Procedurally generated, vertex colored mesh self-shadowing problem

Woosh, that was a long title! Well, to make a long story short: I have a terrain mesh, created using help from this site: http://gamasutra.com/blogs/JayelindaSuridge/20130903/199457/Modelling_by_numbers_Part_Two_A.php With help of libnoise I'm generating a nice terrain, and then I'm coloring the vertex with another noise. I've found vertex lit shader with shadows here: http://forum.unity3d.com/threads/191389-Vertex-Color-Shadows Using the one posted by Foam. The problem is - right now, when I try and run the game shadows are all borked. See attachment. Can anyone help me out?