1997, by and
       between the Company and Holdings, to be delivered at Closing (the
       "HOLDINGS CONSENT"), the execution, delivery and performance of this
       Agreement by the Company will not require any consent, approval,
       authorization or other action by, or filing with or notification to, any
       third party or any governmental or regulatory authority.

       3.2.5. ISSUANCE OF THE NOTES. Upon the consummation of the transactions
       contemplated hereby and upon the receipt of the Holdings Consent, the
       Notes issued hereunder will constitute valid and binding obligations of
       the Company, enforceable in accordance with their terms, subject to
       applicable bankruptcy, insolvency and other laws generally applicable to
       creditors' rights and to general principles of equity, and the issuance
       of the Notes will not violate or contravene the terms of any contract,
       agreement, note, bond, mortgage, indenture, deed of trust, license,
       franchise, permit, lease, plan, instrument or other document binding on
       the Company.

       3.2.6. FOREIGN CORRUPT PRACTICES ACT. Neither the Company nor any person
       (including employees, directors, officers or agents thereof) acting at
       the direction of the Company has offered, promised, authorized or made
       any payment or gift in violation of applicable law (including, without
       limitation, the FCPA) to any governmental official, political party or
       official thereof, or candidate for political office for the purpose of
       influencing any act or omission in violation of a lawful duty in order to
       assist in obtaining advantages of any kind for the Company or in
       conducting the transactions herein contemplated.

       3.2.7. NO PUBLIC SOLICITATION. The offering of the Common Stock to the
       Company, to the best of the Company's knowledge, was made only through
       direct, personal communication between the Company and a representative
       of the Seller and not through public solicitation or advertising.

       3.2.8. BROKERS' FEES. The Company has no liability or obligation to pay
       any fees or commissions to any broker, finder, or agent with respect to
       the transactions contemplated by this Agreement.

                                       9
<PAGE>

                                   ARTICLE IV
                              CONDITIONS TO CLOSING

                  SECTION 4.1 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligation of the Company to purchase the Common Stock at the Closing is subject
to the fulfillment (or waiver) on or prior to the Closing Date of the following
conditions:

       a.     REPRESENTATIONS AND WARRANTIES. All of the representations and
              warranties made by the Seller in this Agreement shall be true and
              correct in all material respects as of the date hereof and on the
              Closing Date as though made on and as of the Closing Date.

       b.     PERFORMANCE. The Seller shall have performed in all material
              respects all obligations to be performed or observed by it
              hereunder on or prior to the Closing Date, including delivery of
              the agreements, certificates and other documents required by
              Section 5.1.

       c.     CONSENTS AND WAIVERS. Any governmental and third party consents
              and waivers referenced in Sections 3.1.4 and 3.2.4 hereof shall
              have been obtained.

       d.     INJUNCTIONS. On the Closing Date there shall be no injunction,
              writ, preliminary restraining order or other order in effect of
              any nature issued by a court or governmental agency of competent
              jurisdiction directing that the transactions provided for herein
              not be consummated as provided herein.

       SECTION 4.2 CONDITIONS TO OBLIGATIONS OF THE SELLER. The Seller's
obligation to sell the Common Stock to the Company at the Closing is subject to
the fulfillment (or waiver) on or prior to the Closing Date of the following
conditions:

       a.     REPRESENTATIONS AND WARRANTIES. All of the representations and
              warranties made by the Company in this Agreement shall be true and
              correct in all material respects as of the date hereof and on the
              Closing Date as though made on and as of the Closing Date.

       b.     CONSENTS AND WAIVERS. Any governmental and third party consents
              and waivers referenced in Section 3.1.4 and 3.2.4 hereof shall
              have been obtained.

       c.     PERFORMANCE. The Company shall have performed in all material
              respects all obligations to be performed or observed by it
              hereunder on or prior to the Closing Date, including delivery of
              the agreements, certificates and other documents required by
              Section 5.2.

       d.     INJUNCTIONS. On the Closing Date there shall be no injunction,
              writ, preliminary restraining order or other order in effect of
              any nature issued by a court or governmental agency of competent
              jurisdiction directing that the transactions provided for herein
              not be consummated as provided herein.

       SECTION 4.3 WAIVER. Any condition established in this Article may be
waived by the party for whose benefit it is created.

                                    ARTICLE V
                               CLOSING DELIVERIES

       SECTION 5.1 BY THE SELLER. At or prior to the Closing, the Seller shall
deliver or cause to be delivered to the Company:

                                       10
<PAGE>

       a.     stock Power, in the form of Attachment 3 hereto evidencing the
              transfer by Seller to the Company of the Common Stock, duly
              executed by Seller and dated as of the Closing Date;

       b.     Shareholder Agreement, in the form of Attachment 4 hereto, duly
              executed by the Seller;

       c.     Form W-8 duly executed by the Seller, in the form attached as
              Attachment 6 hereto; and

       d.     such other certificates agreements or documents as the Company may
              reasonably request to evidence or effect the Seller's compliance
              with this Agreement or the consummation of the transactions
              contemplated hereby, including, without limitation, the
              resignation by Mr. Vladimir Tokarev as a Director of the Company,
              effective as of the Closing Date.

       SECTION 5.2 BY THE COMPANY. At or prior to the Closing, the Company shall
deliver or cause to be delivered to the Seller the following:

       a.     the IPO Note, in the form of Attachment 1 hereto, duly executed by
              the Company and dated as of the Closing Date, in the aggregate
              principal amount of Nine Million, Six Hundred Eleven Thousand,
              Eight Hundred United States Dollars (US$9,611,800);

       b.     the Remainder Note, in the form of Attachment 2 hereto, duly
              executed by the Company and dated as of the Closing Date, in the
              aggregate principal amount of Nine Million United States Dollars
              (US$9,000,000);

       c.     the Shareholder Agreement in the form of Attachment 4 hereto, duly
              executed by the Company; and

       d.     Such other certificates agreements or documents as the Seller may
              reasonably request to evidence or effect the Company's compliance
              with this Agreement or the consummation of the transactions
              contemplated hereby.

                                   ARTICLE VI
                            COVENANTS OF THE PARTIES

       SECTION 6.1 PUBLICITY. The Seller, including its partners, officers,
employees, representatives and agents, shall not make any statement or public
announcement, or make any release to trade publications or the press, or make
any statement to any competitor, customer or any other person not a party to
this Agreement with respect to this Agreement or the transactions contemplated
hereby ("PUBLIC DISCLOSURES") without the prior written consent of the Company
(such consent not to be unreasonably withheld), except for disclosures to
affiliates or related companies or representatives, agents or consultants of the
parties hereto, in each case, that are aware of and agree to be bound by the
obligations of this Agreement, and except for such disclosures as are necessary,
in the opinion of counsel to the Seller, to comply with the requirements of any
law, governmental order or regulation.

       SECTION 6.2 FILINGS AND CONSENTS. Each of the Company and the Seller
shall use, and shall use best efforts to cause each of their relevant
subsidiaries to use, all reasonable efforts to obtain and to cooperate in
obtaining any order, license, consent, approval, waiver, permit or authorization
of, or notice to, or declaration, filing or registration with, preparing
applications to, conducting negotiations with, and the taking of any other
action in respect of, any governmental agency or body or other person not a
party to this Agreement (including actions related to the compliance with the
HSR Act, if necessary) required in connection with the execution, delivery or
performance of this Agreement. The Company and the Seller will furnish, and will
use best efforts to cause each of their relevant subsidiaries to furnish, to one
another such necessary information and reasonable assistance as may be requested
in connection with obtaining any necessary consent, approval, authorization or
order.

                                       11
<PAGE>

       SECTION 6.3 COVENANT TO SATISFY CONDITIONS. Each party agrees to use all
reasonable efforts to insure that the conditions set forth in Sections 4.1 and
4.2 hereof are satisfied prior to 12 noon on June 30, 2000 (the "CUT-OFF DATE"),
insofar as such matters are within the control of such party.

       SECTION 6.4 WITHHOLDING TAXES. Interest principal or other payments due
hereunder or under the Notes, or amounts payable in connection with the
redemption thereof, shall be net of withholding tax, if any, required by law,
governmental order or regulation. The Company shall not be required to indemnify
the Seller or its permitted successors or assignees with respect to any such
withholding taxes.

       SECTION 6.5 FURTHER ASSURANCES. Each of the Company and Seller shall
execute such additional documents, take such actions, and provide such
assistance to the other party, as may be reasonably requested by such party, in
connection with fulfillment of obligations under this Agreement and any of the
agreements referenced herein.

       SECTION 6.6 INDEMNIFICATION.

       a.     The Seller shall indemnify and hold the Company (and its
              directors, officers, employees, agents and affiliates) harmless
              from and against any and all claims, liabilities, losses, damages,
              costs and expenses (including, without limitation, legal fees)
              related to or arising, directly or indirectly, in connection with
              any failure or any breach by Seller of any representation,
              warranty, covenant, obligation or undertaking made by Seller
              hereunder or under the Investment Agreement (or any agreement
              entered into between the Seller and the Company pursuant thereto).

       b.     The Company shall indemnify and hold the Seller (and its
              directors, officers, employees, agents and affiliates) harmless
              from and against any and all claims, liabilities, losses, damages,
              costs and expenses (including, without limitation, legal fees)
              related to or arising, directly or indirectly, in connection with
              any failure or any breach by Company of any representation,
              warranty, covenant, obligation or undertaking made by Company
              hereunder or under the Investment Agreement (or any agreement
              entered into between the Seller and the Company pursuant thereto).

                                   ARTICLE VII
                                TRANSFER OF NOTES

       SECTION 7.1 TRANSFER RESTRICTIONS. The Seller shall not sell, pledge,
assign, grant a participation interest in, encumber or otherwise transfer or
dispose of the Notes to any other person, whether directly, indirectly,
voluntarily, involuntarily, by operation of law, pursuant to judicial process or
otherwise (each, a "TRANSFER") without the prior written consent of the Company,
which shall not be unreasonably withheld, except in accordance with one of the
following:

       a.     subject to compliance with the provisions of Section 7.2, pursuant
              to a Transfer of Notes to any one person or group; provided, the
              amount of common stock issuable with respect to the Notes being
              Transferred, upon exercise of the Company's redemption rights in
              accordance with Section 2.4, would be less than 5% of the
              outstanding securities of any class of the Company; provided,
              further, that the aggregate amount of common stock issuable with
              respect to the Notes being Transferred by the Seller and any
              transferee thereof collectively in any one year, upon exercise of
              the Company's redemption rights in accordance with Section 2.4,
              shall be less than 10% of the outstanding securities of any class
              of the Company; or

       b.     pursuant to a merger, consolidation or other business combination
              involving the Seller, where the Seller is not the surviving
              entity, or a sale of all or substantially all of the Seller's
              assets; or

       c.     pursuant to a Transfer to a trust, the beneficiaries of which, or
              to a corporation, partnership or limited liability company, the
              stockholders, limited or general partners or equity owners of
              which, include only the Seller or its wholly-owned subsidiaries
              (each person to whom the Notes may be

                                       12
<PAGE>

              Transferred pursuant to this Section 7.1(c) being hereinafter
              sometimes referred to as a "PERMITTED TRANSFEREE"); provided that
              in the case of any such Transfer, the Seller shall have provided
              the Company 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 and the relationship between
              the Seller and the Permitted Transferee. If any Permitted
              Transferee to whom Notes have been Transferred pursuant to this
              Section 7.1 by the Seller ceases to be a Permitted Transferee,
              such Notes shall be Transferred back to the Seller immediately
              prior to the time such person ceases to be a Permitted Transferee
              of the Seller. The Seller and such Permitted Transferee shall be
              jointly and severally liable for any breach of this Agreement by
              such Permitted Transferee.

       SECTION 7.2 COMPANY'S RIGHT OF FIRST OFFER. The Seller may not Transfer
all or any part of the Notes, other than pursuant to Section 7.1 (b) and (c),
except after full compliance with the right of first offer procedures set forth
below:

       a.     The Seller must first offer to sell the Notes it desires to sell
              (the "OFFERED SECURITIES") to the Company at a price and on terms
              and conditions determined by the Seller and specified in the
              written notice in which the offer is made (the "OFFER"). The
              Company shall have a period of 30 days after the Offer is made to
              accept the Offer by written notice to the Seller.

       b.     If the Company elects to purchase (on its behalf or on behalf of
              others) all of the Offered Securities, the closing of the sale of
              such Offered Securities will be held at the Company's principal
              office in New York on a date to be specified by the Company in its
              acceptance of the Offer which is not less than 10 days nor more
              than 60 days after the end of the 30-day period in which the Offer
              could be accepted. At the Closing, the Company will deliver the
              consideration in accordance with the terms of the Offer, and the
              Seller will deliver the Offered Securities to the Company, duly
              endorsed for transfer, free and clear of all liens, claims and
              encumbrances.

       c.     If the Company does not elect to purchase all of the Offered
              Securities, the Seller will be free for a period of 90 days after
              the last day for such acceptance to sell, assign or transfer all,
              but not less than all, of the Offered Securities to a third party
              for a price and on terms no more favorable to the third party than
              those contained in the Offer. If the Offered Securities are not so
              sold within that 90-day period, all rights to sell the Offered
              Securities to a third party (without making another offer to the
              Company pursuant to this Section 7.2) will terminate and the
              provisions of this Section 7.2 will continue to apply to any
              proposed future Transfer, other than Transfers pursuant to Section
              7.1 (b) and (c).

       d.     Notwithstanding the foregoing, in the event that the Company fails
              to close the purchase of the Offered Securities on the date
              specified in its notice of acceptance, the Seller shall be
              entitled, for a period of 120 days from the closing date
              originally set by the Company in its acceptance of the Offer, to
              sell the Offered Securities at any reasonably negotiated price to
              any third party without having to further comply with the
              provisions of this Section 7.2; PROVIDED, HOWEVER, that in the
              event that the Company's failure to close the purchase is due to
              an order, injunction or other similar mandate from a regulatory
              body of competent jurisdiction and the Company is using its best
              efforts to cause such order, injunction or mandate, as the case
              may be, to not apply to the purchase of the Offered Securities,
              then the Company shall have until the earlier of (i) the
              expiration of 30 days from the closing date originally set by the
              Company in its acceptance or (ii) such time as the order,
              injunction or mandate becomes final and non-appealable, in which
              to close the purchase of the Offered Securities before the
              provisions of this clause (d) become applicable.

       SECTION 7.3 LEGEND. Each certificate evidencing Notes issued to the
Seller or to a subsequent transferee shall include a legend in substantially the
following form (in addition to any other statements or legends required by law):

                                       13
<PAGE>

              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
              SHARE PURCHASE AGREEMENT DATED AS OF JUNE 29, 2000 AND A
              SHAREHOLDER AGREEMENT, DATED AS OF JUNE 29, 2000. A COPY OF SUCH
              CONDITIONS WILL BE FURNISHED BY THE COMPANY 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 7.4 COMPLIANCE WITH APPLICABLE LAW, TRANSFER RESTRICTIONS, ETC.
The exercise of the right of first offer set forth in Section 7.2 and the
completion of any Transfer of Notes contemplated in this Article VII, shall be
subject to (a) compliance with all applicable law, including the Securities Act
and federal and any applicable state securities laws and regulations and (b) the
transferee's (or in the case of Section 7.1(b), the surviving entity's)
agreement in writing, in form and substance satisfactory to the Company, to be
bound by substantially similar representations and warranties and restrictions
on Transfer applicable to the Seller contained in this Agreement and the
Shareholder Agreement. If the Company so requests with respect to any Transfer
of the Notes, the transferor shall provide the Company with an unqualified
opinion of counsel that such Transfer may be effected without registration under
the Securities Act and any applicable state securities laws. The Company and the
Seller 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 Transfer of the Notes pursuant
to this Agreement. The Company and Seller shall bear its own costs and expenses
in connection with obtaining any such governmental approvals.

       SECTION 7.5 EFFECT. Any purported Transfer of Notes that is not in
accordance with the provisions of this Article IX shall be null and void and of
no force or effect.

                                  ARTICLE VIII
                                   TERMINATION

       SECTION 8.1 TERMINATION. This Agreement may be terminated and abandoned
at any time prior to the Closing:

       a.     by the mutual written consent of the Company and the Seller;

       b.     by the Company in the event the Closing has not occurred on or
              before the Cut-Off Date by reason of the failure of any condition
              under Section 4.1 hereof, unless the failure of such consummation
              shall be due to the failure of the Company to comply with the
              agreements or covenants contained herein to be performed by the
              Company on or before the Cut-Off Date;

       c.     by the Seller in the event the Closing has not occurred on or
              before the Cut-Off Date by reason of the failure of any condition
              under Section 4.2 hereof, unless the failure of such consummation
              shall be due to the failure of the Seller to comply with the
              agreements or covenants contained herein to be performed by such
              party on or before the Cut-Off Date; or

       d.     by either the Company or the Seller in the event any court or
              governmental agency of competent jurisdiction shall have issued an
              order, decree or ruling or taken any other action restraining,
              enjoining or otherwise prohibiting the transactions contemplated
              hereby and such order, decree or ruling or other action shall have
              become final and non-appealable.

       SECTION 8.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of the
termination and abandonment of this Agreement by the Company or the Seller
pursuant to Section 8.1 hereof, written notice thereof shall

                                       14
<PAGE>

forthwith be given to the other party. If the transactions contemplated by this
Agreement are terminated as provided herein:

       a.     Each party will redeliver all documents, work paper and other
              material of the other party relating to the transactions
              contemplated hereby, whether so obtained before or after the
              execution hereof, to the party furnishing the same.

       b.     Except (i) with respect to the survival of the obligations set
              forth in Section 10.3 or (ii) in the case of a willful breach,
              neither party to this Agreement will have any liability under this
              Agreement to the other party upon termination of this Agreement.

                                   ARTICLE IX
                                 CONFIDENTIALITY

       SECTION 9.1 CONFIDENTIAL INFORMATION. All records, data, reports and
other information, concerning the Company and/or its subsidiaries and their
operations (whether written or oral) acquired or obtained before or after the
date hereof by the Seller or its affiliates (including directors, employees,
agents, consultants or representatives thereof, hereinafter collectively
"REPRESENTATIVES") in connection with its ownership of the Common Stock or the
transactions contemplated hereby shall be kept confidential and not disclosed to
third parties without the prior written consent of the Company.

       SECTION 9.2 EXCLUSIONS. For purposes of Section 9.1, the obligation of
confidentiality shall not extend to information:

       a.     which is available to the general public (except as a result of a
              breach of this obligation by Seller or its Representatives;

       b.     which the Seller is legally compelled (including, without
              limitation, by oral questions, interrogatories, requests for
              information or documents, subpoena, civil investigative demand or
              similar process) to disclose, in which case the Seller will
              provide the Company with prompt written notice so that the Company
              may seek a protective order or other appropriate remedy and/or
              waive compliance with the provisions of this Section 9.2 (b). In
              the event that such protective order or other remedy is not
              obtained or the Company waives compliance with the provisions of
              this Section 9.2 (b), the Seller will furnish only the specific
              information it is legally required to; or

       c.     confidential data and information which must be disclosed pursuant
              to any rules or requirements of any government or stock exchange
              having jurisdiction over the Seller, or its affiliates.

                                    ARTICLE X
                                  MISCELLANEOUS

       SECTION 10.1 WAIVERS AND AMENDMENTS. This Agreement may be amended only
in writing signed by both parties, and any waiver of any provision hereof shall
be effective only if set forth in writing signed by the party charged with the
waiver. No failure to enforce any provision of this Agreement shall be deemed to
or shall constitute a waiver of such provision and no waiver of any of the
provisions of this Agreement shall be deemed to or shall constitute a waiver of
any other provision hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.

       SECTION 10.2 GOVERNING LAW. This Agreement shall be governed by the laws
of the State of New York without regard to the conflicts of law provisions
thereof.

       SECTION 10.3 SURVIVAL. The obligations of the Company and the Seller, as
the case may be, under Sections 6.1, 9.1, 9.2, 10.2, and 10.7 and Article VIII,
as well as this Section 10.3, shall survive the termination of this

                                       15
<PAGE>

Agreement. The representations, warranties, covenants and agreements made herein
shall survive the Closing, regardless of any investigation made by or on behalf
of any party or its representatives.

       SECTION 10.4 SUCCESSORS AND ASSIGNS.

       a.     Except as expressly provided herein, 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 in the event of such assignment, such party
              shall in no event be released from its obligations hereunder
              without the prior written consent of the other party.

       b.     Notwithstanding the provisions of Section 10.4 (a), (i) the Notes
              shall be transferable pursuant to Article VII hereof and the
              Transferees shall be entitled to the rights thereunder, and (ii)
              all transferees of the Notes shall be subject to the restrictions
              on transfer set forth in Article VII hereof and, for so long as
              such transferee (excluding Permitted Transferees) holds the Notes,
              shall be deemed party to this Agreement for purposes of Article
              VII only.

       c.     Subject to the foregoing, 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.

       SECTION 10.5 ENTIRE AGREEMENT. This Agreement, including the Attachments
hereto, (a) constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof and (b) except as set forth in Section 2.7, are not
intended to confer upon any person, other than the parties hereto, any rights or
remedies hereunder.

       SECTION 10.6 NOTICES. All notices that are required or may be given
hereunder shall be in writing and may be given by personal delivery or by
facsimile transmission or mail. The person sending any notice shall prepay all
transmission charges. Any notice personally delivered or given by mail shall be
deemed effective upon receipt. Transmission by a recognized courier service
shall be deemed personal delivery and any notice so delivered shall be deemed
received at the time of delivery confirmed by the courier service. Any notice
sent by facsimile transmission shall be deemed received upon confirmation of
transmission by the sender's facsimile machine. The following address and fax
number may be used for delivery of notices until another address or fax number
is specified by the Company or the Seller in a written notice to the other:

           If to the Company:

           Khanty Mansiysk Oil Corporation
           152 West 57th Street, 29th Floor
           New York, New York 10019
           Attention:  John B. Fitzgibbons
           Phone:  (212) 245-5544
           Fax: (212) 245-1932

           If to Seller:

           Waldo Securities S.A.
           Akara Building, Suite #8
           Wickhams Cay, 1 Road Town Tortola, British
           Virgin Islands

           With a copy to: _______________________

                                       16
<PAGE>

       SECTION 10.7 ATTORNEYS' FEES. In the event of any litigation between the
parties with respect to this Agreement, the prevailing party shall be entitled
to recover, in addition to any other relief awarded by the court, its reasonable
attorneys' fees and other costs of preparing for and participating in the
litigation.

       SECTION 10.8 SEVERABILITY. If any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not be affected or impaired thereby.

       SECTION 10.9 CAPTIONS. The captions of the sections and subsections of
this Agreement are for convenience of reference only, and are not to be
considered in construing this Agreement.

       SECTION 10.10 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, no one of which need be
signed by both parties, and both of which together shall constitute one
instrument.

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

                            KHANTY MANSIYSK OIL CORPORATION

                            By:     ____________________
                            Name:   John B. Fitzgibbons
                            Title:  Chief Executive Officer

                            WALDO SECURITIES S.A.

                            By:     ____________________
                            Name:   ____________________
                            Title:  ____________________

                                       17
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>             <C>                                                              <C>
                                    ARTICLE I
                                PURCHASE AND SALE

   SECTION 1.1  PURCHASE AND SALE OF THE COMMON STOCK.............................1
   SECTION 1.2  CONSIDERATION.....................................................1
   SECTION 1.3  CLOSING...........................................................2

                                   ARTICLE II
                                    THE NOTES

   SECTION 2.1  DESCRIPTION; RANKING..............................................2
   SECTION 2.2  INTEREST; MATURITY................................................2
   SECTION 2.3  MANDATORY REDEMPTION..............................................3
   SECTION 2.4  OPTIONAL REDEMPTION...............................................3
   SECTION 2.5  REDEMPTION PROCEDURES.............................................4
   SECTION 2.6  PAYMENT OF PRINCIPAL OF  NOTES....................................4
   SECTION 2.7  SUBORDINATION.....................................................4
   SECTION 2.8  INTEREST AFTER DUE DATE...........................................5
   SECTION 2.9  REGISTRATION, EXCHANGE AND REPLACEMENT OF NOTES...................5

                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

   SECTION 3.1  REPRESENTATIONS AND WARRANTIES OF SELLER .........................6
   SECTION 3.1.1  DUE INCORPORATION...............................................6
   SECTION 3.1.2  BINDING AGREEMENT...............................................6
   SECTION 3.1.3  NO CONFLICT.....................................................7
   SECTION 3.1.4  NO REQUIRED APPROVALS...........................................7
   SECTION 3.1.5  COMPLIANCE......................................................7
   SECTION 3.1.6  TITLE; SENIORITY................................................7
   SECTION 3.1.7  LITIGATION......................................................7
   SECITON 3.1.8  TAX RETURNS.....................................................7
   SECTION 3.1.9  FOREIGN CORRUPT PRACTICES ACT...................................7
   SECTION 3.1.10  NO PUBLIC SOLICITATION.........................................7
   SECTION 3.1.11  BROKER'S FEES..................................................7
   SECTION 3.1.12 INFORMATION.....................................................8

   SECTION 3.2  REPRESENTATIONS AND WARRANTIES OF THE COMPANY ....................8
   SECTION 3.2.1  DUE INCORPORATION...............................................9
   SECTION 3.2.2  BINDING AGREEMENT...............................................9
   SECTION 3.2.3  NO CONFLICT.....................................................9
   SECTION 3.2.4  NO REQUIRED APPROVALS...........................................9
   SECTION 3.2.5  COMPLIANCE......................................................9
   SECTION 3.2.6  TITLE; SENIORITY................................................9
   SECTION 3.2.7  FOREIGN CORRUPT PRACTICES ACT...................................9
   SECTION 3.2.8  NO PUBLIC SOLICITATION..........................................9

</TABLE>

                                        i
<PAGE>

<TABLE>
<S>             <C>                                                              <C>
                                   ARTICLE IV
                              CONDITIONS TO CLOSING

   SECTION 4.1  CONDITIONS TO OBLIGATIONS OF COMPANY.............................10
   SECTION 4.2  CONDITIONS TO OBLIGATIONS OF SELLER..............................10
   SECTION 4.3  WAIVER...........................................................10

                                    ARTICLE V
                               CLOSING DELIVERIES
   SECTION 5.1  BY THE SELLLER...................................................10
   SECTION 5.2  BY THE COMPANY...................................................11

                                   ARTICLE VI
                            COVENANTS OF THE PARTIES

   SECTION 6.1  PUBLICITY........................................................11
   SECTION 6.2  FILINGS AND CONSENTS.............................................11
   SECTION 6.3  COVENANT TO SATISFY CONDITIONS...................................12
   SECTION 6.4  WITHHOLDING TAXES................................................12
   SECTION 6.5  FURTHER ASSURANCES...............................................12
   SECTION 6.6  INDEMNIFICATION..................................................12

                                   ARTICLE VII
                                TRANSFER OF NOTES

   SECTION 7.1  TRANSFER RESTRICTIONS............................................12
   SECTION 7.2  COMPANY'S RIGHT OF FIRST OFFER...................................13
   SECTION 7.3  LEGEND ..........................................................14
   SECTION 7.4  COMPLIANCE WITH APPLICABLE LAW, TRANSFER RESTRICTIONS, ETC.......14
   SECTION 7.5  EFFECT...........................................................14

                                  ARTICLE VIII
                                   TERMINATION

   SECTION 8.1  TERMINATION......................................................14
   SECTION 8.2  PROCEDURE AND EFFECT OF TERMINATION..............................14

                                   ARTICLE IX
                                 CONFIDENTIALITY

   SECTION 9.1  CONFIDENTIAL INFORMATION.........................................15
   SECTION 9.2  EXCLUSIONS.......................................................15

                                    ARTICLE X
                                  MISCELLANEOUS

   SECTION 10.1  WAIVERS AND AMENDMENTS..........................................15
   SECTION 10.2  GOVERNING LAW...................................................16
   SECTION 10.3  SURVIVAL........................................................16
   SECTION 10.4  SUCCESSORS AND ASSIGNS..........................................16
   SECTION 10.5  ENTIRE AGREEMENT................................................16
   SECTION 10.6  NOTICES.........................................................16
   SECTION 10.7  ATTORNEYS' FEES.................................................17
</TABLE>

                                       ii

                                       18
<PAGE>

<TABLE>
<S>             <C>                                                              <C>

   SECTION 10.8  SEVERABILITY....................................................17
   SECTION 10.9  CAPTIONS........................................................17
   SECTION 10.10  COUNTERPARTS...................................................17

</TABLE>

                                      iii

<PAGE>

                                   ATTACHMENTS

<TABLE>
<S>                     <C>
ATTACHMENT 1     -      Form of IPO Note
ATTACHMENT 2     -      Form of Remainder Note
ATTACHMENT 3     -      Form of Stock Power
ATTACHMENT 4     -      Form of Shareholder Agreement
ATTACHMENT 5     -      Senior Financing Investors
ATTACHMENT 6     -      Form of W-8
</TABLE>

                                       iv

<PAGE>

                             INDEX OF DEFINED TERMS

<TABLE>
<S>                                                                         <C>
AGREEMENT....................................................................1
BFTC.........................................................................1
CLOSING......................................................................2
CLOSING DATE.................................................................2
COMMON STOCK.................................................................1
COMPANY......................................................................1
CUT-OFF DATE................................................................14
FCPA.........................................................................7
HOLDER.......................................................................3
HOLDINGS.....................................................................1
HOLDINGS CONSENT............................................................10
HSR ACT......................................................................3
INITIAL PAYMENT..............................................................2
INVESTMENT AGREEMENT.........................................................1
IPO..........................................................................3
IPO NOTE.....................................................................2
NOTE.........................................................................2
NOTE REDEMPTION PRICE........................................................3
NOTES........................................................................2
OFFER.......................................................................15
OFFERED SECURITIES..........................................................15
PERMITTED TRANSFEREE........................................................15
PUBLIC DISCLOSURES..........................................................13
REMAINDER NOTE...............................................................2
REPRESENTATIVES.............................................................17
SECURITIES...................................................................9
SECURITIES ACT...............................................................9
SELLER.......................................................................1
SENIOR DEBT..................................................................5
SENIOR EVENT OF DEFAULT......................................................5
SENIOR FINANCING.............................................................2
SHARE PURCHASE PRICE.........................................................2
SHAREHOLDER AGREEMENT........................................................4
TRANSFER....................................................................14
TRANSFER AGREEMENT...........................................................1
WALDO SHAREHOLDERS AGREEMENT.................................................1
</TABLE>

                                       v
<PAGE>

                                       ATTACHMENT 1 THE SHARE PURCHASE AGREEMENT

                               [FORM OF IPO NOTE]

                         KHANTY MANSIYSK OIL CORPORATION

         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 SHARE PURCHASE AGREEMENT DATED
         JUNE 29, 2000 AND A SHAREHOLDER AGREEMENT DATED JUNE 29, 2000. A COPY
         OF SUCH CONDITIONS WILL BE FURNISHED BY THE COMPANY 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.

                                 PROMISSORY NOTE

US$10,005,925                                                     June __, 2000

       FOR VALUE RECEIVED, Khanty Mansiysk Oil Corporation, a Delaware
corporation (the "COMPANY"), hereby promises to pay to the order of Waldo
Securities S.A. (the "LENDER"), a company organized and existing under the laws
of the British Virgin Islands, the principal sum of Ten Million, Five
Thousand Nine Hundred Twenty Five United States Dollars (US$ 10,005,925),
with no interest payable on the outstanding balance thereof from the date
hereof until paid in full (except as otherwise provided in Section 5 of this
Note).

       This Note (the "NOTE") is issued pursuant to and is entitled to the
benefits of, and is subject to the provisions of, the Share Purchase Agreement,
dated June 29, 2000, between the Company and Lender (as amended or otherwise
supplemented from time to time, the "SHARE PURCHASE AGREEMENT"). The Share
Purchase Agreement, among other things, contains provisions for (i) mandatory
redemption by the Company, (ii) optional redemption, with payment, at option of
Company, in cash or by delivery of shares of common stock of the Company, or a
combination thereof (subject to adjustment pursuant to Section 2.4(a) thereof)
(iii) restrictions on transfer of the Note, and (iv) exchange of Notes in
denominations of US$ 100,000 or integral multiples thereof.

       Capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Share Purchase Agreement.

       This Note is also subject to the following terms and conditions:

       1. NO INTEREST. No interest shall accrue or be payable at any time on the
unpaid principal amount of the Note, except as otherwise provided in Section 5
of this Note.

       2. PAYMENT OF PRINCIPAL. Unless sooner declared due hereunder or earlier
redeemed in accordance with the Share Purchase Agreement, the principal amount
of this Note shall be paid on the date fixed for such payment pursuant to
Section 2.2(a) of the Share Purchase Agreement.

       3. METHOD OF PAYMENT. Payments of principal shall be made in United
States Dollars by wire transfer in immediately available funds to the account
specified by the Lender or other holder of this Note (the "HOLDER"); provided,
however, that in the event of redemption of the Note pursuant to Section 2.4 of
the Share Purchase Agreement,

<PAGE>

payment of the outstanding principal may be made, at the option of Company, in
cash or in common stock of the Company or a combination thereof. Principal shall
be paid at such place as the Holder may designate in writing to the Company. The
Holder must surrender this Note to the Company upon the earlier of the
redemption hereof in accordance with the Share Purchase Agreement or at the time
of final payment of principal.

       4. PREPAYMENT. The Company shall have the right to prepay this Note prior
to maturity in accordance with the Share Purchase Agreement without the consent
of the Lender.

       5. INTEREST AFTER DUE DATE. If the principal of this Note is not paid
when due, as a result of redemption or otherwise, the overdue amount shall bear
interest from the due date until paid at an annual rate of 12%.

       6. INTEREST SAVINGS CLAUSE. Notwithstanding any other provision hereof,
the interest payable hereunder shall be limited to the maximum amount permitted
under applicable law. If any amount is paid hereunder which would be usurious
under applicable law, it shall be deemed a payment of principal or shall be
promptly refunded to the Company as necessary to avoid violation of any
applicable usury statute.

       7. APPLICATION OF PAYMENTS. All payments received on this Note shall
first be applied to the payment of any accrued interest (if any) pursuant to
Section 5 of this Note and then to the reduction of principal.

       8. WAIVERS. The Company, for itself and its successors and assigns and
any endorsers of this Note from time to time hereby waives presentment for
payment, demand, notice of dishonor, protest, notice of protest and any other
notice not provided for in the Share Purchase Agreement that the Company may
lawfully waive. No delay in exercising any right under this Note shall operate
as a waiver of such right or any other right under this Note, nor shall any
omission in exercising any right on the part of Holder under this Note operate
as a waiver of any other rights. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law.

       9. ATTORNEYS' FEES. If this Note or interest thereon is not paid when
due, or suit is brought to enforce any right hereunder, the Company and each
successor, assignee and endorser of this Note agrees to pay all reasonable costs
of collection and enforcement, including reasonable attorneys' fees. In the
event of any bankruptcy or insolvency proceedings involving the Company, costs
of collection shall include all costs and attorneys' fees incurred in connection
with such proceedings, including the fees of counsel for attendance at meetings
of creditors.

       10. RIGHTS AND PRIORITIES. The rights and priorities of the Holders of
this Note with respect to payment of interest and principal shall be
subordinated in right of payment to the notes issued by the Company pursuant to
the US$55,000,000 financing conducted by the Company in October 1997 (the
"SENIOR FINANCING") and shall rank PARI PASSU with the rights and priorities of
all other current and future unsecured indebtedness of the Company of similar
size (being less than US$10 Million) and tenor.

       11. SUBORDINATION.

       (a)    The indebtedness of the Company evidenced hereunder shall be
              junior and subordinate to all Senior Debt. As used in this Note,
              the term "SENIOR DEBT" means: (i) all securities issued by the
              Company pursuant to the Senior Financing and (ii) any refundings,
              renewals or extensions of any indebtedness described in clause (i)
              above.

       (b)    In the event of any dissolution, winding up, liquidation,
              reorganization or other similar proceedings relative to the
              Company, its property or its operations (whether in bankruptcy,
              insolvency or receivership proceedings, or upon an assignment for
              the benefit of creditors, or any other marshalling of assets of
              the Company or otherwise), then all Senior Debt shall first be
              paid in full in cash or cash equivalents before the Company shall
              be entitled to retain any payment or distribution of assets made
              after such event with respect to the Notes. In any such
              proceeding, any

                                       2
<PAGE>

              payment or distribution of assets to which the Holder would be
              entitled if the Notes were not subordinated to the Senior Debt
              shall be paid by the trustee or agent or other person making such
              payment or distribution, or by the Holder if received by it,
              directly to the holders of the Senior Debt (pro rata) to the
              extent necessary to make payment in full of all Senior Debt
              remaining unpaid, after giving effect to any concurrent payment or
              distribution to or for the holders of the Senior Debt.

       (c)    The Company may, from time to time (and with respect to payments
              of principal of the Notes, upon 30-days prior written notice to
              the holders of the Senior Debt), pay or cause to be paid to the
              Holder and the Holder may accept and retain scheduled payments in
              respect of interest and principal on the Notes, as originally
              executed and delivered, unless at the time of any such proposed
              payment or immediately after giving effect thereto, there shall
              exist any default with respect to the Senior Debt that permits
              holders of the Senior Debt as to which such default relates to
              accelerate its maturity (each, a "SENIOR EVENT OF DEFAULT") and
              the holders of the Senior Debt have notified the Company in
              writing of the existence of such Senior Event of Default prior to
              such payment. If the Holder receives payment from the Company
              pursuant to this Section 11(c), such payment shall be deemed to
              constitute a representation by the Company to the holders of the
              Senior Debt and to the Holder that no Senior Event of Default
              exists, and that such payment is permitted to be paid to the
              Holder under the Notes; and the Holder shall be entitled to keep
              and retain such payments, unless the holders of the Senior Debt
              shall have notified the Company or the Holder of a Senior Event of
              Default in writing prior to such payment, in which case (if such
              Senior Event of Default in fact existed on the date of such
              payment) the Holder shall forthwith deliver such payment or an
              amount of cash equal thereto to the holders of the Senior Debt for
              application in payment of the Senior Debt.

       (d)    In the event that the Holder shall receive any payment or
              distribution of assets which the Holder is not entitled to retain
              under the provisions of the Notes, the Holder shall hold any
              amount so received in trust for the holders of Senior Debt and,
              upon the request of any holder of Senior Debt, shall forthwith
              turn over such payment or distribution (without liability for
              interest thereon) to the holders of Senior Debt (pro rata) in the
              form received to be applied to Senior Debt. Any holder of Senior
              Debt may at any time and from time to time without the consent of
              or notice to the Holder: (i) extend, renew, modify or amend the
              terms of Senior Debt; (ii) sell, exchange, release or otherwise
              deal with any property pledged, mortgaged or otherwise securing
              Senior Debt; (iii) release any guarantor or any other person
              (except the Company) liable in any manner for the Senior Debt;
              (iv) exercise or refrain from exercising any rights against the
              Company or any other person; and (v) apply any sums by whomever
              paid or however realized to Senior Debt. Any and all of such
              actions set forth in this Section 11 may be taken by holders of
              Senior Debt without incurring responsibility to the Holder and
              without impairing or releasing the obligations of the Holder under
              this Section 11.

       (e) No holder of Senior Debt shall be prejudiced in its right to enforce
       subordination of the Notes by any act or failure to act by the Company or
       anyone in custody of the Company's assets or property. No amendment or
       modification of the terms of this Section 11 shall be effective as
       against any holder of Senior Debt without the consent of such holder.

       12. NOTICES. Any notice, request, demand, consent, approval or other
communication which the Company or the Holder are obligated or may elect to give
hereunder shall be given in the form and in the manner set forth

                                       3
<PAGE>

in the Share Purchase Agreement for the giving of notices thereunder and shall
be deemed given for the purposes hereof at such time as the same, if given under
the Share Purchase Agreement, would be deemed given.

       13. SEVERABILITY. If any provision of this Note or the application
thereof to any party or circumstances is held invalid or unenforceable, the
remainder of this Note and the application of such provision to other parties or
circumstances will not be affected thereby and the provisions of this Note shall
be several in any such instance.

       14. GOVERNING LAW. This Note shall be governed by and interpreted in
accordance with the laws of the State of New York applicable to agreements made
and to be performed within such State.

       KHANTY MANSIYSK OIL CORPORATION

       By:      ____________________________________
       Name:    John B. Fitzgibbons
       Title:   Chief Executive Officer

                                       4
<PAGE>

                                       ATTACHMENT 2 THE SHARE PURCHASE AGREEMENT

                            [FORM OF REMAINDER NOTE]

                         KHANTY MANSIYSK OIL CORPORATION

         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 SHARE PURCHASE AGREEMENT DATED
         JUNE 29, 2000 AND A SHAREHOLDERS AGREEMENT DATED JUNE 29, 2000. A COPY
         OF SUCH CONDITIONS WILL BE FURNISHED BY THE COMPANY 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.

                                 PROMISSORY NOTE

US$10,000,000                                                    June __, 2000

       FOR VALUE RECEIVED, Khanty Mansiysk Oil Corporation, a Delaware
corporation (the "COMPANY"), hereby promises to pay to the order of Waldo
Securities S.A. (the "LENDER"), a company organized and existing under the laws
of the British Virgin Islands, the principal sum of Ten Million United States
Dollars (US$10,000,000), with no interest payable on the outstanding balance
thereof from the date hereof until December 31, 2000, and from January 1, 2001
until paid in full, with interest on the outstanding balance thereof at the rate
of 10% per annum (or at such increased rate required to be paid in accordance
with Section 5 of this Note).

       This Note (the "NOTE") is issued pursuant to and is entitled to the
benefits of, and is subject to the provisions of, the Share Purchase Agreement,
dated June 29, 2000, between the Company and Lender (as amended or otherwise
supplemented from time to time, the "SHARE PURCHASE AGREEMENT"). The Share
Purchase Agreement, among other things, contains provisions for (i) optional
redemption, (ii) restrictions on transfer of the Note, and (iii) exchange of
Notes in denominations of $100,000 or integral multiples thereof.

       Capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Share Purchase Agreement.

       This Note is also subject to the following terms and conditions:

       1. COMPUTATION AND PAYMENT OF INTEREST. No interest shall accrue or be
payable by the Company on the unpaid principal amount of this Note from the date
of this Note until December 31, 2000. Commencing on January 1, 2001, the Company
shall pay interest on the unpaid principal amount of the Note until such
principal amount shall be paid in full, at a rate equal to 10% per annum.
Accrued interest on the unpaid principal amount of the Note shall be payable
quarterly on September 30, December 31, March 31 and June 30 of each year until
the Note is paid in full with the first such payment due on March 31, 2001. The
Company shall make each payment under the Note year to the holder thereof, as
determined by the reference to the Company's note registration books on the
first day of relevant month when payment is due, not later than 12:00 noon, New
York City Time, on the day when due. All computations of interest shall be made
on the basis of a year of 365 or 366 days, as the case may be, in each case for
the actual number of days (including the first day but excluding the last day)
elapsed. Whenever any payment under the Note shall be stated

<PAGE>

to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest.

       2. PAYMENT OF PRINCIPAL. Unless sooner declared due hereunder or earlier
redeemed in accordance with the Share Purchase Agreement, the principal amount
of this Note shall be paid on the date fixed for such payment pursuant to
Section 2.2(b) of the Share Purchase Agreement.

       3. METHOD OF PAYMENT. Payments of principal shall be made in United
States dollars by wire transfer in immediately available funds to the account
specified by the Lender or other holder of this Note (the "HOLDER"). Principal
shall be paid at such place as the Holder may designate in writing to the
Company. The Holder must surrender this Note to the Company upon the earlier of
the redemption hereof in accordance with the Share Purchase Agreement or at the
time of final payment of principal.

       4. PREPAYMENT. The Company shall have the right to prepay this Note prior
to maturity in accordance with the Share Purchase Agreement without the consent
of the Lender.

       5. INTEREST AFTER DUE DATE. If the principal of this Note is not paid
when due, as a result of redemption or otherwise, the overdue amount shall bear
interest from the due date until at an annual rate of 12%.

       6. INTEREST SAVINGS CLAUSE. Notwithstanding any other provision hereof,
the interest payable hereunder shall be limited to the maximum amount permitted
under applicable law. If any amount is paid hereunder which would be usurious
under applicable law, it shall be deemed a payment of principal or shall be
promptly refunded to the Company as necessary to avoid violation of any
applicable usury statute.

       7. APPLICATION OF PAYMENTS. All payments received on this Note shall
first be applied to the payment of any accrued interest (if any) pursuant to
Sections 1 or 5 of this Note and then to the reduction of principal.

       8. WAIVERS. The Company, for itself and its successors and assigns and
any endorsers of this Note from time to time hereby waives presentment for
payment, demand, notice of dishonor, protest, notice of protest and any other
notice not provided for in the Share Purchase Agreement that the Company may
lawfully waive. No delay in exercising any right under this Note shall operate
as a waiver of such right or any other right under this Note, nor shall any
omission in exercising any right on the part of Holder under this Note operate
as a waiver of any other rights. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law.

       9. ATTORNEYS' FEES. If this Note or interest thereon is not paid when
due, or suit is brought to enforce any right hereunder, the Company and each
successor, assignee and endorser of this Note agrees to pay all reasonable costs
of collection and enforcement, including reasonable attorneys' fees. In the
event of any bankruptcy or insolvency proceedings involving the Company, costs
of collection shall include all costs and attorneys' fees incurred in connection
with such proceedings, including the fees of counsel for attendance at meetings
of creditors.

       10. RIGHTS AND PRIORITIES. The rights and priorities of the Holders of
this Note with respect to payment of interest and principal shall be
subordinated in right of payment to the notes issued by the Company pursuant to
the US$55,000,000 financing conducted by the Company in October 1997 (the
"SENIOR FINANCING") and shall rank PARI PASSU with the rights and priorities of
all other current and future unsecured indebtedness of the Company of similar
size (being less than US$10 Million) and tenor.

                                       2
<PAGE>

       11. SUBORDINATION.

       (a)    The indebtedness of the Company evidenced hereunder shall be
              junior and subordinate to all Senior Debt. As used in this Note,
              the term "SENIOR DEBT" means: (i) all securities issued by the
              Company pursuant to the Senior Financing and (ii) any refundings,
              renewals or extensions of any indebtedness described in clause (i)
              above.

       (b)    In the event of any dissolution, winding up, liquidation,
              reorganization or other similar proceedings relative to the
              Company, its property or its operations (whether in bankruptcy,
              insolvency or receivership proceedings, or upon an assignment for
              the benefit of creditors, or any other marshalling of assets of
              the Company or otherwise), then all Senior Debt shall first be
              paid in full in cash or cash equivalents before the Company shall
              be entitled to retain any payment or distribution of assets made
              after such event with respect to the Notes. In any such
              proceeding, any payment or distribution of assets to which the
              Holder would be entitled if the Notes were not subordinated to the
              Senior Debt shall be paid by the trustee or agent or other person
              making such payment or distribution, or by the Holder if received
              by it, directly to the holders of the Senior Debt (pro rata) to
              the extent necessary to make payment in full of all Senior Debt
              remaining unpaid, after giving effect to any concurrent payment or
              distribution to or for the holders of the Senior Debt.

       (c)    The Company may, from time to time (and with respect to payments
              of principal of the Notes, upon 30-days prior written notice to
              the holders of the Senior Debt), pay or cause to be paid to the
              Holder and the Holder may accept and retain scheduled payments in
              respect of interest and principal on the Notes, as originally
              executed and delivered, unless at the time of any such proposed
              payment or immediately after giving effect thereto, there shall
              exist any default with respect to the Senior Debt that permits
              holders of the Senior Debt as to which such default relates to
              accelerate its maturity (each, a "SENIOR EVENT OF DEFAULT") and
              the holders of the Senior Debt have notified the Company in
              writing of the existence of such Senior Event of Default prior to
              such payment. If the Holder receives payment from the Company
              pursuant to this Section 11(c), such payment shall be deemed to
              constitute a representation by the Company to the holders of the
              Senior Debt and to the Holder that no Senior Event of Default
              exists, and that such payment is permitted to be paid to the
              Holder under the Notes; and the Holder shall be entitled to keep
              and retain such payments, unless the holders of the Senior Debt
              shall have notified the Company or the Holder of a Senior Event of
              Default in writing prior to such payment, in which case (if such
              Senior Event of Default in fact existed on the date of such
              payment) the Holder shall forthwith deliver such payment or an
              amount of cash equal thereto to the holders of the Senior Debt for
              application in payment of the Senior Debt.

       (d)    In the event that the Holder shall receive any payment or
              distribution of assets which the Holder is not entitled to retain
              under the provisions of the Notes, the Holder shall hold any
              amount so received in trust for the holders of Senior Debt and,
              upon the request of any holder of Senior Debt, shall forthwith
              turn over such payment or distribution (without liability for
              interest thereon) to the holders of Senior Debt (pro rata) in the
              form received to be applied to Senior Debt. Any holder of Senior
              Debt may at any time and from time to time without the consent of
              or notice to the Holder: (i) extend, renew, modify or amend the
              terms of Senior Debt; (ii) sell,

                                       3
<PAGE>

              exchange, release or otherwise deal with any property pledged,
              mortgaged or otherwise securing Senior Debt; (iii) release any
              guarantor or any other person (except the Company) liable in any
              manner for the Senior Debt; (iv) exercise or refrain from
              exercising any rights against the Company or any other person; and
              (v) apply any sums by whomever paid or however realized to Senior
              Debt. Any and all of such actions set forth in this Section 11 may
              be taken by holders of Senior Debt without incurring
              responsibility to the Holder and without impairing or releasing
              the obligations of the Holder under this Section 11.

       (e)    No holder of Senior Debt shall be prejudiced in its right to
              enforce subordination of the Notes by any act or failure to act by
              the Company or anyone in custody of the Company's assets or
              property. No amendment or modification of the terms of this
              Section 11 shall be effective as against any holder of Senior Debt
              without the consent of such holder.

       12. NOTICES. Any notice, request, demand, consent, approval or other
communication which the Company or the Holder are obligated or may elect to give
hereunder shall be given in the form and in the manner set forth in the Share
Purchase Agreement for the giving of notices thereunder and shall be deemed
given for the purposes hereof at such time as the same, if given under the Share
Purchase Agreement, would be deemed given.

       13. SEVERABILITY. If any provision of this Note or the application
thereof to any party or circumstances is held invalid or unenforceable, the
remainder of this Note and the application of such provision to other parties or
circumstances will not be affected thereby and the provisions of this Note shall
be several in any such instance.

       14. GOVERNING LAW. This Note shall be governed by and interpreted in
accordance with the laws of the State of New York applicable to agreements made
and to be performed within such State.

       KHANTY MANSIYSK OIL CORPORATION

       By:      ____________________________________
       Name:    John B. Fitzgibbons
       Title:   Chief Executive Officer

                                       4
<PAGE>

                                    ATTACHMENT 3 TO THE SHARE PURCHASE AGREEMENT

                                   STOCK POWER

                  FOR VALUE RECEIVED, WALDO SECURITIES S.A., an international
                  business company organized under the laws of the British
                  Virgin Islands, hereby sells, assigns and transfers unto
                  KHANTY MANSIYSK OIL CORPORATION, a Delaware corporation, free
                  and clear of all liens, mortgages, charges and other security
                  interests and encumbrances of any kind, 44,223 (Forty Four
                  Thousand, Two Hundred Twenty Three) Shares of common stock, no
                  par value, of KHANTY MANSIYSK OIL CORPORATION standing in its
                  name on the books of said Corporation represented by
                  Certificate No. 163, dated November 15, 1999 herewith, and do
                  hereby irrevocably constitute and appoint S. Adam Deery
                  (General Counsel and Secretary of Khanty Mansiysk Oil
                  Corporation) attorney to transfer the said stock on the books
                  of said Corporation with full power of substitution in the
                  premises.

Dated: June 29, 2000

                                          WALDO SECURITIES S.A.

                                          -----------------------------------
                                          Name:
                                          Title:

In presence of

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

<PAGE>

                                        ATTACHMENT 4 TO SHARE PURCHASE AGREEMENT

                         [FORM OF SHAREHOLDER AGREEMENT]

<PAGE>

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

                              SHAREHOLDER AGREEMENT

                                   DATED AS OF

                                  JUNE 29, 2000

                                 BY AND BETWEEN

                         KHANTY MANSIYSK OIL CORPORATION

                                       AND

                              WALDO SECURITIES S.A.

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

<PAGE>

       SHAREHOLDER AGREEMENT, dated as of June 29, 2000, by and between Khanty
Mansiysk Oil Corporation, a Delaware corporation ("KMOC") and Waldo Securities
S.A., an international business company organized and existing under the laws of
the British Virgin Islands ("WALDO").

       WHEREAS KMOC and Waldo are parties to a Share Purchase Agreement, dated
       as of June 29, 2000, (the "PURCHASE AGREEMENT"), pursuant to which Waldo
       sold to KMOC 44,223 (Forty Four Thousand, Two Hundred Twenty Three)
       shares of common stock, no par value per share, of the Company (the
       "PURCHASED SHARES"), for an aggregate purchase price equal to
       US$21,005,925 (Twenty One Million, Five Thousand, Nine Hundred Twenty
       Five United States Dollars);

       WHEREAS, a portion of the aggregate consideration paid by KMOC for the
Purchased Shares consisted of a promissory note issued by KMOC to Waldo in the
amount of US$10,000,525 (Ten Million, Five Hundred Twenty Five United States
Dollars) (the "IPO NOTE");

       WHEREAS KMOC has the right to redeem the IPO Note, at its option, in cash
       or common stock of KMOC (or a combination thereof), all upon the terms
       and conditions set forth in the Purchase Agreement;

       WHEREAS the parties hereto wish to set forth their agreement concerning
certain matters relating to the Waldo's ownership and disposition of any shares
of common stock, no par value, of KMOC issued to or acquired by Waldo (i) upon
the redemption of the IPO Note, and the Company's election to pay the redemption
price therefor in shares of common stock of KMOC, or (ii) by any other means
subsequent to the Closing Date (as defined in the Purchase Agreement), unless
otherwise agreed in writing by the Parties hereto (collectively, "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 1.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:

       "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.

       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 manner.

                                       1

<PAGE>

       "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 KMOC Voting Securities or (ii) otherwise obtains control of
KMOC.

       "EFFECTIVE DATE" means the date on which Waldo is issued or otherwise
acquires any Shares.

       "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.

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

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

       "INDEMNIFIED PERSON" has the meaning set forth in Section 4.3(a).

       "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" has the meaning set forth in Section 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 of KMOC registered under
the Securities Act.

       "PURCHASED SHARES" has the meaning set forth in 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.

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

                                       2
<PAGE>

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

       "SHAREHOLDER" means Waldo at such time as Waldo Beneficially Owns Shares
and any Permitted Transferee that holds Shares.

       "THIRD PARTY OFFER" means a bona fide offer to enter into a transaction
by a Person other than Waldo or any of Waldo's affiliates or any other Person
acting on behalf of Waldo or any of Waldo'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.

                                   ARTICLE II.
                               THIRD PARTY OFFERS

       SECTION 2.1 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
Waldo, briefly describing the material terms of such Third Party Offer, and
Waldo 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.

                                  ARTICLE III.
                              TRANSFER RESTRICTIONS

       SECTION 3.1 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,

                                       3
<PAGE>

              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 merger, consolidation or other business combination
              involving Waldo, where Waldo is not the surviving entity, or a
              sale of all or substantially all of Waldo's assets; PROVIDED,
              HOWEVER, that the surviving or purchasing entity agrees to be
              bound by the terms of this Agreement; or

     c.     pursuant to a Transfer of Shares by Waldo to a Wholly Owned
              Subsidiary of Waldo, from a Wholly Owned Subsidiary of Waldo to
              Waldo or between Wholly Owned Subsidiaries of Waldo (any such
              transferee shall be referred to herein as a "Permitted
              Transferee"), provided that in the case of any such Transfer,
              Waldo 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 Waldo 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
              Waldo ceases to be a Permitted Transferee, such Shares shall be
              Transferred back to Waldo immediately prior to the time such
              Person ceases to be a Permitted Transferee of Waldo. Waldo and
              such Permitted Transferee shall be jointly and severally liable
              for any breach of this Agreement by such Permitted Transferee.

       SECTION 3.2 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 endorsed
              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 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.

                                       4
<PAGE>

     f.     Notwithstanding the foregoing, in the event that KMOC fails to
              close the purchase of the Offered Shares on the date specified in
              its notice of acceptance, the Shareholder shall be entitled, for a
              period of 120 days from the closing date originally set by KMOC in
              its offer of acceptance, to sell the Offered Shares at any
              reasonably negotiated price to any third party without having to
              further comply with the provisions of this Section 3.2; provided,
              however, that in the event that KMOC's failure to close the
              purchase is due to an order, injunction or other similar mandate
              from a regulatory body of competent jurisdiction and KMOC is using
              its best efforts to cause such order, injunction or mandate, as
              the case may be, to not apply to the purchase of the Offered
              Shares then KMOC shall have until the earlier of (i) the
              expiration of 30 days from the closing date originally set by KMOC
              in its acceptance or (ii) such time as the order, injunction or
              mandate becomes final and non-appealable, in which to close the
              purchase of the Offered Shares before the provisions of this
              clause (f) become applicable.

       SECTION 3.3 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 JUNE 29, 2000. 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 3.4 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 3.5 EFFECT. Any purported transfer of securities that is not in
accordance 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 4.1 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 Waldo (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 Waldo
made within 10 days after the receipt of any such notice (which request shall
specify the number of Shares intended to be disposed of by each Shareholder),
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 Waldo (including Shares to be
              included on behalf of other Shareholders) among those securities
              to be distributed by or through such underwriters (on the

                                       5
<PAGE>

              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 Common Stock.
              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 who have substantially
              similar registration rights to the holders of Shares and have
              requested registration of their 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 Waldo 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 Waldo.

       SECTION 4.2 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:

          (1)  furnish to Waldo 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 Waldo may reasonably request to facilitate the disposition of
               the Shares included in such registration by the Shareholders;

          (2)  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;

          (3)  advise Waldo, 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 pro-

                                       6
<PAGE>

               ceeding 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;

          (4)  notify Waldo 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 Waldo's request prepare and
               furnish to Waldo 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;

          (5)  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.

       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, Waldo agrees not
              to, 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. Waldo
              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.     Waldo 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)(4), 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, Waldo 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 indemnification 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 conditions as may then be customarily required in
              connection with such offering; and (iii) distribute the Shares in
              accordance with

                                       7
<PAGE>

              and in the manner of the distribution contemplated by the
              applicable registration statement and prospectus.

       SECTION 4.3 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
              "Indemnified 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
              Indemnified 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 written
              information furnished by such seller of Shares to KMOC for
              inclusion therein, whether directly or indirectly by reference.

       b.     INDEMNIFICATION BY THE SHAREHOLDERS. Waldo 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 to the extent that such statement or
              omission or alleged statement or omission was made solely in
              reliance upon and in conformity with written 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.

                                       8
<PAGE>

       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 except to the extent
              that the indemnifying party is materially prejudiced thereby.
              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 or alleged statement or omission which
              resulted in such losses, claims, damages or liabilities (or
              actions or proceedings in respect thereof). The relative fault
              shall be determined by reference 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 5.1 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.

                                       9
<PAGE>

                                   ARTICLE VI.
                                   TERMINATION

       SECTION 6.1 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 and the Company and PROVIDED,
FURTHER, that as set forth in Section 3.1(a), Waldo shall be liable for any
breach of this Agreement by a Permitted Transferee even if at such time Waldo
does not hold any Shares.

                                  ARTICLE VII.
                                  MISCELLANEOUS

       SECTION 7.1 EFFECTIVENESS. This Agreement shall be effective as of the
Effective Date.

       SECTION 7.2 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
                152 W. 57th St, 29th Floor
                New York, New York 10017
                Attention: John B. Fitzgibbons
                Phone: (212) 245-5544
                Fax: (212) 245-1932

       If to Waldo or any other Shareholder, to:

                 Waldo Securities S.A.
                 Akara Building, Suite #8
                 Wickhams Cay, 1 Road Town Tortola,
                 British Virgin Islands
                 Attn:
                 Phone:
                 Fax:

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 8.2 (or in accordance with the latest
unrevoked written direction from such party), (B) if given by fax, when such fax
is transmitted to the fax number specified in this Section 8.2 (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 7.3 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."

                                       10
<PAGE>

       SECTION 7.4 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 7.5 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 7.6 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 (or with respect to Section 4.3, the
parties referenced therein), any rights or remedies hereunder.

       SECTION 7.7 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 7.8 GOVERNING LAW; EQUITABLE REMEDIES. This Agreement shall be
governed by and construed in accordance with the laws of the 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 7.9 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 7.10 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 (a) in connection with a
Transfer pursuant to and in accordance with, Article III hereof, and (b) 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.

                                       11
<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:    John B. Fitzgibbons
             Title:   Chief Executive Officer

             WALDO SECURITIES S.A.
             By:      ______________________________
             Name:    ______________________________
             Title:   ______________________________

                                       12
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                 PAGE
                                                                                 ----
<S>               <C>                                                            <C>
                                    ARTICLE I
                                   DEFINITIONS
SECTION 1.1.      DEFINITIONS                                                      1

                                   ARTICLE II
                               THIRD PARTY OFFERS
SECTION 2.1.      THIRD PARTY OFFERS                                               3

                                   ARTICLE III
                              TRANSFER RESTRICTIONS
SECTION 3.1.      RESTRICTIONS                                                     3
SECTION 3.2.      RIGHT OF FIRST OFFER                                             4
SECTION 3.3.      LEGEND                                                           5
SECTION 3.4.      COMPLIANCE WITH APPLICABLE LAW                                   5
SECTION 3.5.      EFFECT                                                           5

                                   ARTICLE IV
                               REGISTRATION RIGHTS
SECTION 4.1.      INCIDENTAL REGISTRATION                                          5
SECTION 4.2.      REGISTRATION PROCEDURES                                          6
SECTION 4.3.      INDEMNIFICATION                                                  8

                                    ARTICLE V
                                VOTING COVENANTS
SECTION 5.1.      VOTING SHARES                                                    9

                                   ARTICLE VI
                                   TERMINATION
SECTION 6.1.      TERMINATION                                                     10

                                   ARTICLE VII
                                  MISCELLANEOUS
SECTION 7.1.      EFFECTIVENESS                                                   10
SECTION 7.2.      NOTICES                                                         10
SECTION 7.3.      INTERPRETATION                                                  10
SECTION 7.4.      SEVERABILITY                                                    11
SECTION 7.5.      COUNTERPARTS                                                    11
SECTION 7.6.      ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES                  11
SECTION 7.7.      FURTHER ASSURANCES                                              11
SECTION 7.8.      GOVERNING LAW; EQUITABLE REMEDIES                               11
SECTION 7.9.      AMENDMENTS; WAIVERS                                             11
SECTION 7.10.     ASSIGNMENT                                                      11
</TABLE>

                                       i

<PAGE>

                                    ATTACHMENT 5 TO THE SHARE PURCHASE AGREEMENT

                           SENIOR FINANCING INVESTORS

Khanty Holdings, LLC
Deltec Asset Management Corporation
Acorn International
Koch Capital Services, Inc
Fractor Investments Limited
Spindrift Partners, LP
Spindrift Investors (Bermuda) LP
Mr. James Fitzgibbons
Mr. Robert Gray
Mr. Peter B. Kellner
Mr. Remy Trafelet
Ms. Sarah Leggat

<PAGE>

                                    ATTACHMENT 6 TO THE SHARE PURCHASE AGREEMENT

                          [FORM OF W-8 BEN CERTIFICATE]

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