Bonds FLC

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U.S.$150,000,000 10 per cent. Series 2008-1 Loan Participation Notes due 2013
with a put option at par in 2010

issued by
Greenwich Avenue Finance B.V.
(incorporated under the laws of The Netherlands)

on a limited recourse basis for the sole purpose of financing a U.S.$150,000,000 loan to
Open Joint-Stock Company “Finance Leasing Company”
(incorporated under the laws of the Russian Federation)

Issue Price: 99.779 per cent.

Greenwich Avenue Finance B.V. (incorporated under the laws of The Netherlands) (the “Issuer”) issued an aggregate principal amount of U.S.$150,000,000 10 per cent.
Series 2008-1 Loan Participation Notes due 2013 (the “Notes”) for the sole purpose of financing a 5 year loan (the “Loan”) to Open Joint-Stock Company “Finance Leasing
Company” (“FLC”) pursuant to a loan agreement dated 30 June 2008 (the “Loan Agreement”) between the Issuer and FLC. The Notes are constituted by, subject to, and
have the benefit of, a trust deed dated 27 June 2008 (the “Trust Deed”) between the Issuer and BNY Corporate Trustee Services Limited as trustee (the “Trustee”).
Pursuant to the Trust Deed, the Issuer charged in favour of the Trustee, for the benefit of the holders of the Notes (the “Noteholders”) as security for its payment
obligations in respect of the Notes (a) its right as lender to all payments under the Loan Agreement and (b) amounts received pursuant to the Loan in an account of the
Issuer. See “Description of the Transaction”. The Issuer also assigned its administrative rights under the Loan Agreement to the Trustee.

The Notes are limited recourse secured obligations of the Issuer. In each case where amounts of principal, interest and additional amounts (if any) are stated to be payable
in respect of the Notes, the obligation of the Issuer to make any such payment constitutes an obligation only to account to the Noteholders, on each date upon which such
amounts of principal, interest and additional amounts (if any) are due in respect of the Notes, for an amount equivalent to all principal, interest and additional amounts (if
any) actually received by or for the account of the Issuer pursuant to the Loan Agreement. The Issuer has no other financial obligation under the Notes. Noteholders will
be deemed to have accepted and agreed that they are relying solely and exclusively on the credit and financial standing of FLC in respect of the financial
servicing of the Notes.

The Loan will rank pari passu in right of payment with FLC’s other outstanding unsecured and unsubordinated indebtedness. Other than as described in this Prospectus and
the Trust Deed, the Noteholders have no proprietary or other direct interest in the Issuer’s rights under or in respect of the Loan Agreement or the Loan. Subject to the
terms of the Trust Deed, no Noteholder will have any rights to enforce any of the provisions in the Loan Agreement or have direct recourse to FLC except through action by
the Trustee.

Except as set forth herein, payments in respect of the Notes will be made without any deduction or withholding for or on account of taxes of the Russian Federation or The
Republic of Cyprus. (see “Taxation”). The loan may be prepaid at its principal amount, together with accrued interest, at the option of FLC upon FLC being required to
deduct or withhold any such Russian or Cypriot taxes from payments to be made by it in respect of such Loan. The loan may also be prepaid if it becomes unlawful for such
Loan or the Notes to remain outstanding, as set out in the loan Agreement. Upon prepayment of the loan in accordance with its terms, the principal amount of all
outstanding Notes will be prepaid by the Issuer, together with accrued interest.

An investment in the Notes involves a high degree of risk. Investors should carefully consider the factors described in the section entitled “Risk Factors” in this
Prospectus before investing in the Notes.

THE NOTES AND THE LOAN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”) AND, SUBJECT TO CERTAIN EXCEPTIONS, MAY NOT BE OFFERED AND SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”)). THE NOTES ARE BEING SOLD IN RELIANCE
ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY REGULATION S.

The Prospectus has been approved by the Irish Financial Services Regulatory Authority (the “Financial Regulator”), as competent authority under Directive 2003/71/EC
(the “Prospectus Directive”). The Financial Regulator only approves this Prospectus as meeting the requirements imposed under Irish and EU law pursuant to the
Prospectus Directive. Application has been made to the Irish Stock Exchange for the Notes to be admitted to the official list of the Irish Stock Exchange (the “Official List”)
and trading on its regulated market.

Such approval relates only to the Notes which are to be admitted to trading on the regulated market of the Irish Stock Exchange or other regulated markets for the purposes
of Directive 2004/39/EC or which are to be offered to the public in any Member State of the European Economic Area.

The Notes have been issued in registered form in denominations of U.S.$100,000 and integral multiples of U.S.$1,000 in excess thereof, without coupons. The Notes are
represented by a global Note certificate deposited with a common depositary for Euroclear Back S.A./N.V. (“Euroclear”) and Clearstream Banking, société anonyme
(“Clearstream, Luxembourg”) on 30 June 2008 (the “Issue Date”). Individual note certificates (“Individual Note Certificates”) evidencing holdings of Notes will be
available only in certain limited circumstances described under “Summary of Provisions Relating to the Notes in Global Form”.

Lead Arranger and Dealer

The date of this Prospectus is 23 October 2008

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IMPORTANT NOTICE

This Prospectus constitutes a prospectus for the purpose of Article 5 of the Prospectus Directive and
for the purpose of giving information with regard to the Issuer and FLC and the Notes which,
according to the particular nature of the Issuer, FLC and the Notes, is necessary to enable investors
to make an informed assessment of the assets and liabilities, financial position, profit and losses and
prospects of the Issuer and FLC and of the rights attaching to the Notes.

Each of the Issuer and FLC accepts responsibility for the information contained in this Prospectus.
To the best of the knowledge and belief of each of the Issuer and FLC (having taken all reasonable
care to ensure that such is the case) the information contained in this Prospectus is in accordance
with the facts and does not omit anything likely to affect the import of such information. FLC’s legal
name is Open Joint-Stock Company “Finance Leasing Company”, and the address of its registered
office is 50 Perovskaya Street, Building 1, Premises IX, Moscow 111141, Russian Federation. The
telephone number of the registered office is +7 495 232 06 30.

The Issuer’s legal name is Greenwich Avenue Finance B.V., registered in The Netherlands on 6
June 2008, with registered number 34303854, as a limited liability company. The Issuer’s registered
address is Parnassustoren, Locatellikade 1, 1076 AZ Amsterdam, The Netherlands. The Issuer may
be reached by Tel: +31 20 5755 600

FLC and the Issuer have derived substantially all of the information contained in this Prospectus
concerning the Russian aviation market and FLC’s competitors, which may include estimates or
approximations, from publicly available information, including press releases and filings made under
various securities laws.

FLC and the Issuer accept responsibility that such information has been accurately reproduced and,
as far as FLC and the Issuer are aware and are able to ascertain, no facts have been omitted which
would render the information inaccurate or misleading. However, FLC and the Issuer have relied on
the accuracy of such information without carrying out an independent verification. The official data
published by Russian federal, regional and local governments and the CBR is substantially less
complete or researched than those of Western countries. Official statistics may also be compiled on
different bases than those used in Western countries. Any discussion of matters related to Russia in
this Prospectus must, therefore, be subject to uncertainty due to concerns about the completeness
or reliability of available official and public information. The veracity of some official data released by
the Russian government may be questionable.

The Arranger and Dealer has not separately verified the information contained in this Prospectus.
The Arranger and Dealer does not make any representation, express or implied, or accept any
responsibility, with respect to the accuracy or completeness of any of the information in this
Prospectus. Neither this Prospectus nor any financial statements are intended to provide the basis
of any credit or other evaluation and should not be considered as a recommendation by either of the
Issuer or the Arranger and Dealer that any recipient of this Prospectus or any financial statements
should purchase the Notes. Each potential purchaser of Notes should determine for itself the
relevance of the information contained in this Prospectus and its purchase of Notes should be based
upon such investigation as it deems necessary. The Arranger and Dealer does not undertake to
review the financial condition or affairs of FLC during the life of the arrangements contemplated by
this Prospectus nor will the Arranger and Dealer advise any investor or potential investor in the
Notes of any information coming to the attention of any of the Arranger and Dealer. Further, none of
the Issuer, FLC, the Trustee, the Arranger and Dealer or any of the respective representatives is
making any representation to any offeree or purchaser of the Notes regarding the legality of an
investment by such offeree or purchaser under relevant legal investment or similar laws. Each
investor should consult with their own advisers as to the legal, tax, business, financial and related
aspects of any purchase of the Notes.

No person is authorised to give any information or make any representation not contained in this
Prospectus in connection with the issue and offering of the Notes and, if given or made, such
information or representation must not be relied upon as having been authorised by any of the
Issuer, FLC, the Trustee or the Lead Arranger or any of their directors, affiliates, advisers or agents.

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The delivery of this Prospectus does not imply that there has been no change in the business and
affairs of the Issuer or FLC since the date hereof or that the information herein is correct as at any
time subsequent to its date.

This Prospectus does not constitute an offer to sell or a solicitation of an offer to buy the Notes by
any person in any jurisdiction where it is unlawful to make such an offer or solicitation. The
distribution of this Prospectus and the offer or sale of the Notes in certain jurisdictions is restricted
by law. This Prospectus may not be used for, or in connection with, and does not constitute, any
offer to, or solicitation by, anyone in any jurisdiction or under any circumstance in which such offer or
solicitation is not authorised or is unlawful. Persons into whose possession this Prospectus may
come are required by the Issuer, FLC, the Trustee and the Lead Arranger to inform themselves
about and to observe such restrictions. Further information with regard to restrictions on offers, sales
and deliveries of the Notes and the distribution of this Prospectus and other offering material relating
to the Notes is set out under “Subscription and Sale” and “Summary of Provisions Relating to the
Notes in Global Form”.

This Prospectus has been filed with and approved by the Financial Regulator as required by the
Prospectus Regulations.

The Issuer is not and will not be regulated by the Financial Regulator as a result of issuing the
Notes. Any investment in Notes does not have the status of a bank deposit and is not within the
scope of the deposit protection scheme operated by the Financial Regulator.

Neither the delivery of this Prospectus nor the offer, sale or delivery of any Note shall in any
circumstances create any implication that there has been no adverse change, or any event
reasonably likely to involve any adverse change, in the condition (financial or otherwise) of the
Issuer or FLC since the date of this Prospectus.

Prospective purchasers must comply with all laws that apply to them in any place in which they buy,
offer or sell any Notes or possess this Prospectus. Any consents or approvals that are needed in
order to purchase any Notes must be obtained. FLC, the Issuer, the Arranger and Dealer are not
responsible for compliance with these legal requirements. The appropriate characterisation of any
Notes under various legal investment restrictions, and thus the ability of investors subject to these
restrictions to purchase such Notes, is subject to significant interpretative uncertainties. No
representation or warranty is made as to whether or the extent to which any Notes constitute a legal
investment for investors whose investment authority is subject to legal restrictions. Such investors
should consult their legal advisers regarding such matters.

The language of this Prospectus is English. Certain legislative references and technical terms have
been cited in their original language in order that the correct technical meaning may be ascribed to
them under applicable law.

In connection with the issue of any Series of Notes, the Arranger and Dealer, will act as the
stabilising manager (the “Stabilising Manager”), as disclosed in the relevant Final Terms. Such
Stabilising Manager (or persons acting on its behalf) may over-allot Notes (provided that the
aggregate principal amount of the Notes allotted does not exceed 105% of the aggregate principal
amount of the Notes) or effect transactions with a view to supporting the market price of the Notes at
a level higher than that which might otherwise prevail. However, there is no assurance that the
Arranger and Dealer (or persons acting on its behalf) will undertake stabilisation action. Any
stabilisation action may begin on or after the date on which adequate public disclosure of the terms

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of the offer of a Series of Notes is made and, if begun, may be ended at any time, but it must end no
later than the earlier of 30 days after the issue date of such Series of Notes and 60 days after the
date of allotment of such Series of Notes.

NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, IS MADE BY THE
ARRANGER DEALER AS TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION
SET FORTH IN THIS DOCUMENT, AND NOTHING CONTAINED IN THIS DOCUMENT IS, OR
SHALL BE RELIED UPON AS, A PROMISE OR REPRESENTATION BY THE ARRANGER
DEALER, WHETHER AS TO THE PAST OR THE FUTURE. THE ARRANGER DEALER DOES
NOT ASSUME ANY RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS OF THE
INFORMATION CONTAINED IN THIS PROSPECTUS.

EACH PERSON CONTEMPLATING MAKING AN INVESTMENT IN THESE NOTES MUST MAKE
ITS OWN INVESTIGATION AND ANALYSIS OF THE CREDITWORTHINESS OF FLC AND THE
ISSUER AND ITS OWN DETERMINATION OF THE SUITABILITY OF ANY SUCH INVESTMENT,
INVESTMENT OBJECTIVES AND
WITH PARTICULAR REFERENCE TO
EXPERIENCE AND ANY OTHER FACTORS WHICH MAY BE RELEVANT TO
IN
CONNECTION WITH SUCH INVESTMENT.

ITS OWN

THE NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE U.S. SECURITIES AND
EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION IN THE UNITED STATES
OR ANY OTHER U.S. REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING
AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THE NOTES OR THE
ACCURACY OR THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENCE IN THE UNITED STATES.

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CONTENTS

FORWARD-LOOKING STATEMENTS

ENFORCEABILITY OF JUDGMENTS

RESPONSIBILITY STATEMENT

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

OVERVIEW OF THE BUSINESS

OVERVIEW OF THE NOTES

DESCRIPTION OF THE TRANSACTION

USE OF PROCEEDS

RISK FACTORS

EXCHANGE RATES

SELECTED CONSOLIDATED FINANCIAL AND OPERATING INFORMATION

CAPITALISATION AND INDEBTEDNESS

FINANCIAL REVIEW

BUSINESS

RISK MANAGEMENT

MANAGEMENT

OWNERSHIP

RELATED PARTY TRANSACTIONS

THE ISSUER

TERMS AND CONDITIONS OF THE NOTES

SUMMARY OF PROVISIONS RELATING TO THE NOTES IN GLOBAL FORM

SUBSCRIPTION AND SALE

GENERAL INFORMATION

APPENDIX 1 DEFINITIONS SCHEDULE

APPENDIX 2 LOAN AGREEMENT

APPENDIX 3 COMFORT LETTER FROM UAC

APPENDIX 4 COMFORT LETTER FROM THE TRANSPORT MINISTRY OF THE RUSSIAN FEDERATION

INDEX TO THE FINANCIAL STATEMENTS

6
8
9
10
11
13
16
19
20
34
35
38
39
41
52
54
55
57
58
60
76
77
79
81
82
120
121
122

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FORWARD-LOOKING STATEMENTS

Some statements in this Prospectus, as well as written and oral statements that FLC and its officers
make from time to time in reports, filings, news releases, conferences, teleconferences, web
statements or otherwise, may be deemed to be “forward-looking statements”. Forward-looking
statements include, without limitation, statements concerning FLC’s plans, objectives, goals,
strategies, future operations and performance and the assumptions underlying these forward-
looking statements. These forward-looking statements are characterised by words such as
“anticipate”, “estimates”, “expects”, “believes”, “intends”, “plans”, “may”, “will”, “should” and similar
expressions. FLC has based these forward-looking statements on the current views of its
management with respect to future events and financial performance. These views reflect the best
judgement of FLC’s management but involve uncertainties and are subject to certain risks, the
occurrence of which could cause actual results to differ materially from those FLC predicts in its
forward-looking statements and from its past results, performance or achievements.

Although FLC believes that the estimates and the projections reflected in its forward-looking
statements are reasonable, if one or more risks or uncertainties were to materialise or occur,
including those which FLC has identified in this Prospectus, or if any underlying assumptions prove
to be incomplete or inaccurate, its results of operations may vary from those it expected, estimated
or projected.

Forward-looking statements that may be made by FLC from time to time (but that are not included in
this Prospectus) may also include projections or expectations of interest income, net interest
income, operating income (or loss), net profit (or loss) (including on a per share basis), dividends,
capital structure or other financial items or ratios.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both
general and specific, and risks exist that predictions, forecasts, projections and other forward-
looking statements will not be achieved. You should be aware that a number of important factors
could cause actual results to differ materially from the plans, objectives, estimates, intentions and
expectations expressed in such forward-looking statements. These factors include:

•

inflation, interest rate fluctuations and exchange rate fluctuations in Russia;

price for securities issued by Russian entities;

the health of the Russian economy, including the Russian banking sector;

the effects of, and changes in, the policy of the federal government of Russia and
regulations promulgated by the CBR;

the effects of competition in the geographic and business areas in which FLC conducts its
operations;

the effects of changes in the laws, regulation and taxation or accounting standards or
practices in the jurisdictions where Bank conducts its operations;

FLC’s ability to maintain or increase market share for its products and services and control
expenses;

the management of the rapid growth of FLC’s business and assets;

acquisitions or divestitures;

technological changes; and

FLC’s success at managing the risks associated with the aforementioned factors.

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This list of important factors is not exhaustive. When reviewing forward-looking statements, you
should carefully consider “Risk Factors” and other uncertainties and events, especially in light of the
political, economic, social and legal environment in which FLC operates. These forward-looking
statements speak only as at the date of this Prospectus. FLC expressly disclaims any obligation or
undertaking to update or revise any forward-looking statements made in this Prospectus whether as
a result of new information, future events or otherwise, unless required to do so by applicable law.
All subsequent written or oral forward-looking statements attributable to FLC or persons acting on
FLC’s behalf are expressly qualified in their entirety by the cautionary statements contained
throughout this Prospectus. As a result of these risks, uncertainties and assumptions, a prospective
purchaser of the Notes should not place reliance on these forward-looking statements.

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ENFORCEABILITY OF JUDGMENTS

FLC is an open joint stock company incorporated under the laws of the Russian Federation and
most of its assets and the assets of its branches and associates are currently located outside the
United Kingdom and the United States. In addition, all of FLC’s directors and executive officers are
residents of countries other than the United Kingdom and the United States. As a result, it may not
be possible for the Noteholders to:

●

effect service of process within the United Kingdom or the United States upon any of FLC’s
directors or executive officers named in this Prospectus; or

enforce, in the English or U.S. courts, judgments obtained outside English or U.S. courts
against FLC or any of its directors and executive officers named in this Prospectus in any
action.

In addition, it may be difficult for the Noteholders to enforce, in original actions brought in courts in
jurisdictions located outside the United Kingdom and the United States, liabilities predicated upon
English laws or the U.S. federal securities laws.

Judgments rendered by a court in any jurisdiction outside the Russian Federation are likely to be
recognised by courts in Russia only (i) if an international treaty providing for the recognition and
enforcement of judgments in civil cases exists between the Russian Federation and the country
where the judgment is rendered and/or (ii) a federal law of the Russian Federation provides for the
recognition and enforcement of foreign court judgements. No such treaty exists between the United
States and Russia or between the United Kingdom and Russia for the reciprocal enforcement of
foreign court judgments, and no relevant federal law on enforcement of foreign court judgments has
been adopted in Russia. See “Risk Factors – Risks Relating to the Russian Legal System and
Russian Legislation.”

The Loan Agreement is governed by English law and provides the option for disputes, controversies
and causes of action brought by any party thereto against FLC to be settled by arbitration in
accordance with the Rules of the London Court of International Arbitration (“LCIA”). The Russian
Federation is a party to the United Nations (New York) Convention on the Recognition and
Enforcement of Foreign Arbitral Awards. However, it may be difficult to enforce arbitral awards in the
Russian Federation due to:

●

the inexperience of the Russian courts in international commercial transactions;

official and unofficial political resistance to the enforcement of awards against Russian
companies in favour of foreign investors; and

●

the inability of Russian courts to enforce such awards.

Moreover, in September 2002, the new arbitrazh procedural code of the Russian Federation (the
“Arbitrazh Procedural Code”) entered into force. The Arbitrazh Procedural Code established the
procedure for Russian courts to refuse to recognise and enforce any such arbitral award. The
Arbitrazh Procedural Code and other Russian procedural legislation could change; therefore, inter
alia, other grounds for Russian courts to refuse the recognition and enforcement of foreign courts’
judgments and foreign arbitral awards could arise in the future. In practice, reliance upon
international treaties may meet with resistance or a lack of understanding on the part of a Russian
court or other officials, thereby introducing delay and unpredictability into the process of enforcing
any foreign judgment or any foreign arbitral award in the Russian Federation.

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RESPONSIBILITY STATEMENT

Each of the Issuer and FLC accepts responsibility for the information contained in this Prospectus.
To the best of the knowledge of the Issuer and FLC (which have taken all reasonable care to ensure
that such is the case), the information contained in this Prospectus is in accordance with the facts
and contains no omission likely to affect the import of such information. The delivery of this
Prospectus at any time does not imply that the information contained therein is correct at any time
subsequent to the date of this Prospectus.

In addition, FLC, having made all reasonable enquiries, confirms that: (i) this Prospectus contains all
information with respect to FLC, the Loan and the Notes that is material in the context of the issue
and offering of the Notes; (ii) the statements contained in this Prospectus relating to FLC are in
every material particular true and accurate and not misleading; (iii) the opinions, expectations and
intentions expressed in this Prospectus with regard to FLC are honestly held, have been reached
after considering all relevant circumstances and are based on reasonable assumptions; (iv) there
are no other facts in relation to FLC, the Loan or the Notes, the omission of which would, in the
context of the issue and offering of the Notes, make any statement in this Prospectus misleading in
any material respect; and (v) all reasonable enquiries have been made by FLC to ascertain such
facts and to verify the accuracy of all such information and statements. Accordingly, save as set out
in the immediately preceding sentence, the FLC accepts responsibility for the information contained
in this Prospectus.

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PRESENTATION OF FINANCIAL AND OTHER INFORMATION

FLC’s financial information set forth herein has, unless otherwise indicated, been derived from its
audited consolidated balance sheet and statements of income, cash flows and changes in equity
and notes thereto as at and for the years ended 31 December 2007 and 2006 (the “Financial
Statements”) prepared in accordance with International Financial Reporting Standards (“IFRS”) as
promulgated by the International Accounting Standards Board (the “IASB”). The Financial
Statements have been audited by HLB Univers-Audit (“Univers”) in accordance with International
Standards on Auditing. Univers are based at 41 Bld. 13, 2nd Zvenigordskay Ulitsa, 123100
Moscow, Russia. The Financial Statements, including the audit opinion of Univers, are set forth
elsewhere in this Prospectus.

The Issuer is an independent legal entity. FLC is not a legal shareholder of the Issuer. FLC cannot
govern the operating, financial and economic policies of the Issuer.

Since its date of incorporation, the Issuer has commenced operations and no financial statements of
the Issuer have been prepared as at the date of this Prospectus.

Currency

In this Prospectus, the following currency terms are used:

•

“US Dollar”, “Dollar”, or “U.S.$” mean the lawful currency of the United States;

“RUR”, “Rouble” or “rouble” mean the lawful currency of the Russian Federation; and

“EUR” or “€” means the single lawful currency of participating member states of the
European Union, as contemplated by the Treaty of Rome establishing the European
Community, as amended.

Rounding

Some numerical figures included in this Prospectus have been subject to rounding adjustments.
Accordingly, numerical figures and percentage amounts shown as totals in certain tables may not be
an arithmetic aggregation of the figures that preceded them.

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OVERVIEW OF THE BUSINESS

This overview does not contain all the information that is important to prospective purchasers of the
Notes. Prospective purchasers of the Notes should read this entire prospectus, including the more
detailed information regarding FLC’s business and Financial Statements included elsewhere in this
Prospectus. Investing in the Notes involves risks. The information set forth under “Risk Factors”
should be carefully considered. Certain statements in this Prospectus include forward – looking
statements that also involve risks and uncertainties as described under “forward – looking
Statements”.

FLC

Established on 15 January 1997 and registered in the Russian Federation (registration number
1027739010507), FLC is a leading Russian long-term finance leasing company, with a primary
focus on the leasing of aircraft and equipment. The Russian Government currently owns, directly
and indirectly, 80.5 per cent. of FLC’s share capital (see “Ownership”). The authorised, issue and
fully paid share capital of the Issuer was U.S.$429,992,337 as at 31 December 2007, divided into
104,564,931 shares of RUR 100 each.

As at the date of this Prospectus, FLC is headquartered in Moscow, and also has three branches in
St. Petersburg and a branch in each of Kazan and Almetyevsk.

According to FLC’s IFRS financial statements for the year ended 31 December 2007, FLC’s net
profit for the year ended 31 December 2007 was U.S.$6.72 million, as compared to U.S.$7 million
for the year ended 31 December 2006.

FLC leases Russian-made commercial passenger aircraft and aircraft-building equipment to
Russian airlines. Leases for aircraft typically last for about 15 years, while those in relation to aircraft
equipment typically last for three to five years. FLC retains ownership of all aircraft and equipment
that it leases until the termination of the lease agreement following receipt of all payments under the
agreement, whereupon ownership passes from FLC to the Lessee.

Approximately 85 per cent. of FLC’s leasing income for the year ended December 2007 was derived
from aircraft leasing activities. FLC aims to increase the number of aircraft in its portfolio from 13 to
56 by 2010. FLC is currently funding into construction of eight Tupolev Tu-214s, ten Sukhoi Superjet
100s and twenty-five Ilyushin-114s. FLC’s current clients for its aircraft include Transaero, Aeroflot,
Aerostar and Dalavia.

Since the consolidation of the state controlled shareholdings of the Russian aircraft industry by the
Russian Government in 2006 under United Aircraft Corporation (“UAC”), FLC has built strong
relationships with a number of other companies in the aviation industry. These relationships enable
FLC to respond effectively to the business needs of the Russian aviation sector through an
increased awareness of the strategies of its main players.

Market Position and Competitive Advantages

FLC’s management believes that FLC occupies a strong position in the Russian aircraft leasing
market and attributes part of this strength to its close links with the Russian Government and with
UAC. In 2001, FLC was one of two companies to win a Russian Government tender to develop the
Russian aircraft industry through state-financed leasing programmes, the other company being
Ilyushin Finance. Since 2002, FLC has received U.S.$250 million in capital injections from the
Russian Government and to date has signed contracts with seven Russian carriers (Transaero,
Dalavia (a subsidiary of Aeroflot), Aviakompania Yakutia, Aerostars, KrasAir and Aviastar) to deliver
46 Russian aircraft, for a value totalling RUB25 billion (approximately U.S.$1.1 billion).

FLC’s management estimates that FLC has a market share of approximately 12-15 per cent. in the
Russian aviation technology leasing sector and approximately 35 per cent. of the aircraft leasing

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sector, making it the market leader in Russia. Its principal competitors are Ilyushin Finance
Company, which leases aircraft, and VTB-Leasing, which leases machinery for the manufacture of
aircraft.

Business Strategy

FLC’s current business strategy is to continue to develop in response to the changing market
conditions within the Russian Federation, and to broaden its leasing portfolio and its customer base.
The main component of FLC’s growth strategy is the focus on their aircraft and aircraft/transport
manufacturing equipment leasing business lines.

FLC’s growth strategy is based on rapid expansion: FLC aims to increase the number of aircraft in
its portfolio from 13 to 56 by 2010, and the total value of their aircraft leasing equipment portfolio
from U.S.$11.798 million, as at the end of the first quarter of 2008 according the FLC’s unaudited
management accounts, to U.S.$80 million by 2010. A significant area of investment is the
construction of new aircraft. FLC is currently funding the construction of eight Tupolev TU-214s, ten
Superjet aircraft and 25 Ilyushin-114 aircraft. FLC’s management believes that such significant
investment will assist FLC in reaching its growth objectives.

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OVERVIEW OF THE NOTES

The following is a description of certain additional aspects of the issue of the Notes of which any
prospective Noteholder should be aware, but is not intended to be exhaustive and any prospective
Noteholder should also read the detailed information set out elsewhere in this document and take
their own tax, legal and other relevant professional advice as to the structure and suitability of their
investment. Words and expressions defined in “Terms and Conditions of the Notes” below shall
have the same meanings in this summary.

The Notes:

Issuer:

Borrower:

U.S.$150,000,000 10 per cent. Series 2008-1 Loan Participation
Notes due 2013 with a put option at par in 2010 for the sole
purpose of financing a U.S.$150,000,000 loan to Open Joint-
Stock Company “Finance Leasing Company”.

Greenwich Avenue Finance B.V.

Open Joint-Stock Company “Finance Leasing Company”

Arranger and Dealer:

BCP Securities LLC

Registrar:

Trustee:

The Bank of New York (Luxembourg) S.A.

BNY Corporate Trustee Services Limited

Principal Paying Agent,
Paying Agent

The Bank of New York

Issue Price:

99.779%

Governing Law:

Risk Factors:

Interest:

Limited Recourse:

Security:

The Notes, the Loan Agreement and the Trust Deed are
governed by, and shall be construed in accordance with,
English law.

For a discussion of certain investment considerations relating
to the Issuer, the Borrower and the Notes that prospective
investors should consider carefully prior to an investment in
the Notes, see “Risk Factors”.

Interest under the Loan Agreement is 10 per cent. per annum
from 30 June 2008 to 30 June 2010, or to 30 June 2013 in the
event that the Borrower does not exercise its right to declare a
new rate of interest on 30 June 2010.

The Notes are limited recourse secured obligations of the
Issuer. The notes constitute the obligation of the Issuer to
apply an amount equal to the proceeds from the issue of the
notes solely for the purpose of financing a Loan to the
Borrower pursuant to the terms of the Loan Agreement. The
Issuer accounts to the Noteholders only for all amounts
equivalent to those received and retained from FLC under the
Loan Agreement and no other asset of the Issuer is available
to meet claims of the Noteholders.

The Notes are limited recourse secured obligations of the
Issuer and are secured by a first fixed charge in favour of the
Trustee of the payment of al sums due in relation to the Notes
including all available amounts corresponding to the principal

Form:

Borrower Covenants:

Event of Default

Mandatory Redemption;
Enforcement of
Security

– 14 –

in respect of the Notes and for the payment of all claims of any
Paying Agent under the Agency Agreement.

The Notes are in registered form in denominations of
U.S.$100,000 each and integral multiples of U.S.$1,000 in
excess thereof. The Notes are represented by a Global Note
Certificate which is exchangeable for Notes in definitive form
as set out in the “Supplemental Terms and Conditions”.

The Loan Agreement contains, in Clause 13, covenants
limiting, inter alia, mergers, acquisitions and disposals by the
Borrower. In addition, the Loan Agreement requires the
Borrower to provide certain periodic financial information to the
Issuer.

If an Event of Default (as defined in the Loan Agreement)
occurs, the Issuer may give notice to FLC that the Loan is due
and repayable and may institute proceedings for the winding-
up of the Borrower and/or to prove for its debt, and claim, in
any liquidation of the Borrower.

The Notes are capable of being declared immediately due and
payable prior to their due date for redemption following the
occurrence of any Event of Default and in certain other
mandatory redemption circumstances. The Notes are also
capable of being declared immediately due and payable at
their face value upon a change of control at FLC, and
Noteholders also have a put option exercisable on 30 June
2010. If the Notes are declared due and payable, the security
therefor may
in certain circumstances also become
enforceable.

On any enforcement of the Security or mandatory redemption
of the Notes, the Issuer will have recourse only to the Loan,
which may be highly illiquid and the net proceeds of which may
be insufficient to pay all amounts due on redemption to the
Noteholders. Any such shortfall shall be borne in accordance
with the Priority (Application of Proceeds) basis specified
below and any claims of the Noteholders remaining after
realisation of the security and application of the proceeds as
aforesaid shall be extinguished. Neither the Trustee nor any
Noteholder may take any further steps against the Issuer or
any of its assets to recover any sum still unpaid in respect of
the Trust Deed or the Notes, as applicable. In particular,
neither the Trustee nor any Noteholder shall be entitled to
petition or take any other step for the winding-up of the Issuer,
nor shall either of them have any claim in respect of any such
sums over or in respect of any assets of the Issuer which are
or purport to be security for any other series of notes. None of
the Trustee, the shareholders of the Issuer, the Arranger and
Dealer, the Principal Paying Agent or FLC under the Loan has
any obligation to any Noteholder for payment of any amount
owing by the Issuer in respect of the Notes.

Withholding Tax:

All payments of principal and interest to be made by the Issuer

- 15 –

in respect of the Notes and by FLC in respect of payments
under the Loan Agreement will be made free and clear of all
taxes, duties, assessments or governmental charges of Ireland
or the Russian Federation, respectively, save as required by
law. If any taxes, duties, assessments or governmental
charges are payable in either or both of the above jurisdictions,
the sum payable by the Issuer will (subject to certain
exceptions) be required
the extent
to be
necessary to ensure that the Noteholders receive a net sum
which they would have received had no such deduction or
withholding been made or required to be made. The sum
payable by the Bank under the Loan Agreement will be
required to be increased to the extent necessary to ensure that
the Issuer receives and retains a net sum equivalent to such
increased amounts. The sole obligation of the Issuer in this
respect will be to pay to the Noteholders sums equivalent to
the sums received and retained from the Bank. See ‘‘Terms
and Conditions of the Notes’’.

increased

Listing:

Selling Restrictions:

Governing Law:

Risk Factors:

Security Codes:

Application has been made to the Irish Stock Exchange for the
Notes to be admitted to the Official List and to trading on the
regulated market of the Irish Stock Exchange.

The Notes have not been and will not be registered under the
Securities Act and, subject to certain exceptions, may not be
offered or sold within the United States. The Notes may be
sold in other jurisdictions (including the United Kingdom,
Ireland and Russia) only in compliance with applicable laws
and regulations. See ‘‘Subscription and Sale’’.

The Notes, the Loan Agreement and the Trust Deed are
governed by English law.

An investment in the Notes involves a high degree of risk. See
‘‘Risk Factors’’.

ISIN: XS0373899276
Common Code: 037389927

- 16 –
DESCRIPTION OF THE TRANSACTION

The following Overview contains basic information about the Notes and the Loan and should be
read in conjunction with, and is qualified in its entirety by, the information set forth under “Terms and
Conditions of the Notes”, “Supplemental Terms and Conditions of the Notes” and “The Loan
Agreement” appearing elsewhere in this Prospectus.

The transaction has been structured as a loan to FLC by the Issuer.

The U.S.$150,000,000 10 per cent. Series 2008-01 Loan Participation Notes due 2013 (the “Notes”)
are secured limited recourse Loan Participation Notes issued by the Issuer for the sole purpose of
funding the Loan to FLC.

Pursuant to the Dealer Agreement, the Dealer, BCP Securities, LLC, has agreed to purchase the
Notes from the Issuer on the Issue Date and the Dealer has given certain undertakings to the Issuer
therein relating to the distribution of the Notes.

Pursuant to the Agency Agreement, the Principal Paying Agent will make payments from time to
time on behalf of the Issuer to Noteholders, subject to the security created by the Trust Deed.

Credit considerations

The Notes are solely the obligation of the Issuer. In particular, the Notes are not the obligation or
responsibility of, or guaranteed by, the Arranger and Dealer, the Trustee or the Principal Paying
Agent. Apart from the Issuer, none of those persons will accept any liability whatsoever to the
Noteholders in respect of any failure by the Issuer to pay any amount due under the Notes.

The ability of the Issuer to meet its obligations to pay the principal of and interest on the Notes, after
payment in full has been made by the Issuer of all amounts due and owing which rank in priority
thereto, will be dependent solely on the actual receipts by the Issuer under the Loan Agreement.

The Security

•

The Secured Obligations

The Secured Obligations means all moneys, debts and liabilities which may at any time be
or become due, owing or incurred, actually or contingently, by the Issuer to the Secured
Creditors, being the Trustee, any Receiver, the Principal Paying Agent and the Noteholders.

The Security

Pursuant to the Trust Deed, the Issuer with full title guarantee and as continuing security for
the Secured Obligations referred to above has created security interests in favour of the
Trustee for itself and as Trustee for the Secured Creditors in the following manner and over
the following assets: a first fixed charge (the Charge) over: (i) all principal, interest and/or
additional amounts (if any) now or hereafter payable and/or paid by the Borrower under the
Loan Agreement; (ii) the right to receive all sums which may be or become payable by the
Borrower under any claim, award or judgment relating to the Loan Agreement; and (iii) all
the rights, title and interest in and to all sums of money now or in the future deposited in the
Account and the debts represented thereby, provided that for the avoidance of doubt the
Issuer shall remain the legal and beneficial owner of the Charged Assets following the
granting of the Charge; and an assignment to the Trustee for itself and as Trustee for the
Secured Creditors: (i) all the rights, interests and benefits, both present and future, which
have accrued or may accrue to the Issuer under or pursuant to the Loan Agreement, other
than the assets subject to the Charge and any amounts relating to the property subject to the
Charge; (ii) all of the Issuer’s right, title and interest in and to the Dealer Agreement to the
extent that it relates to the Notes; and (iii) all of the Issuer’s right, title and interest in and to

the Agency Agreement to the extent that it relates to the Notes including any sums held by
the Principal Paying Agent to meet payments due in respect of the Notes,

– 17 –

all of which together with the Charge shall comprise the underlying assets for the series of
Notes.

The Issuer’s assets over which security has been taken comprise the underlying assets for
the Notes.

Commercial and legal aspects of the transaction

No investigations, searches or other enquiries have been made by or on behalf of the Issuer in
respect of the Loan and no representations or warranties have been given for the benefit of the
Noteholders in connection with it. In connection therewith, prospective Noteholders should take
their own tax, legal, accounting and other relevant advice as to the structure and viability of their
investment.

While certain legal opinions relating to the issue of the Notes and the security taken in respect
thereof have been or will be obtained with respect to the laws of England and Wales, The
Netherlands and the Russian Federation, no other opinions have been or will be obtained with
respect to any other applicable laws as regards the security over the Charged Assets, any of which,
depending upon the circumstances, may affect, among other matters, the value, validity, legal and
binding effect of the underlying assets and/or Notes and the effectiveness and ranking of the
security for the Notes. The Arranger has provided an officer’s certificate to the Trustee in respect of
the investigations which the Arranger made into the capacity and authority of FLC under the Loan
Agreement.

Enforceability

The Loan Agreement is governed by English law and provides that any dispute in connection with
the Loan Agreement shall be referred to and finally resolved by arbitration in accordance with the
Rules of the London Court of International Arbitration as in force and effect on the date of this
Agreement. A copy of the Loan Agreement appears at Appendix 2.

FLC is a legal entity incorporated under the laws of the Russian Federation. None of the directors
and executive officers of FLC is a resident of England. It may not be possible to effect service of
process in England upon FLC. Moreover, all or a substantial portion of the assets of FLC, and such
persons are located outside England. As a result, it may not be possible to enforce court judgments
obtained in English courts against FLC or any such persons.

It may not be possible to enforce an English court judgment in the Russian Federation against FLC
or its directors or executive officers. Courts in the Russian Federation will only recognise judgments
rendered by a court in any jurisdiction outside the Russian Federation if an international treaty
providing for the recognition and enforcement of judgments in civil cases exists between the
Russian Federation and the country where the judgment is rendered. No such treaty exists between
the Russian Federation and the United Kingdom. Even if there were such a treaty, Russian courts
could nonetheless refuse to recognise and enforce a foreign court judgment on the grounds
provided in such treaty and in Russian legislation in effect on the date on which such recognition
and enforcement is sought. In September 2002, the new Arbitrazh Procedural Code of the Russian
Federation (the Arbitrazh Procedural Code) came into force, providing for the procedures of
recognition and enforcement of judgments and introducing an extensive list of grounds for refusal of
such recognition and enforcement of judgments. However, Russian procedural legislation may
further change and no assurance can be given that there could be no other ground for refusal in the
future.

Set out below is a diagrammatic representation of the structure:

Proceeds of
Notes

Noteholders

– 18 –

Issuer

Loan

FLC

Payment of principal
and interest on the
Notes

Payment of principal
and interest on the
Loan

- 19 –
USE OF PROCEEDS

The proceeds from the sale of the Notes, after deducting aggregate commissions, transaction
expenses and certain adjustments, will be used for:

•

refinancing of the Borrower’s short-term Indebtedness (as defined in the Loan Agreement);
and

the Borrower’s general corporate purposes.

- 20 –
RISK FACTORS

An investment in the Notes involves a high degree of risk. Prospective investors should consider
carefully, among other things, the risks set forth below and the other information contained in this
Prospectus prior to making any investment decision with respect to the Notes. The risks highlighted
below could have a material adverse effect on FLC’s business, financial condition, results of
operations or prospects which, in turn, could have a material adverse effect on its ability to service
its payment obligations under the Loan Agreement and, as a result, the ability of the Issuer to make
payments under the Notes. In addition, the value of the Notes could decline due to any of these
risks, and prospective investors may lose some or all of their investment.

Prospective investors should note that the risks described below are not the only risks FLC faces.
These are the risks that FLC considers material. There may be additional risks that FLC currently
considers immaterial or of which it is currently unaware, and any of these risks could have similar
effects to those set forth below.

Risks relating to FLC

Each of the Issuer, Arranger and Dealer has made no investigation and accepts no responsibility as
to the performance or creditworthiness of FLC. Noteholders should conduct their own due diligence
in respect of FLC, the Loan and the risk of the Notes. Noteholders should also conduct their own
due diligence in respect of BCP Securities LLC, acting as Arranger and Dealer, and Greenwich
Avenue Finance B.V., as Lender. The Issuer and Arranger and Dealer do not accept any
responsibility for a Noteholder’s decision to invest in the Notes.

Risks relating to FLC’s aircraft leasing business

Interest rates

FLC’s substantial level of indebtedness, which it incurs to acquire and fund the production of its
operating assets, results in significant levels of debt service payments. As of 1 June 2008, FLC only
uses fixed rate debt to finance the acquisition of its aircraft and aircraft/transport manufacturing
equipment, and none of FLC’s lease agreements have lease rates tied to floating interest rates.
However, FLC’s fixed rate leases are based, in part, on prevailing interest rates at the time FLC
enters into the lease and if interest rates decrease, new leases FLC enters into will be at lower
rates. Under such circumstances, FLC may not be able to refinance itself at commensurately lower
rates and this could have a material adverse effect on FLC’s business, financial condition, results of
operations and/or prospects.

Reliance on financing from Russian banks

FLC relies on borrowing to fund the acquisition and production of its aircraft. FLC is, therefore,
exposed to the risk that the cost of long-term borrowing may increase as a result of, among others,
changes to the CBR rate, LIBOR rate, and Rouble exchange rates. In addition, FLC is exposed to
the risk that a financial crisis or a reduction in the willingness of banks to lend it sufficient funds to
develop its business would hinder its ability to invest in its leasing portfolio. Any of the above factors
could have a material adverse effect on FLC’s business, financial condition, results of operations
and/or prospects. See “Economic Risks”.

Geographical focus

FLC is exposed to significant regional and economic risks due to the concentration of its lessees in
certain geographical regions and overall in Russia. This means that FLC is vulnerable to
fluctuations in the economic fortunes of such regions and Russia as a whole, which could have a
material adverse effect on FLC’s business, financial condition, results of operations and/or
prospects.

FLC is indirectly subject to many of the economic and political risks associated with emerging
markets such as Russia, which could adversely affect FLC’s financial results. As at 1 June 2008,

- 21 –
FLC leased all of its aircraft to airlines based in Russia. As with lessees based in any emerging
market country, FLC’s lessees may be more likely to default than lessees that are based in Western
countries. In addition, the Russian legal system is less well developed than in Western countries
and this could have a material adverse effect on FLC’s business, financial condition, results of
operations and/or prospects. See “Risks relating to the Russian Federation.”

Competition

Competition from other aircraft lessors with greater resources or a lower cost of capital than FLC
could have a material adverse effect on FLC’s business, financial condition, results of operations
and/or prospects.

Regulatory environment

Failure by FLC to obtain certain licences, certificates and approvals necessary for the continuity of
its business could adversely affect FLC’s ability to lease or sell aircraft and other equipment, or
FLC’s ability to perform maintenance services or to provide case management services, and this
could have a material adverse effect on FLC’s business, financial condition, results of operations
and/or prospects.

Insurance

Although FLC has insurance in place in respect of its assets, FLC has limited insurance coverage
with respect to its operations and civil liability, and the company is therefore exposed to any risks as
a result of loss or damage that is not covered by FLC’s insurance policies. Any loss or damage that
is not insured against may need to be paid for by FLC, and such payment could have a material
adverse effect on FLC’s business, financial condition, results of operations and/or prospects.

Senior management

FLC’s business depends to a large degree on the personal relationship with its parent company,
UAC, and its customers. The departure of senior managers could adversely affect FLC’s ability to
maintain such relationships, which in turn could have a material adverse effect on FLC’s business,
financial condition, results of operations and/or prospects.

Reliance on the Russian Government

The implementation of FLC’s business strategy depends to a large degree on the support that it
receives from the Russian Government, both through capital investment and as a result of
legislation in line with the Russian Government’s plans for the growth of the Russian aviation sector,
including tariffs imposed on the import of foreign-built aircraft. FLC expects such support to continue
and does not expect there to be any changes to the current Russian aviation regulatory framework
until at least 2020. However, if the Russian Government were to withdraw its support for FLC or for
the Russian aviation sector, or to reduce or remove the tariff on foreign-built aircraft, this could
adversely affect FLC’s ability to achieve its business strategy, which in turn could have a material
adverse effect on FLC’s business, financial condition, results of operations and/or prospects.

Risks relating to FLC’s aircraft

Supply and demand for aircraft

The commercial aircraft leasing and sales industry has periodically experienced cycles of aircraft
oversupply and undersupply. The oversupply of a specific type of aircraft in the market is likely to
depress aircraft lease rates and values of that type of aircraft. The supply and demand of aircraft is
affected by various cyclical factors that are not under FLC’s control, including:

• passenger air travel and air cargo demand;

•

fuel costs and general economic conditions affecting the lessees’ operations;

• geopolitical events, including war, prolonged armed conflict and acts of terrorism;

• outbreaks of communicable, pandemic diseases and natural disasters;

• governmental regulation,

including new Airworthiness Directives and environmental

– 22 –

regulations;

• prevailing interest rates;

• airline restructurings and bankruptcies;

• cancellation of orders for aircraft;

• delays in delivery by manufacturers;

•

the availability of credit;

• manufacturer production levels and technological innovation, including introduction of new

generation aircraft types;

•

retirement and obsolescence of aircraft models;

• manufacturers merging or exiting the industry or ceasing to produce aircraft types;

• accuracy of estimates relating to future supply and demand made by manufacturers and

lessees; and

• air traffic control infrastructure constraints.

These factors may produce sharp decreases or increases in aircraft values and lease rates, and
may prevent the aircraft from being re-leased or, where applicable, sold on satisfactory terms. This
could have a material adverse effect on FLC’s business, financial condition, results of operations
and/or prospects.

Aircraft delivery

FLC has a limited number of aircraft (13 as at 1 June 2008) and the failure of any manufacturer to
meet its delivery obligations of new aircraft or of FLC to renew its fleet in such a way as to remain in
a position to satisfy customer demand could have a material adverse effect on FLC’s business,
financial condition, results of operations and/or prospects.

Aircraft concentration

As at 1 June 2008, the portfolio of aircraft owned by FLC included four different models of aircraft.
Of these four different models, Tupolev-214 aircraft represented 77.9 per cent. of FLC’s aircraft
portfolio by net book value as at 1 June 2008.

A high concentration of particular models of aircraft in FLC’s aircraft portfolio could adversely affect
FLC’s business and financial results should any problems or design faults specific to these particular
models occur. If the demand for these models of aircraft declines, or if they are redesigned or
replaced by their manufacturer, it could have a material adverse effect on FLC’s business, financial
condition, results of operations and/or prospects.

Investment

FLC’s lessees obtain ownership of the aircraft that they lease once the final lease payment has been
made under the lease agreement. If FLC fail continually to invest in new aircraft, FLC’s existing
aircraft portfolio could reduce in value. This could contribute to a reduction in the value of the
leasing rates achievable in respect of such aircraft, which could, in turn, have a material adverse
effect on FLC’s business, financial condition, results of operations and/or prospects.

FLC has made a substantial investment in the Sukhoi Superjet 100 (the “Superjet”), the latest
regional jet airliner developed by the civil division of JSC Sukhoi Corporation (“Sukhoi”), a Russian
aerospace company. The Superjet is intended to compete against the Antonov An-148, Embraer E-
Jets (“Embraer”) and the Bombardier CSeries (“Bombardier”) programmes. Sukhoi claims the
Superjet will have 10-15% lower operation costs than the competing aircraft from Embraer or
Bombardier counterparts and that its wider cabin will offer airline customers more comfort. It is also
expected to be built and sold at a competitive price. The Superjet took its maiden flight on 19 May
2008 and, although it is expected to do so by FLC, the Superjet has not yet obtained its

- 23 –
airworthiness certificate. Although production of the Superjet is currently in line with the production
schedule, FLC is exposed to the risk that the production of the Superjet may be delayed and that,
being a new and as yet unproven aircraft, it may prove unreliable and/or unpopular with customers.
Any failure to obtain the Superjet’s airworthiness certificate, delays to production, or lack of demand
could have an adverse effect on FLC’s business, financial condition, results of operations and/or
prospects.

Risks relating to FLC’s lessees

Financial condition of FLC’s lessees

FLC’s financial condition is dependent, in part, on the financial strength of FLC’s lessees; although
FLC conducts a risk assessment of all its lessees before entering into any lease agreement, if a
lessee were to default on their lease payments, it could have a material adverse effect on FLC’s
business, financial condition, results of operations and/or prospects.

There can be no assurance that, in the event that a lessee defaults under a lease, any security
deposit paid or any letter of credit provided by the lessee will be sufficient to cover the lessee’s
outstanding or unpaid lease obligations and maintenance requirements.

There can be no assurance that, in the event that a lessee defaults under a lease, FLC will be able
to re-lease the aircraft or equipment that is the subject of that lease on favourable terms, if at all.

If FLC’s lessees encounter financial difficulties and FLC decides to restructure its leases, any such
restructuring would be likely to result in less favourable leases, which could have a material adverse
effect on FLC’s business, financial condition, results of operations and/or prospects.

The ability of FLC’s lessees to perform their obligations under their lease agreements with FLC will
depend primarily on that lessee’s financial condition which may be affected by factors beyond FLC’s
control, including:

• competition;

•

fare and tariff levels;

• air cargo rates;

• passenger and air cargo demand;

• geopolitical events, including war, acts of terrorism and outbreaks of communicable

diseases;

• natural disasters;

• operating costs (including the price and availability of jet fuel and labour costs);

•

labour difficulties;

• economic conditions and currency fluctuations in the countries in which the Lessee operates;

and

• governmental regulation of or affecting the air transportation business.

See “Risks relating to the aviation industry” for further detail.

As a general matter, airlines with weak capital structures are considered more likely than well-
capitalised airlines to enter into operating leases and, at any point in time, a varying number of
lessees may experience payment difficulties. As a result of their weak financial condition, a large
portion of lessees may consistently be in arrears in their rental payments or maintenance payments.
As at 1 June 2008, no rental payments due under FLC’s current aircraft or aircraft/transport
manufacturing equipment lease agreements were overdue for a period greater than 30 days. While
FLC’s management does not expect there to be any defaults under the current lease agreements,
there can be no assurance that lessees will be able to perform their financial and other obligations
under the leases in the future and if lessees do become unable to perform such obligations, this

- 24 –
could have a material adverse effect on FLC’s business, financial condition, results of operations
and/or prospects.

If FLC’s lessees’ insurance coverage is insufficient and an insurable event were to happen and to
cause loss not covered by the lessees’ insurance, it could have a material adverse effect on FLC’s
business, financial condition, results of operations and/or prospects.

Lessees may experience periodic difficulties that are not financial in nature, which could impair their
performance of their maintenance obligations under their leases with FLC. These difficulties may
include the failure to perform aircraft maintenance programmes satisfactorily, and labour difficulties,
which could result in accidents, failure to provide scheduled flights, and litigation proceedings, all of
which could have a material adverse effect on FLC’s business, financial condition, results of
operations and/or prospects.

Aircraft not in FLC’s physical possession

FLC may not be in possession of any aircraft while such aircraft are on lease to its lessees.
Consequently, FLC’s ability to determine the condition of the aircraft or whether its lessees are
properly maintaining the aircraft will be limited to periodic inspections performed on behalf of FLC by
third party service providers or aircraft inspectors. Should a lessee of an FLC aircraft default on its
lease payment, causing FLC to seek to re-lease the relevant aircraft to another counter-party, any
failure by such a defaulting lessee to meet its maintenance obligations during its possession of the
aircraft could result in:

• a grounding of the aircraft;

• FLC incurring integration and other costs, which may be substantial, in restoring the aircraft
to a satisfactory maintenance condition and to induce a subsequent lessee to lease the
aircraft;

• FLC being unable to re-lease the aircraft promptly or re-leasing the aircraft at a lower rate;

and

• an adverse effect on the value of the aircraft.

All of the above factors could have a material adverse effect on FLC’s business, financial condition,
results of operations and/or prospects.

Risks relating to the aviation industry

The financial condition of the commercial airline industry

The financial condition of the commercial airline industry is of particular importance to FLC because
FLC leases most of its aircraft to commercial airline customers. The risk factors that follow describe
risks that affect the commercial airline industry generally and therefore have an impact on FLC’s
business, financial condition and the results of its operations. The risks are generally not within
FLC’s control. To the extent that FLC’s customers are adversely affected by these risk factors, FLC
may experience:

• downward pressure on demand for the aircraft in the FLC fleet and reduced market lease

rates and lease margins, as well as reduced aircraft values;

• a higher incidence of lease defaults, lease restructurings, repossessions and airline
bankruptcies and restructurings, resulting in lower lease margins and/or increased costs due
to maintenance, insurance, storage and legal costs associated with the repossession, as
well as lost revenue for the time any aircraft are off-lease, increased aircraft transition costs
to new lessees (including refurbishment and modification of aircraft to fit the specifications of
new lessees) and possibly lower lease rates for the new lessee; and

• an inability to lease aircraft on commercially acceptable terms, resulting in lower lease
margins due to aircraft not earning revenue and resulting in storage, insurance and
maintenance costs.

- 25 –
Any or all of the foregoing could have a material adverse effect on FLC’s business, financial
condition, results of operations and/or prospects.

Fuel costs

Fuel costs represent a major expense to companies operating within the airline industry. Fuel prices
fluctuate widely depending primarily on
international market conditions, geopolitical and
environmental events and currency exchange rates. As a result, fuel costs are not within the control
of FLC’s lessees and significant changes would materially and adversely affect their operating
results.

As at 1 June 2008, fuel prices are at historically high levels. The high cost of fuel has had, and
sustained high costs in the future may continue to have, a material adverse effect on airlines’
profitability, business, financial condition, results of operations and/or prospects. Due to the
competitive nature of the airline industry, airlines may not be able to pass on any increases in fuel
prices to their customers by increasing fares. This means that additional costs would need to be
absorbed by the airlines themselves. In addition, airlines may not be able to manage this risk by
appropriately hedging their exposure to fuel price fluctuations. If fuel prices remain at current levels
or become higher due to adverse supply and demand conditions, future terrorist attacks, acts of war,
armed hostilities or natural disaster or for any other reason, they may cause FLC’s lessees to incur
higher costs and to generate lower net revenues, resulting in an adverse impact on their financial
positions, business, financial condition, results of operations and/or prospects. Consequently, these
conditions may (i) affect FLC’s lessees’ ability to make rental and other lease payments, (ii) result in
lease restructuring and aircraft repossessions, (iii) increase FLC’s costs of servicing and marketing
the aircraft, (iv) impair FLC’s ability to re-lease the aircraft or re-lease or otherwise dispose of the
aircraft on a timely basis and/or at favourable rates and (v) reduce the sum receivable for any
aircraft that FLC sells. All of the above could have a material adverse effect on FLC’s business,
financial condition, results of operations and/or prospects.

Terrorist attacks and geopolitical conditions

As a result of the 11 September 2001 terrorist attacks in the United States and subsequent terrorist
attacks outside the United States, airlines have increased security restrictions, airline costs for
aircraft insurance and enhanced security measures have increased and airlines have faced, and
continue to face, increased difficulties in acquiring war risk and other insurance at reasonable costs.
The uncertain situation in countries including Iraq and Afghanistan, as well as tension over Iran’s
nuclear programme, continues and these may lead to further instability in the Middle East or
elsewhere. Future terrorist attacks, war or armed hostilities, or the fear of such events, could have a
further adverse impact on the airline industry and on the financial condition of FLC’s lessees, aircraft
values and rental rates and may lead to restructurings, all of which could have a material adverse
effect on FLC’s business, financial condition, results of operations and/or prospects.

If the current industry conditions continue or become exacerbated due to future terrorist attacks, acts
of war or armed hostilities, they are likely to cause FLC’s lessees to incur higher costs and to
generate lower revenues, which could have a material adverse effect on FLC’s business, financial
condition, results of operations and/or prospects. Consequently, these conditions may (i) affect
FLC’s lessees’ ability to make rental and other lease payments or obtain the types and amounts of
insurance required by the applicable lease (which may in turn lead to aircraft groundings), (ii) may
result in additional lease restructuring and aircraft repossessions, (iii) may increase FLC’s cost of re-
leasing or selling the aircraft, (iv) may impair the FLC’s ability to re-lease the aircraft or lease the
aircraft on a timely basis and/or at favourable rates and (v) may reduce the value received for
aircraft upon any disposition. These results could have a material adverse effect on FLC’s business,
financial condition, results of operations and/or prospects.

Pandemic diseases

The 2003 outbreak of Severe Acute Respiratory Syndrome (“SARS”) was linked to air travel early in
its development and had a severe impact on the aviation industry which was evidenced by a sharp
reduction in passenger bookings, cancellation of many flights and employee layoffs. In addition,
since 2003, there have been several outbreaks of avian influenza, or bird flu, beginning in Asia and,

- 26 –
most recently, spreading to certain parts of Africa and Europe. Although human cases of avian
influenza so far have been limited in number, the World Health Organisation has expressed serious
concern that a human influenza pandemic could develop from the avian influenza virus. In such an
event, numerous responses, including travel restrictions, might be necessary to combat the spread
of the disease. Additional outbreaks of SARS or other epidemic diseases such as avian influenza,
or the fear of such events, could negatively affect passenger demand for air travel, the aviation
industry and demand for services, which could have a material adverse effect on FLC’s business,
financial condition, results of operations and/or prospects.

Risks related to the Russian Federation

FLC is a Russian company, and virtually all of its assets are located in the Russian Federation.
There are certain risks associated with an investment in the Russian Federation, some of which are
outlined below.

Investments in emerging markets

Investors in emerging markets such as the Russian Federation should be aware that these markets
are subject to greater risk than more developed markets, including in some cases significant legal,
economic and political risks. Investors should also note that emerging economies such as the
economy of the Russian Federation are subject to rapid change and that the information set out
herein may become outdated relatively quickly.

The disruptions recently experienced in the international and domestic capital markets have led to
reduced liquidity and increased credit risk premiums for certain market participants and have
resulted in a reduction of available financing. Companies located in countries in emerging markets
such as Russia may be particularly susceptible to these disruptions and reductions in the availability
of credit or increases in financing costs, which could result in them experiencing financial difficulty.
In addition, the availability of credit to entities operating within emerging markets is significantly
influenced by levels of investor confidence in such markets as a whole, and any factors that impact
market confidence (for example, a decrease in credit ratings or state or central bank intervention in
one market) could affect the price or availability of funding for entities within any of these markets.

Accordingly, investors should exercise particular care in evaluating the risks involved and must
decide for themselves whether, in light of those risks, their investment is appropriate. Generally,
investment in emerging markets is only suitable for sophisticated investors who fully appreciate the
significance of the risks involved, and investors are urged to consult with their own legal and
financial advisors before making an investment in the relevant Notes.

Political climate

Political conditions in the Russian Federation were highly volatile in the 1990s, as evidenced by the
frequent conflicts among executive, legislative and judicial authorities which negatively impacted
Russia’s business and investment climate. While Russia’s previous President, Vladimir Putin,
maintained the stability of the Russian Government and introduced policies generally oriented
towards the continuation of economic reforms, there can be no assurances that there will be no
material changes to Russian Government policies or to economic or regulatory reforms under Dmitry
Medvedev, the new President. The State Duma (the lower chamber of the Russian parliament)
elections in December 2003 resulted in an increase in the percentage of the aggregate vote
received by the “United Russia” party and other members of the State Duma allied with the
President. Furthermore, Putin replaced the Prime Minister and changed the composition of the
Russian Government just prior to his last re-election in 2004. The latest State Duma elections in
2007 resulted in the defeat of the principal opposition parties (the social-democratic Yabloko, the
Union of Right Forces and the Civil Force). None of these parties received the requisite 7 per cent.
(on a joint or several basis) needed to enter the State Duma, and the pro-presidential party United
Russia gained the majority of the seats in the new State Duma. The remaining seats were
distributed between the pro-presidential Fair Russia, the Liberal Democrats and the Russian
Communist Party, which gained approximately 11 per cent. of the votes. The elections were

- 27 –
criticised by European experts and observers from the EU, and some experts believe that the
allocation of the State Duma seats has resulted in weak opposition to the President and rendered
the suppression of any Russian Governmental initiatives by the State Duma impossible.

Shortly after the State Duma elections, United Russia, Fair Russia, the Agricultural Party and Civil
Force jointly named Dmitry Medvedev, at that time the First Deputy Prime Minister of the Russian
Government, as their candidate for the 2008 presidential elections. Mr Putin supported Mr
Medvedev’s candidacy. On 2 March 2008, presidential elections were held in Russia, which resulted
in Dmitry Medvedev being elected the President of Russia, having gained 70.28 per cent. of the
votes. The other candidates for the presidential post, Gennadiy Zyuganov, the leader of the
Russian Communist Party, Vladimir Zhirinovskiy, the leader of the Liberal Democrats and Andrey
Bogdanov, the leader of the Democrats, gained 17.72 per cent., 9.35 per cent. and 1.30 per cent. of
the votes, respectively. According to the Russian Central Electoral Commission, there were no
material violations in the course of the elections, which might have put into question their results. At
the same time, some Russian and foreign observers pointed out violations of the electoral
procedures in Russia, including manipulations with bulletins and absentee ballots; the procedures
for registration of the candidates; the application of the administrative resources to ensure a high
percentage of attendance of Russian citizens to the elections; and the creation of generally unequal
terms for the candidates. Notwithstanding such alleged irregularities, the election results were
generally considered by most experts and observers to be broadly in line with expectations. As at
present, it is too early to make any conclusions as to whether Dmitry Medvedev will follow Vladimir
Putin’s policies and exactly how powers and authorities will be divided between them, although Mr
Putin has announced support for Dmitry Medvedev as a successor and, at the same time, has
declared his intention to remain active in the political arena. Mr Putin has also retained a singular
amount of control over certain areas of the Russian economy and has made the economy the focus
of his speeches so far as Prime Minister.

Any potential instability during the transition period could negatively affect the economic and political
environment in Russia in the short term. Any significant struggle over the direction of future reforms,
or any reversal of Mr Putin’s programme of change in Russia, could lead to deterioration in Russia’s
investment climate that might limit the ability of FLC to obtain financing in the international capital
markets or otherwise have a material adverse effect on FLC’s business, financial condition or results
of operations.

The Company’s business, financial condition, results of operations or prospects could be materially
affected if political instability recurs or if reform policies are reversed or lose effectiveness.

In addition, ethnic, religious, historical and other divisions have, on occasion, given rise to tensions
and, in certain cases, military conflict. Russian military and paramilitary forces have been engaged
in the Chechen Republic in the recent past and continue to maintain a presence there. The
escalation of violence may entail grave political consequences. In particular, the Federal
Constitutional Law “On Emergency” of 2001 allows, under certain circumstances, the declaration of
a state of emergency in the whole territory of Russia or in any part thereof, which may adversely
impact its investment climate. Further, the ‘‘anti-extremism’’ legislation, ostensibly enacted to
combat extremism, has been criticised by various experts for providing a very vague definition of
extremist activities, and provides for severe penalties, which has given rise to the concern that such
legislation may be abused, including for the purpose of curtailing press freedom.

In recent years, Russia has suffered a number of terrorist attacks, including suicide bombings,
bombings of two domestic passenger flights and hostage-taking at a school in Beslan, Russia,
resulting in significant loss of life and damage to property. In addition, in October 2005, terrorists
conducted a co-ordinated series of attacks on police and other Russian Government buildings in
Nalchik, Kabardino-Balkaria and low-level terrorist attacks have continued since then from time to
time, recent examples of which took place in November and December 2007, where explosions in
North Ossetia and Stavropol respectively led to the death of seven people and injured more than 20
people. Any future acts of terrorism or armed conflicts in the Russian Federation or internationally
could have an adverse effect on the financial and commodity markets, the global economy in
general, and FLC’s financial results in particular.

- 28 –
In September 2004, President Putin announced a proposed reform of the sub-federal election
system. Pursuant to the proposed reform, the heads of executive authorities on the sub-federal
level will be elected by their respective legislatures from a list of candidates nominated by the
President of the Russian Federation (instead of direct election by the population without the
participation of federal authorities in the nomination process). The proposed amendments to
Russian election legislation were approved by both chambers of the Russian parliament and entered
into force in December 2004. These events could materially and adversely affect the investment
environment and overall consumer confidence in the Russian Federation, which in turn could have a
material adverse effect on FLC’s business, financial condition, results of operations or prospects.

Furthermore, in October 2003, the ex-Chief Executive Officer of NK OAO ‘‘Yukos’’ (“Yukos”) Mikhail
Khodorkovsky, was arrested on charges of fraud and tax evasion and was sentenced to nine years
in prison in May 2005 (later commuted to eight years) on criminal charges. Despite Yukos’ filing for
Chapter 11 protection in the United States, 100 per cent. of the voting shares in Yuganskneftegaz
(Yukos’ main oil-extracting subsidiary) were sold at an auction organised by the Russian Federal
Property Fund to recover Yukos’ alleged debts to the Russian tax authorities. There has been
considerable volatility in the Russian stock market in the context of these events. According to
some commentators, these events have called into question the security of property and the
contractual rights and independence of the judiciary in Russia, and raise concerns about the revision
of tax and mineral resources legislation, the re-examination of Russia’s privatisations and the
redistribution of the assets involved.

Legislation to protect against nationalisation and expropriation may not be enforced in the event of a
nationalisation or expropriation of private assets

Although the Russian Government has enacted legislation to protect property against expropriation
and nationalisation and to provide for fair compensation to be paid if such events were to occur,
there can be no certainty that such protections will be enforced. This uncertainty is due to several
factors, including the lack of state budgetary resources, the lack of an independent judicial system
and sufficient mechanisms to enforce judgments, and corruption among Russian state officials.

The concept of property rights is not well developed in the Russian Federation and there is not a
great deal of experience in enforcing legislation enacted to protect private property against
nationalisation and expropriation. As a result, private owners may not be able to obtain proper
redress in the courts, and may not receive adequate compensation if, in the future, the Russian
Government decides to nationalise or expropriate some or all of their assets, which may have a
material adverse effect on any such private owner’s business, financial condition, results of
operations and/or prospects.

Economic Risks

The Russian economy is less stable than those of most Western countries

Since the dissolution of the Soviet Union in 1991, Russia’s society and economy have been
undergoing a rapid transformation in the context of the Russian Government’s inconsistent attempts
to transform the Russian Federation from a one-party state with a centrally-planned economy to a
pluralist democracy with a market-oriented economy. This transformation has been marked by
periods of significant instability, and the Russian economy at various times has experienced:

•

significant declines in gross domestic product;

hyperinflation;

an unstable currency;

high levels of state debt relative to gross domestic product;

a weak banking system providing limited liquidity to Russian enterprises;

high levels of loss-making enterprises that have continued to operate due to the lack of
effective bankruptcy proceedings;

significant use of barter transactions and illiquid promissory notes to settle commercial
transactions;

– 29 –

widespread tax evasion;

growth of black and grey market economies;

pervasive capital flight;

high levels of corruption and the penetration of organised crime into the economy;

significant increases in unemployment and under-employment; and

the impoverishment of a large portion of the Russian population.

•

The Russian Government’s increased role in the economy could create precarious economic
conditions in Russia

Although Russia’s economy has undergone a substantial transformation from central planning and
pervasive state ownership and control to more private ownership and market mechanisms, the role
of the state in the Russian economy remains significant and has recently been increasing. In
particular, the Russian Government controls or has material stakes in a significant number of
monopolies involved in the extraction and exporting of natural resources, and a significant
percentage of the population works for the state. The Russian Government has attempted to
manage the large inflows of foreign currency into Russia due to recent high commodity prices by,
among other steps, instituting a state stabilisation fund to limit the impact of such inflows. The
Russian Government has also used budget surpluses to make early repayments on Russia’s
external debt. The formation of the stabilisation fund, the recent budget surpluses, the high and
rising foreign currency reserves held by the CBR and decreases in overall volumes of Russia’s
external debt have had a positive effect on Russia’s investment rating and economic outlook;
however, there can be no assurance that these positive factors will continue in the future, or that
current budget surpluses or assets of the stabilisation fund will be sufficient to offset an abrupt or
prolonged future economic deterioration.

Risks associated with the current global financial crisis

Since May 2008 the Russian markets have undergone a significant downturn. For instance the
MICEX and the RTS have lost approximately 60 per cent. of their value of May 2008. Concomitantly,
the Russian interbank lending market has significantly constricted, resulting in reduced liquidity. So
far this has seen KIT Finance and Svyaz Bank unable to meet debt obligations and the pre-emptive
sale of half of Renaissance Capital in order to avoid foreseeable refinancing problems.

Widespread insolvencies have thus far been averted by the Russian Government’s efforts to provide
liquidity to the banking sector, and by Central Bank initiatives, such as reducing its reserve
requirements; however, loans remain expensive and difficult to access.

FLC’s management is unable to predict the effect that a future significant deterioration in the liquidity
of, or significant volatility in, the Russian banking system could have on FLC’s liquidity, ability to
access the capital markets or on its financial position. If FLC is unable to obtain funding when
necessary, on reasonable terms or at all, this may have a material adverse effect on FLC’s
business, financial condition or results of operations.

The Russian economy escaped the general global financial downturn for 2007 and the first half of
2008. It has seen positive developments over recent years, such as an increase in gross domestic
product, a relatively stable Rouble, a reduced rate of inflation and reduced levels of state debt. This
now seems to be changing. Some commentators predict that rising inflation in Russia, the drop in oil
prices and the higher incidence of insolvencies in Russia, which, coupled with a strengthening
dollar, could cause a significant decline in the Russian economy. This could have an adverse effect
on FLC’s business, financial condition, results of operations and prospects for the future.

- 30 –
Fluctuations in the global or Russian economies may have an adverse effect on FLC’s ability to
attract future capital as well as on its financial condition and prospects

The Russian economy is being adversely affected by market downturns and economic slowdowns
elsewhere in the world. As has happened in the past, financial problems outside the Russian
Federation or an increase in the perceived risks associated with investing in emerging economies
could dampen foreign investment in Russia and adversely affect the Russian economy.
Additionally, because the Russian Federation produces and exports large volumes of oil and gas,
the Russian economy is particularly sensitive to the price of oil and gas on the world market, and a
decline in the price of oil and gas could have a significant negative impact on the Russian economy,
which could adversely impact the demand for FLC’s services and, in turn, its growth and profitability.
Such developments could also severely limit FLC’s access to capital and could adversely affect
FLC’s business, financial condition, results of operations or prospects.

Recent terrorist activity inside and outside of the Russian Federation and the recent armed conflicts
in the Middle East have had a significant effect on international and domestic finance and
commodity markets. Any future acts of terrorism or armed conflicts in the Russian Federation or
internationally could have an adverse effect on the financial and commodities markets and the
global economy. As the Russian Federation produces and exports large amounts of crude oil and
gas, any acts of terrorism or armed conflicts causing disruptions to Russian oil and gas exports
could negatively affect the Russian economy and, thus, adversely affect FLC’s business, financial
condition, results of operations and/or prospects.

If Russia were to return to heavy and sustained inflation, FLC’s results of operations could be
adversely affected

According to Russian Government estimates, the inflation rate (CPI) in the Russian Federation was
18.6 per cent. in 2001, 15.1 per cent. in 2002, 12 per cent., in 2003, 11.7 per cent. in 2004, 11 per
cent. in 2005, 9.7 per cent. in 2006 and 11.9 per cent. in 2007. As at 1 June 2008, the Russian
Government expects inflation to be around 10.5 per cent. in 2008. Zeljko Bogetic (a World Bank
lead economist for Russia) predicted in an Interfax report published on 2 June 2008 that 2008
inflation could range from 12 percent to 14 per cent. For the two months ended 29 February 2008,
the CPI, according to the Russian Federal State Statistics Service, was 3.4 to 3.6 per cent.
However, various experts consider this forecast to be unrealistic and expect that the rate of inflation
in Russia will exceed 10 per cent. in 2008. Although the rate of inflation had been gradually
declining until 2007, any return to heavy and sustained inflation could lead to market instability, new
financial crises, reductions in consumer purchasing power and erosion of consumer confidence.
Any one of these events could lead to decreased demand for FLC’s products and services and,
consequently, have an adverse effect on FLC’s business, financial condition, results of operations
and/or prospects.

The currency control regime could have an adverse effect on FLC’s business

Over the last 15 years, Russia’s currency control regime has undergone major changes and
liberalisation, with the currency changing from being the subject of heavy Russian Government
control and supervision to being largely subject to market forces.

Recent changes include the adoption of Federal Law No. 173 ‘‘On Currency Regulation and
Currency Control’’ of 2003 (the ‘‘Currency Control Law’’), which largely replaced the previous
currency control regime with effect from 11 June 2004, where transfers and settlements involving
foreign currency were subject to special permits of the CBR, along with a number of regulations,
such as the requirement applicable to residents and non residents to reserve Rouble amounts in
certain proportions to the underlying currency operations (such as cross border lending or the
purchase of securities).

The general trend towards the further liberalisation of the Russian currency regulation regime
continued in 2006 in light of the positive trends in the Russian economy resulting partly from high oil
and gas prices. Most of the restrictions provided in the Currency Control Law (such as mandatory
requirements for maintaining special accounts and reserve requirements) have been fully abolished
since 1 January 2007. However, there can be no assurance that there will be no further changes to

- 31 –
the Currency Control Law, which could have a material adverse effect on FLC’s business, financial
condition, results of operations or prospects.

Shifts in the foreign policy of the Russian Government and changes in its key global relationships
could adversely affect the Russian political and economic environment in general

Russia’s exports are commodity driven and are heavily oriented towards developed nations.
Nevertheless, Russia’s foreign policy interests have often diverged from the interests and goals of
its main trading partners (for example, with the EU and the United States in connection with
confronting Iran’s nuclear ambitions). There can be no assurance that Russia’s political
relationships with key trading partners will remain at the level where they currently stand. Any
deterioration in relations with any one or more other nations could result in a lower volume of
exports and a lower volume of inbound investment and other transfers. Russia’s prospective
accession, however, into the World Trade Organisation, which may occur in 2008, is likely to have a
strong positive impact on Russia’s political and economic relations with its trade partners. This also
is expected to facilitate the access of foreign banks to the Russian market and an increased volume
of inbound investments. Changes in the Russian Government’s policy or a deterioration of key
global relationships of Russia could have a material adverse effect on FLC’s business, financial
conditions, results of operations and/or prospects.

The official data upon which prospective investors may base their investment decision may not be
as reliable as equivalent data from official sources in the West

Official statistics and other data published by the CBR, Russian federal, regional and local
governments, and federal agencies may be substantially less complete or researched and,
consequently, less reliable than those published by comparable bodies in other jurisdictions.
Accordingly, FLC cannot assure prospective investors that the official sources from which FLC has
drawn some of the information set out herein are reliable or complete. Russian state entities may
produce official statistics on bases different from those used by comparable bodies in other
jurisdictions. Any discussion of matters relating to the Russian Federation herein may, therefore, be
subject to uncertainty due to concerns about the completeness or reliability of available official and
public information.

Russia’s physical infrastructure is in very poor condition, which could disrupt normal business
activity

The physical infrastructure in the Russian Federation largely dates back to Soviet times and has not
been adequately funded and maintained over the past decade. Particularly affected are the rail and
road networks, power generation and transmission, communication systems and building stock. For
example, during the winter of 2000/2001, electricity and heating shortages in the Russian
Federation’s far eastern Primorye region seriously disrupted the local economy. In August 2000, a
fire at the main communications tower in Moscow interrupted television and radio broadcasting for
weeks. In May 2005, an electricity blackout affected much of Moscow for one day, disrupting normal
business activity. The Russian Government is considering plans to reorganise rail, electricity and
telephone systems in Russia. Any such reorganisation may result in increased charges and tariffs.
The state of the Russian Federation’s physical infrastructure negatively affects the Russian
Federation’s national economy, disrupts the transportation of goods and supplies, imposes
additional costs on business and can interrupt business operations. Further deterioration in the
physical infrastructure could have a material adverse effect on FLC, in particular, and on the value of
investments in the Russian Federation, in general.

Risks relating to the Notes

Limited recourse to the Issuer

The Issuer will only be obliged to make payments under the Notes to Noteholders in an amount
equivalent to sums of principal, interest, and/or additional amounts (if any), it actually receives by or
for its account under the Loan Agreement. Consequently, if FLC fails to meet its obligations fully
under the Loan Agreement, the Noteholders could receive less than the full amount of principal,

- 32 –
interest and/or additional amounts (if any), or, in the event of a complete failure by FLC to meet its
obligations, the Noteholders could receive no payment whatsoever on the relevant due date.

No direct recourse to FLC

Except as otherwise disclosed in the Conditions and in the Trust Deed, no proprietary or other direct
interest in the Issuer’s rights under or in respect of the Loan Agreement exists for the benefit of the
Noteholders. Subject to the terms of the Trust Deed, no Noteholder will have any entitlement to
enforce any of the provisions of the Loan Agreement or have direct recourse to FLC, except through
action by the Issuer and/or the Trustee under the security created pursuant to the 2008-01
Supplemental Trust Deed. Neither the Issuer nor the Trustee shall be required to enter into
proceedings to enforce payment under the Loan Agreement, unless it has been indemnified and/or
secured by the Noteholders to its satisfaction against all liabilities, proceedings, claims and
demands to which it may thereby become liable and all costs, charges and expenses which may be
incurred by it in connection therewith.

Payment of principal and/or interest by FLC under the Loan Agreement to, or to the order of, the
Trustee or the Principal Paying Agent is expected to meet, and will discharge, the Issuer’s
obligations in respect of the Notes. Consequently, Noteholders will have no further recourse against
the Issuer after such payment is made.

Lack of public market for the Notes

Prior to their issue, there is no existing market for the Notes. If an active trading market does not
develop or cannot be maintained, this could have a material adverse effect on the liquidity and the
trading price of the Notes. In addition, securities in recent years have experienced significant price
fluctuations. These fluctuations were often unrelated to the operating performance of the companies
whose securities were traded. Market fluctuations as well as adverse economic conditions have
negatively affected the market price of many securities and may affect the market price of the Notes.

Denominations

In relation to any issue of Notes which have a denomination consisting of the minimum Specified
Denomination plus a higher integral multiple of another smaller amount, it is possible that the Notes
may be traded in amounts in excess of U.S.$100,000 (or its equivalent) that are not integral
multiples of U.S.$1,000 (or its equivalent). In such a case a Noteholder who, as a result of trading
such amounts, holds a principal amount of less than the minimum Specified Denomination may not
receive a definitive Note in respect of such holding (should definitive Notes be printed) and would
need to purchase a principal amount of Notes such that its holding amounts to a Specified
Denomination.

Further considerations

Neither the Issuer nor the Trustee makes any representation or warranty in respect of, or shall at
any time have any responsibility for, or liability or obligation in respect of, the performance and
observance by FLC of its obligations under the Loan Agreement, or the recoverability of any sum of
principal or interest (or any additional amounts) due or to become due from FLC under the Loan
Agreement.

Neither the Issuer nor the Trustee shall at any time have any responsibility for, or obligation or
liability in respect of, the condition (financial, operational or otherwise), creditworthiness, affairs,
status, nature or prospects of FLC.

Neither the Issuer nor the Trustee shall at any time have any responsibility for, or obligation or
liability in respect of, any misrepresentation or breach of warranty or any act, default or omission of
FLC under or in respect of the Loan Agreement.

The Trustee shall not at any time have any responsibility for, or liability or obligation in respect of,
the performance and observance by the Principal Paying Agent or the Paying Agent of their
respective obligations under the Agency Agreement.

- 33 –
The financial servicing and performance of the terms of the Notes depend solely and exclusively
upon performance by FLC of its obligations under the Loan Agreement and its covenants, credit and
financial standing. FLC has represented and warranted in the Loan Agreement that the Loan
constitutes a legal, valid and binding obligation of FLC.

The Trustee shall be entitled to rely on notification by the Issuer, itself relying on notification by FLC
and certification by third parties as to whether FLC is complying with its obligations under the Loan
Agreement, and shall not otherwise be responsible for investigating any aspect of FLC’s
performance in relation thereto and, subject as further provided in the Trust Deed, the Trustee will
not be liable for any failure to make the usual or any investigations which might be made by a
security holder in relation to the security created pursuant to the Trust Deed and shall not be bound
to enquire into or be liable for any defect or failure in the right or title of the Issuer to the property
which is subject to the Security whether such defect or failure was known to the Trustee or might
have been discovered upon examination or enquiry or whether capable of remedy or not, nor will it
have any liability for the enforceability of the Security whether as a result of any failure, omission or
defect in registering or filing or otherwise protecting or perfecting such Security; the Trustee has no
responsibility for the value of such Security.

The Trustee shall not at any time be required to expend or risk its own funds or otherwise incur any
financial liability in the performance of its obligations or duties or the exercise of any right, power,
authority or discretion pursuant to these terms and conditions until it has received such funds as are
in its sole discretion necessary to cover the costs and expenses in connection with such
performance or exercise, or has been (in its sole discretion) sufficiently assured that it will receive
such funds.

Risks relating to taxation

FLC’s operations may become subject to income taxes in other jurisdictions which could have a
material adverse effect on FLC’s business, financial condition, results of operations and/or prospects

FLC is subject to the income tax laws of Russia and may be subject to the income tax laws of other
jurisdictions by reason of the activities and operations of FLC, or others in possession of FLC’s
aircraft. Although FLC has adopted operating procedures to reduce the exposure to such foreign
taxation, no assurance can be given that FLC will not be subject to such foreign taxes in the future.

Changes to Russian tax law

Russian tax law may be subject to change, varying interpretation and causing inconsistent and
selective enforcement. This may increase the tax burden of FLC or of FLC’s lessees. Any increase
in the tax burden of FLC’s lessees may cause such lessees to default on their lease payment. Any
of the above factors could have an adverse affect on FLC’s business, financial condition, results of
operations and/or prospects.

Interpretation of Russian tax law

Russian tax law may be interpreted differently and inconsistently by FLC and by the Russian tax and
customs authorities. Consequently, FLC may become liable for unanticipated payments, fines or
damages. Tax inspections in Russia usually cover the three years prior to the inspection, although
this may be extended in certain cases. Although FLC’s management believes that FLC has
interpreted all applicable tax and customs law correctly, there can be no assurance that the Russian
tax authorities will not take a different approach in interpreting such legislation. Any liability on the
part of FLC as a result of such a difference of interpretation could have an adverse affect on FLC’s
business, financial condition, results of operations and/or prospects.

- 34 –
EXCHANGE RATES

The following table sets forth, for the periods indicated, the high, low, average and year end official
rates set by the CBR in each case for the purchase of Roubles, all expressed per US Dollar. These
translations should not be construed as representations that Rouble amounts actually represent
such US Dollar amounts or could be converted into US Dollars at the rate indicated as at any of the
dates mentioned in this Prospectus or at all. The official rate of the CBR on 1 June 2008 was RUR
23.7384 to U.S.$1.0.

High

Low

Average

Period End

2008 (until 1 June 2008) ………………………………

24.8917

23.5027

24.23139

2007 ………………………………………………………….

26.577

24.2649

25.5546

2006 ………………………………………………………….

28.4834

26.184

27.18657

2005 ………………………………………………………….

28.9978

27.4611

28.31294

2004 ………………………………………………………….

29.4545

28.485

28.8947

2003 ………………………………………………………….

31.8846

29.5375

30.67186

23.7384

24.5462

26.3311

28.7825

27.7487

29.4545

The RUR/U.S.$ exchange rates used by FLC in the preparation of its audited consolidated financial
statements for the year ended 31 December 2007 are set out below.

Average rate…………………………………………………………………………………..

RUR 25.5547 per U.S.$

End of year rate ……………………………………………………………………………..

RUR 24.5462 per U.S.$

- 35 –
SELECTED CONSOLIDATED FINANCIAL AND OPERATING INFORMATION

The following tables present selected consolidated financial and operation information which has
been extracted without material adjustment from and should be read in conjunction with the
Financial Statements and the notes thereto as at and for the years ended 31 December 2007, 2006
(restated) and 2005 (restated) prepared in accordance with IFRS, all of which are included
elsewhere in this Prospectus, as well as the sections entitled “Capitalisation and Indebtedness”.

Income Statement Data

International Financial Reporting Standards

2007

2006

2005

(restated)

(thousands of US Dollars)

Revenues

Income from Leasing ………………………………………..

Income from Sale of Goods ……………………………….

Other Operating Income ……………………………………

84,985

23,008

8,533

69,778

19,709

12,989

Total Revenues ………………………………………………

116,526

102,476

Operating Expenses

Cost of Leasing ………………………………………………..

(77,688)

(64,291)

Staff Costs……………………………………………………….

(5,073)

(3,617)

Depreciation, Amortization, Impairment ………………

Operating Lease Expenses ……………………………….

Taxes………………………………………………………………

(927)

(1,866)

(3,088)

(678)

(1,355)

(2,028)

Other Operating Expenses ………………………………..

(16,721)

(21,016)

Total Operating Expenses ………………………………

(109,363)

(92,989)

Operating Profit………………………………………………

Interest on Leasing …………………………………………..

Profit Before Taxation and Minority Interest ……

Prior years’ Taxation …………………………………………

Deferred Taxation …………………………………………….

Profit before Minority Interest …………………………

Minority Interest: Share of Net Result………………….

Net Profit for the Year……………………………………..

11,163

(46)

11,117

(42)

(4,339)

(6,736)

(18)

6,718

9,491

(13)

9,478

–

(2,459)

7,019

(15)

7,004

65,318

7,912

(631)

72,599

(55,308)

(2,703)

(153)

(999)

(8)

(10,019)

(69,190)

3,409

(33)

3,376

–

(725)

2,651

2,670

Balance Sheet Data

International Financial Reporting Standards

– 36 –

Assets ……………………………………………………………

Non-Current Assets ………………………………………..

Intangible Assets………………………………………………

Property, Plant, and Equipment………………………….

Construction in Progress……………………………………

Capital in Joint-Venture……………………………………..

Held to Maturity Investments ……………………………..

Amounts Receivable under Leasing Agreements …

Trade and Other Receivables and Prepayments ….

2007

2006

2005

(restated)

(thousands of US Dollars)

11,189

25,397

2,804

189,615

–

9,700

32,215

12,911

2,614

69,202

–

737

15,421

–

122

99,741

8,166

Total Non-Current Assets ……………………………….

229,010

126,646

124,193

Current Assets ……………………………………………….

Inventories……………………………………………………….

Investments at Fair Value through Profit or Loss ….

Amounts Receivable under Leasing Agreements …

Loans Receivables……………………………………………

Trade and Other Receivables…………………………….

Cash and Equivalents ……………………………………….

72,067

14,845

78,632

279,909

92,447

3,100

34,606

3,238

48,440

228,049

136,945

Total Current Assets……………………………………….

537,907

454,378

Total Assets……………………………………………………

766,917

581,024

28,643

22,259

24,967

64,457

107,085

247,415

371,608

Liabilities………………………………………………………..

Non-Current Liabilities ……………………………………

Borrowings ………………………………………………………

151,398

51,787

60,452

Amounts Payable under Leasing Agreements ……..

Deferred Taxation …………………………………………….

Total Non-Current Liabilities …………………………..

Current Liabilities …………………………………………..

130

10,104

161,632

–

5,765

57,552

Trade and Other Payables…………………………………

26,871

28,652

Borrowings ………………………………………………………

131,804

102,930

Amounts Payable under Leasing Agreements ……..

116

Total Current Liabilities…………………………………..

158,791

131,646

Total Liabilities ……………………………………………….

320,423

189,198

Capital and Reserves………………………………………

2,304

62,785

130,228

43,799

174,067

236,852

Share Capital …………………………………………………..

425,922

379,266

129,898

Currency Translation Reserve ……………………………

Capital Reserve ……………………………………………….

2,435

228

873

136

Retained Earnings ……………………………………………

17,745

11,054

(42)

4,798

Total Equity and Liabilites ………………………………

766,917

981,024

134,726

Cash Flow Statement

International Financial Reporting Standards

– 37 –

Cash flows from operating activities

Gross cash flows from trade receivables and
other operating activities

Gross cash payments to trade payables and
other operating activities

Payments of wages, benefits and payroll taxes

Other cash payments on operational activities

Interest paid

Profit tax paid

Dividends paid to shareholders

Taxes paid (other than profit tax, VAT and payroll
taxes)

Net cash used in operating activities

Cash flows from investing activities

Cash flows from sale of property, plant and
equipment

Interest and dividend income

Cash flows from sale of bills of exchange

Purchases of bills of exchange and other
financial instruments

Purchases of property, plant and equipment and
other non-current assets

Net cash used in investing activities

Cash flows from financing activities

Cash flows from loans and other credit facilities

Proceeds from issue of share capital

Repayment of loans and other credit facilities

Payments under finance leases

Net cash generated from financial activities

(Decrease)/increase in cash and cash
equivalents

Cash and cash equivalents at the beginning
of the year

Cash in hand

Cash at bank

Cash and cash equivalents at the end of the
year

Cash in hand

Cash in bank

Effect of fluctuations in the US$/RUR
exchange rate

2007

2006

(restated)

(thousands of US Dollars)

51 375

38 476

(113 514)

(4 954)

(2 093)

(17 035)

(27)

(384)

(2 646)

(89 278)

208

6 952

62 720

(132 451)

(2 727)

(3 203)

(16 153)

(5)

(220)

(118 168)

19 726

3 617

45 650

(111 110)

(72 643)

(49 695)

(90 925)

254 701

18 392

(145 140)

(46)

127 907

(498)

(4 139)

112 554

110 529

(91 293)

(188)

141 602

(52 295)

19 295

136 945

136 944

92 447

92 446

107 085

107 083

136 945

136 944

7 796

10 565

- 38 –
CAPITALISATION AND INDEBTEDNESS

The following table sets forth FLC’s capitalisation and indebtedness as at 31 December 2007, 2006
and 2005. Prospective investors should read this information in conjunction with “Funding and
Liabilities” and the Financial Statements included elsewhere in this Prospectus.

Long term loans and borrowings ………………………..

Short term loans and borrowings………………………..

Total debt ………………………………………………………..

Share capital ……………………………………………………

Retained earnings…………………………………………….

Total shareholders’ equity (including capital
reserves and currency translation reserves)……

31 December

2007

2006

2005

(restated)

(thousands of US Dollars)

151,398

131,804

283,202

425,992

17,745

446,399

51,787

102,930

154,717

379,266

11,913

391,749

60,481

43,839

104,320

129,898

4,798

134,726

Total capitalisation …………………………………………

729,601

564,466

239,046

Except as described above, there has been no material change to FLC’s capitalisation and
indebtedness since 31 December 2007.

- 39 –
FINANCIAL REVIEW

The following discussing and analysis should be read in conjunction with the Bank’s Financial
Statements appearing elsewhere herein. Unless otherwise specified, the financial data set forth
below have been extracted without material adjustment from the Financial Statements.

Investors should read the following financial review of FLC as of 31 December 2007, 2006 and 2005
and for the years then ended in conjunction with the Financial Statements as of and for the years
ended 31 December 2007, 2006 and 2005 included elsewhere in this Prospectus. Such Financial
Statements have been prepared in accordance with IFRS.

Principal Activities

Established in January 1997, FLC is a leading Russian long-term finance leasing company, with a
primary focus on the leasing of aircraft and equipment. The Russian Government currently owns,
directly and indirectly, 80.5 per cent. of FLC’s share capital (see “Ownership”). As at the date of this
Prospectus, FLC is headquartered in Moscow, and also has three branches in St. Petersburg and a
branch in each of Kazan and Almetyevsk. For a more detailed description of the business activities
of FLC, see “Business”.

General Market Conditions and Operating Environments in the Russian Federation

FLC’s assets are concentrated in the Russian Federation. As a result, FLC is substantially
influenced by Russian economic conditions.

While there have been improvements in recent years in the economic situation in the Russian
Federation, its economy continues to display certain characteristics of an emerging market,
including, for instance, a currency that is not freely convertible in most countries outside the Russian
Federation, a volatile securities market and inflation rates higher than those in more developed
countries. See ‘‘Risk Factors—Risks Related to the Russian Federation’’.
The following table sets forth key Russian economic indicators as of the years ended 31 December
2007, 2006 and 2005:

As at or for the year ended

31 December

2007

2006

2005

Gross domestic product (billions of RUR)(1) …………………… 32,988.6

26,781.1

21,620.1

Foreign currency reserves (billions of US Dollars)(2) ……….. 476.6(3)

303.7

182.2

Inflation (per cent.)(1) …………………………………………………… 11.9

Nominal (appreciation) depreciation of the RUR against
the US Dollar (year-to-year) (per cent.)(2) ………………………. 6.3

9.0

4.0

10.9

1.9

Real appreciation of the RUR against the U.S. dollar
(year-to-year) (per cent.)(2)…………………………………………… 12.8

10.7

10.8

(1) Russian Federal State Statistics Service.

(2) CBR.

(3) As at 4 January 2008.

- 40 –

In 2007, the Russian Federation enjoyed its eighth consecutive year of economic growth. The
continuing rebound of domestic demand from the depressed levels immediately following the
financial crisis of August 1998, along with high market prices for key export commodities, particularly
oil and gas, sustained economic growth and led to an increase in foreign currency reserves by 56.9
per cent. to U.S.$476.6 billion for the year ended 31 December 2007 from U.S.$303.7 billion for the
year ended 31 December 2006. In 2003, the Russian economy ceased to be hyperinflationary, as
the inflation rate in the Russian Federation over the preceding years declined significantly below the
levels indicating hyperinflation and the purchasing power of the Russian Rouble strengthened. The
significant cash inflows resulting from exports of commodities at high prices also led to the
strengthening of the Rouble against the US Dollar. Currently, the Russian economy generates large
amounts of excess liquidity, which has resulted in significant competition among banks for
borrowers.

- 41 –
BUSINESS

Overview

FLC is an open joint-stock company organised under the laws of the Russian Federation, with its
registered office and head office at 50 Perovskaya Street, Building 1, Premises IX, Moscow 111141,
Russian Federation, telephone number +7 495 232 06 30. It is authorised in accordance with article
3 of its charter to provide financial leasing services in respect of property, and to make profit from
such activity.

Until 1 April 2008, FLC owned 50% of the share capital of a Luxembourg-incorporated company
called FLC West Holding S.A.R.L. (“FLC West”). On 1 April 2008, FLC sold the majority of its stake
in FLC West (equal to 49% of the share capital of FLC West) to Blackstead Holding Limited, a
Cypriot company. The deal was registered on 23 May 2008. FLC retains a 1% stake in FLC West.

FLC’s majority shareholder is UAC, 90.9 per cent. of whose share capital is owned by the Russian
Government as at 1 June 2008. UAC was incorporated in Russia in September 2006 in order to
consolidate the state-controlled shareholdings of a number of Russian aircraft manufacturers. UAC
had revenues of approximately U.S.$4 billion in 2007, and former Russian President Vladimir Putin
has expressed his intention to make it a “national champion”. UAC provided Moody’s with a comfort
letter in relation to FLC on 22 February 2008, which is attached to this Prospectus as Appendix 3. In
this comfort letter, which is a non-binding statement of intention that cannot legally be enforced,
UAC has confirmed that it is prepared to provide FLC with such support and assistance as it may
require to ensure the adequacy of its capital and timely performance of its financial obligations. In
addition, The Russian Transport Ministry provided Moody’s with a further comfort letter, which is
attached to this Prospectus as Appendix 4, as to the strategic importance of FLC in the realisation of
Russia’s strategy for its aviation industry.

Credit rating of FLC

FLC was downgraded on 26 September 2008 from a rating from Moody’s Investor Service
(“Moody’s”) of Ba2 and a baseline credit assessment (“BCA”) of 16 to a rating of Ba3 and a BCA of
17. According to Moody’s, downgrades have been prompted by the recent difficult conditions of the
Russian air carrier sector, which – along with the high single-name and industry concentration of
FLC’s assets – have been weighing on the company’s asset quality and the performance of its
leasing book, in particular. In addition, the rapid leveraging of the company’s balance sheet over the
past year has not been adequately supported by asset-liability management systems and
procedures and has therefore exposed FLC to notable refinancing risks. Moody’s also cautions that
certain corporate governance issues may pose a potential threat to FLC’s asset quality and liquidity
profile going forward. FLC was classified as a governmental-related, “finance leasing company” by
Moody’s in its report dated 17 April 2008.

A security rating is not a recommendation to buy, sell or hold securities and may be subject to
revision, suspension or withdrawal at any time by the assigning rating organisations.

Assets

According to its financial statements prepared in accordance with IFRS, for the year ended
31 December 2007, FLC had total assets worth U.S.$766.917 million, as compared to the total asset
value of U.S.$581.024 million for the year ended 31 December 2006. This change represents a
year-on-year increase of 31.99% per cent. and FLC’s management believes that it is attributable to
increases in the number and value of the leasing contracts entered into by FLC during 2007, and the
quantity and value of FLC-funded aircraft under construction.

As at 31 December 2007, FLC’s lease portfolio had a value of U.S.$430 million, including
prepayments for assets not yet delivered.

- 42 –
According to FLC’s unaudited management accounts, as at the end of the first quarter of 2008, FLC
directly owns 13 aircraft with a total book value of U.S.$312.4million.

The following table summarises FLC’s aircraft portfolio as at the end of the first quarter of 2008. The
actual mix of aircraft, lessees and leases in FLC’s portfolio will change over time if aircraft are sold
or additional aircraft are acquired and as FLC re-leases the aircraft to different lessees.

Status

Total

Aircraft Type

lease……………………………………… 13
Under construction…………………..
8
Under lease contract (or letter of
intent) ……………………………………. 35

Tu-
204/214
8
8

IL-76 An-140

IL-114

Superjet

The following table shows information about the leases of the 13 aircraft that together comprise
FLC’s aircraft leasing portfolio as at the end of the first quarter of 2008.

Lessee

Aircraft model

No of aircraft
under contract

Duration of
lease

Expiry of
lease

Book Value

Aerostars

Ilyushin-76

Transaero

Tupolev-214

Yakutia

Antonov-140

KrasAir

Tupolev-214

Aerostars

Tupolev-204

Delavia

Tupolev-214

7 years
5 years

9 years

2011
2009

2012

15 years

2021

15 years

2019

15 years

2022

15 years

2021

U.S.$3.2
million

U.S.$86.3
million

U.S.$28.9
million

U.S.$34.4
million

U.S.$36.7
million

U.S.$122.8
million

The following table shows the schedule for leasing aircraft that are currently under construction and
which are the subject of contracts to enter into leases, or of letters of intent to enter into leases, with
various airlines.

Year

2008

2009

2010

2011

Aircraft Type

Tu-204/214

IL-76 An-140

IL-114 Superjet

- 43 –
The following table shows the total number of passenger planes operated by Russian air carriers as
at 5 June 2008.

Registered

Currently in use

Produced in Russia

IL-96

IL-86

IL-62

Tu-214

Tu-204

Tu-154

Tu-134

Yak-42

Yak-40

An-24

IL-18

An-74

Produced outside Russia

Boeing-737

Boeing-747

Boeing-757

Boeing-767

Airbus-310

Airbus-319

Airbus-320

Airbs-321

DC-10

GL-604

Falcon-20

Falcon-50

Falcon-900

others

Total

353

223

265

207

1352

134

1486

251

162

138

121

882

126

1008

- 44 –

The following table summarises as at 31 December 2007 specified information about FLC’s current
leases of aircraft/transport manufacturing equipment. The actual mix of aircraft, lessees and leases
in FLC’s portfolio may change over time if equipment is sold or additional equipment is acquired and
as FLC re-leases the equipment to different lessees. According to FLC’s unaudited management
accounts, as at the end of the first quarter of 2008, the total book value of FLC’s aircraft/transport
manufacturing equipment was U.S.$11.798 million.

Lessee

Leased Object

Contract
commencement
date

Contract
termination
date

Book Value

Aviation Systems

Aircraft manufacturing
equipment

18/12/2006

21/1/2011

18/12/2007

01/03/2012

Sukhoi Civil Planes Production Equipment

23/03/2006

25/04/2012

Sukhoi Civil Planes Production Equipment

14/07/2005

10/10/2011

Sukhoi Civil Planes Production Equipment

14/07/2005

10/05/2011

Sukhoi Civil Planes Production Equipment

14/07/2005

10/05/2011

Penztyazh-
Promarmatura

Production Equipment

06/09/2005

20/09/2008

Production Equipment

12/09/2005

20/01/2009

Production Equipment

30/07/2005

20/11/2008

Vostek

Auto-transport

03/12/2004

10/07/2009

Mahachikila Sea
Trading Port

Barges

Business

19/12/2003

20/12/2009

19/06/2003

20/10/2008

U.S.$0.231
million

U.S.$0.067
million

U.S.$1.723
million

U.S.$0.911
million

U.S.$0.440
million

U.S.$0.339
million

U.S.$0.128
million

U.S.$0.126
million

U.S.$0.121
million

U.S.$0.253
million

U.S.$4.356
million

U.S.$3.103
million

For the year ended 31 December 2007, FLC’s income from leasing was U.S.$84.985 million
(compared to U.S.$69.778 million for the year ended 31 December 2006) and its overall income
from selling goods was U.S.$23.008 million for the year ending 31 December 2007 (as compared to
U.S.$19.709 million for the year ending 31 December 2006). Total revenue for the year ended 31
December 2007 was U.S.$116.526 million, as compared to U.S.$102.476as at 31 December 2006.

Of FLC’s net leasing income of U.S.$7.297 million for the year ended 31 December 2007,
approximately 85 per cent. was derived from FLC’s aircraft leasing activities.

Market Position and Competitive Advantages

- 45 –
Russian aircraft industry through state-financed leasing programmes, the other company being
Ilyushin Finance. Since 2002, FLC has received U.S.$250 million in capital injections from the
Russian Government and to date has signed contracts with seven Russian carriers (Transaero,
Dalavia (a subsidiary of Aeroflot), Aviakompania Yakutia, Aerostars, KrasAir and Aviastar) to deliver
46 Russian aircraft, for a value totalling RUB25 billion (approximately U.S.$1.1 billion).

FLC’s management estimates that FLC has a market share of approximately 12-15 per cent. in the
Russian aviation technology leasing sector and approximately 35 per cent. of the aircraft leasing
sector, making it the market leader in Russia. Its principal competitors are Ilyushin Finance
Company, which leases aircraft, and VTB-Leasing, which leases machinery for the manufacture of
aircraft.

Industry trends

FLC’s management believes that the Russian aviation market shows signs of future growth as a
result of increasing demand, despite the current high cost of oil (and hence of jet fuel) causing
difficulties for Russian airlines. In their “Current Market Outlook 2007”, Boeing suggested that
Russia and the CIS would need 1,060 additional aircraft by 2026. Some commentators predict
substantial growth in Russian passenger traffic, with passenger traffic of 38 million per year in 2007
predicted to reach approximately 60 million per year by 2015.

Some commentators believe that a major trend in civil aviation at present is a move towards low-
cost carriers operating on short-haul routes. At the 5th Annual Russia Airfinance Conference in
Moscow in 2007, Aeroflot urged the Russian market to prepare for the emergence of low-cost
carriers. The current market leader among low cost carriers in Russia is Sky Express, which
operates from Moscow Vnukovo Airport and uses Boeing B737 “Classics”. FLC’s management
plans to invest heavily in Superjets and Tupolev TU-214s during the next few years, and believed
that both types of aircraft are suitable for use by low-cost carriers.

The demand for aircraft as a result of growing passenger numbers is strengthened by the need of
Russian airlines to modernise their fleets. Aeroflot, Russia’s international flag-carrier airline, with
group net income of over U.S.$300 million in 2006, is progressively retiring its ageing Tupolev TU-
134 and TU 154 aircraft and replacing them with more modern models. S7 Group and Pulkovo
Aviation, Russia’s second and third largest airlines, respectively, are planning similar modernisation
drives. FLC estimates that approximately 30 Russian aircraft of the type that they own are being
written off each year.

To date, the lack of modern Russian-built aircraft has prompted Russian airlines to renovate their
fleet by purchasing and leasing foreign-built aircraft. However, the Russian Government’s focus on
the civil aviation industry, including its plan to spend, via UAC, over RUR18 billion in 2008-2010
supporting the civil aviation industry, is expected by FLC’s management to increase demand among
Russian airlines for new Russian-built aircraft such as those that FLC plans to own and lease in the
future. An example of this Russian aircraft technology is the Superjet. Sukhoi reportedly sees a
market for 800 Superjets, 250 to 300 of which are expected to go to airlines in Russia.

FLC’s management believes that entities owning Russian aircraft are likely to benefit from these
developments as a result of the current import tariff barrier imposed on non-Russian aircraft, which
adds approximately 42 per cent. to the cost of an imported aeroplane according to a report entitled
“Developments in the Russian and CIS Aviation Sector” and published in the 2007/20008 Airfinance
Annual.

FLC benefits from incentives offered by the Russian government to airlines to lessees of Russian-
built aircraft. As at the date of this Prospectus, Russian airlines leasing such Russian aircraft from
Russian aircraft leasing companies only pay half of each payment under their lease agreements,
while the Russian Government pays the other half under a governmental subsidy scheme aimed at
promoting the Russian aviation industry. However, this subsidy is forfeited if lessees fail to make

- 46 –
two consecutive monthly lease payments. To date, none of FLC’s lessees has ever defaulted on its
lease payment for two consecutive payments.

Furthermore, some commentators believe that Russian aircraft leasing companies look set to benefit
from the Russian economic environment. Since 2002, bank lending in Russia has progressively
increased, which has made financing more accessible to leasing companies, thereby providing them
with the chance to expand their portfolios by purchasing further aircraft. In addition, tax benefits
(such as a depreciation rate that is three times greater for assets that are the subject of a finance
lease arrangement) make finance leasing an attractive option for airlines.

Business Strategy

FLC’s management expects the Superjet to be fully certified by the end of 2008. Once full
certification has been obtained, FLC will be in a position to seek to enter into leases with airlines
based outside Russia. In particular, FLC’s management is of the opinion that airlines based in
countries with rapidly expanding aviation industries, such as India and China, would be particularly
suitable as lessees of FLC’s aircraft.

Business Areas

Aircraft Leasing

FLC leases Russian-made aircraft to leading Russian airlines, such as Transaero, Dalavia (a
subsidiary of Aeroflot), Aviakompania Yakutia, Aerostars and Aviastar. The lease contracts
generally have a duration of about 15 years. To date, FLC has not suffered any lease cancellations
or defaults, and due to the anticipated demand for modern aircraft in Russia FLC’s management
does not expect FLC to frequently suffer lease cancellations or defaults by customers in the future.

FLC is involved in leading the technical modernisation of its parent, UAC, by financing equipment
and the production of the Superjet, a new mid-range aircraft produced by the Russian aviation
company Sukhoi, which is 99.69 per cent. owned by UAC. Sukhoi aim to sell 100 Superjet aircraft
between 2008 and 2010 at a cost per unit of approximately U.S.$28 million, with FLC to acquire a
total of 25 at an aggregate price of U.S.$400 million during this period.

- 47 –
By 2008, FLC had significantly increased its lease portfolio largely as a result of capital injections of
the Russian Government and funding from Russian banks, which enabled FLC to acquire more
assets for leasing (see “Funding and Liabilities”).

Breakdown of Leasing Portfolio by Client 2008
(Expected)
Name
Aerostars …………………………………………………….. 1
Sukhoi Civil Aircraft ……………………………………….16
Transaero …………………………………………………….24
Yakutia ………………………………………………………. 5
KrasAir………………………………………………………. 4
Aviastar-Tu ………………………………………………….. 5
Dalavia ………………………………………………………. 19
MMT Port…………………………………………………….. 2
KnAAPO ……………………………………………………… 5
Continent ……………………………………………………..13
Aeroflot ………………………………………………………. 6

Aircraft Equipment Leasing

Until 2008, FLC mainly leased aircraft produced by companies that are now consolidated in UAC. As
well as leasing Russian-made aircraft, FLC leases Western aircraft/transport manufacturing
equipment, and intends to become the sole lessor of such equipment to UAC group companies.
UAC incorporates companies such as Sukhoi, Ilyushin, Tupolev and Yatiovlev. The average
duration of such contracts is between three and five years.

The Russian Government’s recent significant efforts to develop the Russian aircraft sector have
required a substantial modernisation of production facilities and although machinery leasing only
accounted for 2.5 per cent. of FLC’s leasing portfolio as at 31 December 2007, FLC’s management
now expects that leasing of aircraft machinery will form an increasing part of its business and
revenues over the coming years to cope with the demand from aircraft facilities, which require
substantial renewal in order to produce modern aircraft. Once these modern aircraft are produced,
FLC’s management also expects to benefit: FLC plans to act as one of the major leasing companies
operating in the market for the Superjet project. FLC’s management hopes that this will diversify
FLC’s lease portfolio over the next few years.

Apart from aircraft and aircraft/transport manufacturing equipment leasing, FLC derives some
income from a number of other business areas that remain for historic reasons. In aggregate, these
areas comprise less then 2 per cent. of FLC’s leasing portfolio, as at 31 December 2007. A brief
summary of these areas is provided below.

Shipping

A minor area of FLC’s business is in shipbuilding and the leasing of marine equipment. FLC’s first
ship lease commenced from December 2004, and two new ships that are used for salvage and
rescue operations having been built using the latest technology. However, this only a minor part of
FLC’s business (in 2008, FLC expects to realise 77 per cent. of its leasing revenue from airlines,
under 54 leasing contracts) and FLC plans to cease operations in this area by 2010.

Oil

FLC also currently derives some income from leasing equipment used for oil extraction. For
example, in 2000 it signed a U.S.$1.5 million contract to lease oil extraction equipment to
OOO Leninogorsk Tamponag, and another for U.S.$3.7 million in 2001 for the lease of similar
equipment to OAO “Tatneft”. This constitutes a non-core activity for FLC.

- 48 –

Medical Equipment

FLC also leases medical equipment called the Leksell Gamma Knife® in co-operation with a
Swedish medical equipment producer called Elekta. This constitutes a non-core activity for FLC.

General Equipment

FLC also currently provides services for the modernisation of industrial equipment, and was the first
Russian company to lease machinery used to reconstruct boiler equipment using leasing schemes.
This constitutes a non-core activity for FLC.

Funding and Liabilities

FLC’s principal sources of funding are capital injections from the Russian Government and
borrowings from Russian banks and borrowing via the international debt capital markets.

As at 31 December 2007, FLC had total liabilities of U.S.$320.423million, up from U.S.$189.198
million as at 31 December 2006. This figure for liabilities reflects the fact that FLC issued U.S.$100
million in Credit Linked Notes through Dresdner Bank in June 2007, which will mature in 2011. The
majority of FC’s debts fall due in the next four years.

Under Federal Law “On the Federal Budget for 2008 – 2010”, adopted by the Russian Parliament
and signed by the Russian President on 24 July 2007, leasing companies that are engaged in
leasing Russian-produced aircraft may be compensated for their interest expenses from the Federal
Budget. The fund allocated for this purpose is U.S.$70 million for 2008, U.S.$220 million for 2009
and U.S.$360 million for 2010. FLC’s management currently believes that FLC may be the only
Russian company that is eligible to apply for this, and expect that FLC will make a successful claim
for compensation from this fund.

- 49 –
The following table sets out FLC’s borrowings for the years ended 31 December 2007, 2006 and
2005:

2007

2006
(restated)
(thousands of US Dollars)

2005
(restated)

Non-current
Non-current loans………………………………………….
Loan of AKB Eurofinance Mosnarbank…………….
Loans of Sberbank RF …………………………………..
Loan of AKB Sojuz ………………………………………..
Moscow promissory note (“Vekselniy”) bank loan
Loan of IK Server ………………………………………….
Loan of the London branch of Dresdner Bank
AG ………………………………………………………………
Loan of IKB Deutsch Industriebank
Aktiengesellschaft …………………………………………
Other loans…………………………………………………..

Current
Current loans………………………………………………..
Loan of AKB Eurofinance Mosnarbank…………….
Loans of Sberbank RF …………………………………..
Loan of AKB Sojuz ………………………………………..
Loan of MDM-bank………………………………………..
Loan of Mira-bank …………………………………………
International Saint-Petersburg bank loan …………
Absolut bank…………………………………………………
Moscow promissory note Vekselniy…………………
IKB Deutsche Industriebank Aktiengeesellschaft
IK Server ……………………………………………………..
Kru Audit………………………………………………………
AKB Novikombank ………………………………………..
APR Bank…………………………………………………….
Bank Kuznetsky Bridge………………………………….
Other loans…………………………………………………..
Loan interests payable …………………………………..

–
10,734
10,578
1,244
–
12,709
100,000

–
11,963
17,688
1,822
6,198
–
–

4,662
17,671
34,686
3,433
–
–
–

16,105

–

28
151,398

–
21,244
8,845
995
20,000
4,074
16,156
5,935
5,165
3,464
20,343
11,504
4,076
2,444
2,044
3,236
2,279
131,804

14,116
51,787

6,181
38,749
6,469
1,091
20,378
4,886
21,495
–
–
–
–
–
–
–
–
9,599
263
102,930

–
60,452

10,770
26,973
–
–
–
2,779
–
–
–
–
–
–
–
–
–
2,424
853
43,799

Marketing

FLC does not currently have any specific marketing strategy, as FLC’s management considers that
there is higher demand for its aircraft than it can currently meet, which makes marketing
unnecessary at present. Furthermore, FLC is already well-known within the Russian aviation
industry and has good relations with its customers, who often provide repeat business. However,
FLC would consider marketing should its supply of aircraft overtake the demand for them.

Information Technology

FLC invests in information technology (“IT”) to the extent necessary for the effective continuance of
their business. According to FLC’s internal and unaudited calculations, FLC’s expenditure on IT
was, on average, U.S.$100,000 per year for the last three years. FLC’s management will consider
any necessary future investment in IT as and when the need arises.

Premises

FLC leases the premises it occupies and it does not own any substantial real estate assets.

– 50 –

Intellectual Property

There are no claims, either pending or current, being made by or against FLC in respect of
intellectual property. FLC also considers that it does not own any specific intellectual property of
material value.

Litigation

FLC has been, and continues to be, the subject of legal proceedings and adjudications from time to
time, none of which has had, or is expected to have, individually or in aggregate, a material adverse
effect on FLC. There are no, and have not been any, legal or arbitration proceedings against or
affecting FLC or any of its assets or revenues, and FLC is not aware of any pending or threatened
proceedings of such kind, which may have, or have had during the 12 months prior to the date of
this Prospectus, a significant effect on the financial position of FLC.

Employees

For the financial year ended 31 December 2007, the average number of employees was 130, as
compared to 111 for the financial year ended 31 December 2006. FLC’s management considers
staff retention to be an important part of FLC’s success. FLC currently has a low level of staff
turnover, and FLC’s management partly attributes this to the competitive salaries that it pays to its
employees.

Although there are currently no profit-sharing, bonus or other incentive schemes for management or
employees, as FLC recently incorporated such benefits into the salaries that it pays its employees,
these may be still considered on an individual basis by FLC’s Board of Directors.

FLC does not have any private pension plans or other benefit plans for its employees.

FLC’s employees are not represented by any union. FLC considers its relationship with its
employees to be good. FLC does not currently have any disputes with any of its employees and is
not expecting any disputes with any of its employees in future.

FLC is not currently considering any changes to its senior management or to their responsibilities.

Although FLC recently considered obtaining “key man” insurance in respect of its Director General,
FLC does not currently consider that Russian insurance companies offer suitable cover for its
purposes.

Insurance

insurable

The FLC Group has limited insurance policies with respect to assets, transactions, civil liability and
other
risks, with Reso-Garantia, Kapital-Strakhovaie, Alfa-Strakhovanie, and
Rosgosstrakh-Stolitsa. In particular, FLC does not have insurance against business interuption or
directors’ and officers’ insurance. Accordingly, FLC may be exposed to risks against which it is not
insured.

Currently, all losses and damage to FLC’s aircraft and aircraft/transport manufacturing equipment
portfolio are covered by insurance, with the exception of operational losses and damage.

Depending on each individual commercial agreement, either FLC or FLC’s lessee is responsible for
securing adequate insurance policies for the relevant asset or assets. However, FLC is always the
loss payee under such insurance policies, even if the lessee pays for the insurance.

FLC has not made any material insurance claims, and FLC’s management does not know of any
circumstances currently existing that might lead to FLC making such a claim.

Corporate governance

– 51 –

FLC’s management considers high standards of corporate governance to be an important part of
FLC’s business and that it achieves this through its vertical, integrated management structure.
FLC’s corporate governance is managed by its Internal Control Division, which proscribes and
oversees FLC’s corporate governance procedures. FLC’s Internal Control Division is staffed by
suitably qualified personnel. FLC also aims to be as transparent as possible in its operations, and
places key information about major decisions by FLC’s management on its website. FLC also
complies in full with the disclosure requirements that apply to it as a result of having its shares listed
on the Moscow Interbank Currency Exchange. FLC publishes annual reports that disclose its IFRS
financial statements.

Industry Regulation

The main framework of laws governing FLC’s business are those that govern the operation and
leasing of aircraft. These are contained in the Civil Code of the Russian Federation, the Air Code of
the Russian Federation, Federal Law No. 164-FZ “On Financial Lease (Leasing)” dated 29 October
1998, and a number of Russian Governmental decrees and normative acts of the federal executive
authority agencies. The Russian Federation has also acceded to the 1944 Chicago Convention on
Civil Aviation and the 1988 UNIDROIT Convention on International Financial Leasing. Historically,
civil aircraft also needed to be registered in the State Register of Civil Aircraft of the Russian
Federation, which is maintain by the Federal Service for Supervision in the Sphere of Transport.
However, the legislation covering the procedure and requirements for such registration was
abolished in 2004, and has yet to be replaced.

FLC’s management considers that FLC is in compliance with all applicable regulations governing its
business and operations.

- 52 –
RISK MANAGEMENT

Overview

Risk management is fundamental to the aircraft leasing business and is an essential element of
FLC’s operations.

Risk Department

FLC’s Board of Directors is responsible for the overall process of risk management of FLC., but day-
to-day risk management functions are performed by the Risk Department. FLC’s Risk Department is
fully integrated into FLC’s corporate structure and works closely with the Board of Directors (which
deals with political and economic risk) and also with other departments such as the corporate
finance department (which assists the Risk Department with assessing credit risk).

The Risk Department sets the risk strategy and ensures that a risk management process is in place.
Pursuant to its policy of aligning group corporate governance with international best practice and
thereby safeguarding the interests of shareholders, FLC implemented a risk identification and
to be aligned with best-practice
assessment methodology
requirements to identify, assess and monitor risks at strategic, business and process levels. Risk is
not only viewed from a negative perspective. The assessment process also identifies areas of
opportunity, such as where effective risk management can be turned into a competitive advantage,
or the taking of certain risks resulting in reward for FLC. Any risk taken is considered within FLC’s
risk appetite.

its management consider

that

At present, FLC does not have an Assets and Liabilities Committee (“ALCO”). The functions of an
ALCO, such as managing the balance of assets and liabilities and managing credit risk, are currently
performed by the Risk Department. However, setting up an ALCO is something that FLC is
considering as a possibility for the future.

FLC’s Risk Department considers the maintenance of FLC’s liquidity risk, interest rate risk,
exchange risk and credit risk within an acceptable risk profile to be one of its key functions. FLC’s
market risks are measured by the Risk Department on a quarterly basis.

Liquidity risk is the risk that funding is not available in order to fund the assets, operations and
financial commitments of FLC in a timely and/or cost-effective manner. This risk is measured by
analysis of the maturity mismatch gap between assets and liabilities and is managed by accessing
various sources of funding (capital injections, debt capital markets financing and bank facilities)
across the yield curve from the investors and lenders available to FLC.

FLC seeks to maintain a high level of liquidity. It aims to have U.S.$90 million available as cash at
bank, and also to have 20 per cent. of its available credit, which currently equates to between
U.S.$40 million and U.S.$50 million, undrawn at all times. FLC’s management estimates that this
level of liquidity would enable FLC to operate under circumstances where its income was
unexpectedly reduced for between six and ten months on the basis of these reserves.

Interest rate risk is the risk that the interest or interest rate-related income earned on assets and
paid on liabilities are not properly matched in terms of their re-pricing profile and therefore, should
there be fluctuations in interest rates, FLC could suffer losses through the margin between asset
returns and borrowing rates being eroded. Interest rate risk is measured by analysing the re-pricing
profile of assets and liabilities into the future through re-pricing gap analysis and it is managed by
ensuring that the interest rate re-pricing profile of borrowings is matched to assets, in order to attain
an appropriate mix of fixed and floating rate exposures.

Exchange risk exists if foreign currency obligations and receivables are not adequately secured in
order to ensure that the local currency equivalent of such monies, once exchanged, is not adversely
affected by exchange rate fluctuations. This risk is managed mainly through taking appropriate
forward cover over foreign currency obligations and receivables.

- 53 –
As with any leasing company, FLC is exposed to credit risk, which is the risk that a lessee will be
unable to pay amounts in full when due. Given the high value of the assets that FLC leases to its
clients, FLC considers the need to manage its credit risk to be important. FLC remains the owner of
all leased assets until the final lease payment has been made, and would commence legal
proceedings to reclaim possession of any aircraft that was the subject of a lease under which the
relevant lessee had defaulted for two consecutive lease payments.

FLC conducts a careful assessment of every potential lessee before entering into a lease agreement
with them. This assessment is focused in particular on the potential lessee’s creditworthiness. FLC
does not enter into lease agreement with any airline if FLC considers that doing so would pose an
unacceptable credit risk for FLC. Before any lease agreement is entered into, FLC’s Risk
Department produces a report on the potential lease for the FLC Board of Directors. FLC has
always been, and intends to remain, fully compliant with the requirement under Russian law that any
transaction that constitutes 25 per cent. or more of the balance sheet must be approved by the
Board of Directors before it can be entered into.

- 54 –
MANAGEMENT

Management

Members of FLC’s Board of Directors:

Valery Borisovich Bezverkhniy graduated from the Ukrainian Institute of Hydraulic Engineering in
1981, and from the All-Union “Peoples’ Friendship Order” Foreign Trade Academy in 1992. He is
currently the President of the Consolidated Aircraft Building Consortium and the Consolidated
Aircraft Building Corporation. Ulanskiy lane, 22, bld. 1, 101100, Moscow, Russia.

Andrey Anatolyevich Burlakov graduated from the Military Institute of the USSR Ministry of Defence
in 1985. From 2002 to 2005 he was the Advisor to the General Director – First Vice President of
FLC. Mr Burlakov is currently the First Deputy General Director of FLC, which is a post that he has
held since 2005. Makarenko street, 6 bld. 1, 10110, Moscow, Russia.

Nail Anvarovich Malyutin graduated from the Tashkent “Peoples’ Friendship Order” Institute of
National Economy in 1992. He was the Deputy General Director of FLC from 2002 to 2006, and is
currently the General Director. Makerenko street, 6 bld. 1, Moscow, Russia.

Aleksey Innokentyevich Fedorov graduated from the Irkutsk Polytechnic Institute in 1974. He was
the General Director – General Designer at the Federal State Unitary Enterprise “Russian Aircraft
Building Corporation ‘MiG’ from 2004 to 2006. Mr Fedorov is currently the President, Chairman of
the Board of Directors of the Consolidated Aircraft Building Corporation (Open Joint Stock
Company). Ulanskiy lane, 22 bld. 1, 101100, Moscow, Russia.

Evgeniy Viktorovich Bachurin graduated from Moscow State Pedagogical Institute of Foreign
Languages named after Moris Toresa in 1986, From 2001 to 2006 he held the post of Commercial
Director of “Aeroflot – Russian Airlines”. From 2006 to 2007 he was the Deputy Head of the Russian
Federal Agency for Air Transport. Mr Bachurin is currently the Head of the Russian Federal Agency
for Air Transport. Leningradskiy avenue 37, bld. 2, 125993, Moscow Russia.

Sergey Borisovich Galperin graduated from the Moscow Aviation Institute. From 2002 to 2007 he
was Deputy General Director of FLC. Mr. Galperin currently holds the post of Director of UAC’s
Commercial Aviation Programme Direction. Ulanskiy lane, 22, bld. 1, 101100, Moscow, Russia.

Andrey Andreevich Slivchenko graduated from the Moscow International University in 1998. From
2003 to 2007 he was Director of Corporate Finance and Investor Relations of OAO “Pharmacy
Chain 36.6”. Mr Slivchenko is currently Director of UAC’s Corporate Finance Department. Ulanskiy
lane, 22, bld. 1, 101100, Moscow, Russia.

Vladimir Viktorovich Smolko has been Director of UAC’s Economy & Planning Departments since
2007. Ulanskiy lane, 22, bld. 1, 101100, Moscow, Russia.

Alexey Konstantinovich Uvarov graduated from the Nizhegorodskiy State Technical University in
1997, and from the Tax Police Academy of the Federal Tax Police Service in 2001. From 2006 to
2008 he was the Deputy Head of Business Property Unit of Russian Federal Property Management
Agency. Mr. Uvarov is currently Head of Business Property Unit of Russian Federal Property
Management Agency, a post he has held since 2008. Nicolskiy lane, 9, Moscow, 109012, Russia

There has been a recent replacement of many of the directors on the board. These changes are a
result of UAC receiving 11.2 per cent. of FLC shares from the Russian Federation, making them the
majority shareholder of 51.8 per cent. of FLC. As majority shareholder, UAC has the right to appoint
the majority of the board of the directors. FLC does not expect this change in management to impact
the strategy or manner in which FLC is operated.

Directors’ remuneration

U.S.$2,676,000 U.S.$1,900,000 U.S.$1,400,000

2007
(unaudited)

2006

2005
(restated)

- 55 –

OWNERSHIP

As at 25 January 2008, FLC had 104,564,931 ordinary registered shares with a nominal value of
100 Russian Roubles each and a
issued and paid share capital of
total authorised,
U.S.$425,992,337.

The shareholders of FLC as at 1 June 2008 are indicated in the table below.

Shareholder

UAC…………………………………………………………………………………………….

Federal Property Management Agency ……………………………………………

National Depository Centre…………………………………………………………….

Beta-Leasing ZAO…………………………………………………………………………

Depository Clearing Company ………………………………………………………..

National Depository of the Republic of Tatarstan ………………………………

Kazan Aircraft Industrial Amalgamation Gorbunov…………………………….

Total……………………………………………………………………………………………

Percentage of
share capital

51.80

28.69

7.81

3.77

3.60

3.32

1.02

100.00

As a result of two large equity injections in 2002 and 2006 implemented under the Russian
Government’s aircraft sector development programme, which started in 2002, the Russian
Government’s share in FLC’s capital has been significantly increased and is currently 80.5 per cent.
The Russian Government directly owns 28.69 per cent. of FLC’s capital and owns another 51.8 per
cent. through UAC, which is on the Russian Government’s list of “strategic enterprises” and in which
the Russian Government owns a 90.1 per cent. stake. The remaining 19.5 per cent. of FLC’s shares
is owned by minority shareholders, as outlined above. FLC’s management is not aware of any plans
of any shareholder to dispose of any part of their stake in FLC, or of any disagreements between
FLC’s shareholders that have had or may have any effect on FLC.

Dividends

For the financial years ended 31 December 2007 and 31 December 2006, FLC declared dividends
of U.S.$635,590 and U.S.$405,013, respectively. FLC does not have a special dividend policy.
The rights of FLC’s shareholders are set out in FLC’s corporate charter.

Organisational/management structure

FLC conducts operations through its head office in Moscow and sub-offices located in Kazan,
Almetyevsk and St. Petersburg. FLC’s day-to-day activities are managed by the Director General
and the Executive Director of FLC, with the necessary degree of involvement from heads of various
of FLC’s departments. The principal operational departments are the Department for Aircraft
Projects, Production and Technical Re-equipment, the Risk Management Department, the
Corporate Finance Department and the Department for Budgeting and Transaction Implementation.

The following diagram sets out the organisation structure of FLC as at 1 June 2008.

– 56 –

Board of Directors

Shareholder meeting

General Director

Executive Directors

First Deputy General
Director

Administration and
Maintenance
Department

Internal Control
Service

Deputy
General
Director Legal
Issues

Deputy General
Director,
Operations

Deputy General
Director for Corporate
Finance

Legal
Department
Director

Department for Aircraft
Projects and Production and
Technical Re-equipment
Director

Risk
Department
Director

Corporate
Finance
Department
Director

Department for
Budgeting and
Control over
Transaction
Implementation

Deputy General
Director for
Security Issues

Human
Resource
Department

Economic
Security
Service

Chief Accountant

Accounting Office

Secretariat

- 57 –
RELATED PARTY TRANSACTIONS

FLC routinely enters into related party transactions with other members of the UAC group, notably
Sukhoi Civil Aviation and KAPO “Gorbunova” (which manufactures Tupolev aircraft). However, FLC
considers that all such transactions are performed for fair market value and on arm’s length terms.

In considering each possible related party relationship, attention is directed to the substance of the
relationship, and not merely the legal form. However, related parties, as defined by IAS 24 “Related
Party Disclosures”, are those counterparties that represent:

(a)

parties that directly or indirectly through one or more intermediaries, control, or are
controlled by, or are under common control with, FLC (this includes parents,
subsidiaries and fellow subsidiaries); have an interest in FLC that gives them
significant influence over FLC; or that have joint control over FLC;

(a)

associates – enterprises over which FLC has significant influence over FLC; or that
have joint control over FLC;

(b)

joint ventures in which FLC is a participant;

(c)

members of key management personnel of FLC;

(d)

close members of the family of any individuals referred to in (a) or (d);

(e)

(f)

parties that are entities controlled, jointly controlled or significantly influenced by, or
for which significant voting power in such entity resides with, directly or indirectly, any
individual referred to in (d) or (e); or

post-employment benefit plans for the benefit of employees of FLC, or of any entity
that is a related party of FLC.

- 58 –
THE ISSUER

Description of the Issuer

Greenwich Avenue Finance B.V. was incorporated under the laws of The Netherlands on 6 June
2008 with registered number 34303854 as a limited liability company with an authorised share
capital of EUR100,000 and an issued share capital of EUR20,000. Greenwich Avenue Finance
B.V.’s corporate domicile is in Amsterdam, The Netherlands. The sole purpose of Greenwich
Avenue Finance is to issue the Notes and to make payments in respect of the Notes. The
registered office of the Issue is Parnassustoren, Locatellikade 1, 1076 AZ Amsterdam, The
Netherlands.

Sole Director

The sole director of the Issuer is TMF Management B.V. (business address Parnassustoren,
Locatellikade 1, 1076 AZ Amsterdam, The Netherlands), registered with the trade register
(handelregister) of the Amsterdam Chamber of Commerce (Kamer van Koophandel), the
Netherlands, under number 33203015.

Business Activity of the Issuer

The Issuer has been established as a special purpose vehicle for the purpose of issuing the notes.
The Issuer has not previously carried on any business or activities other than those incidental to its
incorporation, the authorisation and issue of the notes, granting the Loan and activities incidental to
the exercise of its rights and compliance with its obligations under the notes, the Subscription
Agreement, the Paying Agency Agreement (both as defined in the Trust Deed) and the other
documents and agreements entered into in connection with the issue of the Notes and the Loan.

General Information

The Issuer has obtained all necessary consents, approvals and authorisations in The Netherlands in
connection with the issuance of the notes and the performance of its obligations in relation thereto.

Availability of Documents

As long as any Note is outstanding copies of the following corporate documents in relation to the
Issuer may be requested from the Issuer upon receipt of a written request for such documents by
the Issuer at its registered address:

•

the memorandum and articles of association of the Issuer;

all reports, letters, and other documents, historical financial information, valuations and
statements prepared by any expert at the Issuer’s request any part of which is included or
referred to in this Prospectus; and

the historical financial information of the Issuer.

Recent Developments

Save as stated above, there has been no significant change in the financial or trading position of the
Issuer and no material adverse change in the financial position or prospects of the Issuer since the
date of its incorporation. Save for the issue of the Notes as described above and their related
arrangements, the Issue has no borrowings or indebtedness in the nature of borrowings (including
loan capital issued or created but unissued), term loans, liabilities under acceptances or acceptance
credits, mortgages, charges or guarantees or other contingent liabilities.

Litigation

– 59 –

There are not, and there have not been, any governmental, legal or arbitration proceedings
(including any such proceedings which are pending or threatened of which the Issue is aware) which
may have, or have had since its incorporation, a significant effect on the financial position or
profitability of the Issuer.

- 60 –
TERMS AND CONDITIONS OF THE NOTES

The following is the text of the Terms and Conditions of the Notes which contain summaries of
certain provisions of the Trust Deed, and which will be attached to the individual note certificates, if
any, and (subject to the provisions thereof) apply to the Global Notes.

The U.S.$150,000,000 10 per cent. Series 2008-1 Loan Participation Notes due 2013 (the “Notes”)
of Greenwich Avenue Finance B.V. (the “Issuer”) are constituted by, are subject to, and have the
benefit of a trust deed (the “Trust Deed”), which expression includes such trust deed as from time to
time modified in accordance with the provisions therein contained and any deed or the document
expressed to be supplemental thereto, as from time to time so modified, dated 30 June 2008 and
made between the Issuer and BNY Corporate Trustee Services Limited (the “Trustee” which
expression shall wherever the context so permits include its successors) as trustee for the holders of
the Notes (the “Noteholders”) and has the benefit of an agency agreement dated 27 June 2008 (as
modified and/or supplemented or restated from time to time, the “Agency Agreement”) and made
between the Issuer, The Bank of New York (the “Agent”, which expression includes any successor
agent), The Bank of New York, London branch (the “Transfer Agent(s), which expression includes
any successor transfer agent(s) and any other transfer agent(s) appointed in accordance with the
Agency Agreement), The Bank of New York (Luxembourg) S.A. (the “Registrar”, which expression
includes any successor registrar) and the paying agents named therein (the “Paying Agent(s)”,
which expression includes, unless the context otherwise requires, the Agent and any other paying
agent(s) appointed in accordance with the Agency Agreement) and the Trustee.

The Issuer has authorised the creation, issue and sale of the Notes for the sole purpose of financing
a U.S.$150,000,000 loan (the “Loan”) to Open Joint-Stock Company “Finance Leasing Company”
(the “FLC”). The terms of the Loan are recorded in a loan agreement (as amended or
supplemented from time to time, the “Loan Agreement”) dated 30 June 2008 between the Issuer (in
its capacity as Lender) and FLC (in its capacity as Borrower).

In each case where amounts of principal, interest and additional amounts (if any) are stated herein
or in the Trust Deed to be payable in respect of the Notes, the obligations of the Issuer to make any
such payment shall constitute an obligation only to account to the Noteholders on each date upon
which such amounts of principal, interest, and additional amounts (if any) actually received by or for
the account of the Issuer pursuant to the Loan Agreement. Noteholders must therefore rely solely
and exclusively on the covenant to pay under the Loan Agreement and the credit and financial
standing of FLC. Noteholders shall have no recourse (direct or indirect) to any other asset of the
Issuer.

The Issuer has charged by way of a first fixed charge in favour of the Trustee certain of its rights and
interests as lender under the Loan Agreement as security for its payment obligations in respect of
the Notes under the Trust Deed (the “Charge”) and has assigned absolutely certain other rights
under the Loan Agreement to the Trustee (the “Assigned Rights” and, together with the Charge,
the “Secured Property”) In certain circumstances, the Trustee can (subject to it being indemnified
and/or secured to its satisfaction) be required by Noteholders holding at least 25 per cent. of the
principal amount of the Notes outstanding or by an Extraordinary Resolution (as defined in the Trust
Deed) of the Noteholders to exercise certain of its powers under the Trust Deed (including those
arising under the Secured Property).

Copies of the Trust Deed, the Loan Agreement and the Agency Agreement are available for
inspection during normal business hours at the principal office of the Trustee being, at the date
hereof, One Canada Square, London E14 5AL, United Kingdom, at the specified office of the Paying
Agent, the initial specified office of which is set out below and from the registered office of the
Issuer.
Certain provisions of these terms and conditions (the “Conditions”) are summaries or restatements
of, and are subject to, the detailed provisions of the Trust Deed, the Loan Agreement and the

- 61 –
Agency Agreement. Noteholders are entitled to the benefit of, are bound by, and are deemed to
have notice of, all the provisions thereof.

Terms not defined herein shall have the same meanings given to them in the Trust Deed and
Agency Agreement.

FORM, DENOMINATION AND TITLE

1.1

Form

Notes are in registered form and are numbered serially with an identifying number which is
recorded in the register (the “Register”) which the Issuer has procured to be to be kept by
the Registrar.

1.2

Denomination

Notes are in the denominations of U.S.$100,000 and integral multiples of U.S.$1,000 in
excess thereof.

Definitive notes, when issued, will be in the denominations of U.S$100,000 and higher
integral multiples of U.S.$1,000, up to and including U.S.$199,000. No definitive note will be
issued with a denomination greater than U.S.$199,000. Furthermore, at any meeting of
holders while the Notes are represented by a Global Note, any vote cast shall only be valid if
it is in respect of at least U.S.$100,000 in nominal amount.

So long as the Notes are represented by a temporary Global Note or permanent Global Note
and the relevant clearing system(s) so permit, the Notes are tradable only in the minimum
authorised denominations of U.S.$100,000 and higher integral multiples of U.S.$1,000,
notwithstanding that no definitive notes will be issued with a denomination above
U.S.$199,000.

1.3

Title

Title to Notes shall pass by registration of transfers in respect thereof in accordance with the
Trust Deed and the Agency Agreement.

Subject to the following paragraph, references herein to the “Holders” are to the persons in
whose names such Notes are registered in the Register or, in the case of joint holders, the
first named thereof.

(a)

Global Note Certificate

The Notes are represented by a Global Note Certificate which is registered in the
name of The Bank of New York Depository (Nominees) Limited and deposited with a
common depositary for Euroclear and Clearstream, Luxembourg.

For so long as all of the Notes are represented by a Global Note Certificate and such
Global Note Certificate is held on behalf of Euroclear and/or Clearstream,
Luxembourg, the Trustee shall, for the purposes of performing the functions under
the Trust Deed be entitled to deem, treat and have regard to the interests of each
person (other than Euroclear or Clearstream, Luxembourg) who is for the time being
shown in the records of Euroclear or Clearstream, Luxembourg as the holder of a
particular principal amount of such Notes (each an ‘‘Accountholder’’) (in which
regard any certificate or other document issued by Euroclear or Clearstream,
Luxembourg as to the principal amount of such Notes standing to the account of
such person shall be conclusive and binding for all purposes) as the holder of such
principal amount of such Notes for all purposes in place of the holder of the Global

Note Certificate (the ‘‘Holder’’) to the extent of the principal amount of Notes in
respect of which such person is an Accountholder.

– 62 –

(b)

Euroclear and Clearstream, Luxembourg

References in the Global Note Certificate and this summary to Euroclear and/or
Clearstream, Luxembourg shall be deemed to include references to any other
clearing system approved by the Trustee. The address of Euroclear is 1 Boulevard
du Roi Albert II B 1210 Brussels Belgium. The address of Clearstream Luxembourg
is L 2967 Luxembourg

No person shall have any right to enforce any term or condition of the Notes under
the Contracts (Rights of Third Parties) Act 1999.

TRANSFERS OF NOTES

2.1

Transfer of Notes

Notes may, upon the terms and subject to the conditions set out in the Trust Deed and the
Agency Agreement, be transferred in whole or in part (which shall, where applicable, be an
Authorised Denomination) only upon the surrender of the Note to be transferred, together
with the form of transfer endorsed on it duly completed and executed, at the specified office
of the Registrar or any Transfer Agent, together with such evidence as the Registrar or, as
the case may be, the relevant Transfer Agent may reasonably request to prove the title of
the transferor and the authority of the person(s) who has or have executed the form of
transfer. A new Note will be issued to the transferee and, in the case of a transfer of part
only of a Note, a new Note in respect of the balance not transferred will be issued to the
transferor.

2.2

Delivery

Each new Note to be issued upon the transfer of a Note will, within five Relevant Banking
Days of the Transfer Date, be available for delivery at the specified office of the Registrar or,
as the case may be, the relevant Transfer Agent or (at the request and risk of the Holder of
such Note) be mailed by uninsured post to such address as such Holder may have specified.
For these purposes, a form of transfer or request for exchange received by the Registrar or
any of the Transfer Agents after the Record Date (as defined in Condition 7.2(b)) in respect
of any payment due in respect of Notes shall be deemed not to be effectively received by the
Registrar or such Transfer Agent until the day following the due date for such payment.

In these Conditions:

(a)

(b)

“Relevant Banking Day” means a day on which commercial banks are open for
business (including dealings in foreign currencies) in the place where the specified
office of the Registrar or, as the case may be, the relevant Transfer Agent is located;
and

“Transfer Date” means the Relevant Banking Day following the day on which the
relevant Note shall have been surrendered for transfer in accordance herewith and
all reasonable requirements of the Registrar or, as the case may be, the relevant
Transfer Agent shall have been satisfied in respect of such transfer.

2.3

Transfer free of charge

Registration of transfers will be effected without charge by or on behalf of the Issuer, the
Registrar or the relevant Transfer Agent, but upon payment (or the giving of such indemnity
as the Registrar or the relevant Transfer Agent may reasonably require) in respect of any tax
or other governmental charges which may be imposed or payable in relation to it.

2.4

Closed periods

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No Holder may require the transfer of a Note to be registered during the period of 15 days
ending on the due date for redemption of any such Note in whole or in part.

2.5

Regulations

All transfers of Notes and entries on the Register will be made subject to the detailed
regulations concerning the exchange and transfer of Notes and the forms and evidence to
be provided, all as contained in the Trust Deed and the Agency Agreement. The regulations
may be changed by the Issuer with the prior written approval of the Registrar and the Agent.
A copy of the current regulations will be mailed free of charge by the Registrar to any Holder
of a Note who requests a copy.

CURRENCY

The Notes are denominated in US Dollars (U.S.$).

STATUS OF NOTES AND SECURED PROPERTY

4.1

Status

The Notes constitute secured limited recourse obligations of the Issuer, ranking pari passu
without any preference among themselves, which are secured as described in Condition 4
and recourse in respect of which is limited as described in Condition 19. Payments in
respect of the Notes are payable solely from the principal and interest received by or for the
account of the Issuer pursuant to the Receivables for this Series purchased from the
proceeds of the issue of the Notes of this Series.

4.2

Secured Property

(a)

Secured assets

The Security for the Notes comprises the following:

(i)

a first fixed charge (the “Charge”) in favour of the Trustee for itself and as
trustee for the Secured Creditors over:

(1)

(2)

(3)

all principal, interest and/or additional amounts (if any) now or
hereafter payable and/or paid to the Issuer by FLC under the Loan
Agreement;

the right to receive all sums which may be or become payable by FLC
under any claim, award or judgement relating to the Loan Agreement;

all the rights, title and interest in and to all sums of money now or in
the future deposited in the Account and the debts represented
thereby; provided that for the avoidance of doubt the Issuer shall
remain the legal and beneficial owner of the Charged Assets following
the granting of the Charge; and

(4)

all the rights of the Issuer under the Loan Agreement.

(ii)

an assignment to the Trustee for itself and as trustee for the Secured
Creditors:

(1)

all the rights, interests and benefits, both present and future, which
have accrued or may accrue to the Issuer under or pursuant to the

(2)

(3)

– 64 –

Loan Agreement other than the assets subject to the Charge and any
amounts relating to the property subject to the Charge; and

all of the Issuer’s right, title and interest in and to the Distribution
Agreement to the extent that it relates to the Notes; and

all of the Issuer’s right, title and interest in and to the Agency
Agreement to the extent that it relates to the Notes including any
sums held by the Principal Paying Agent to meet payments due in
respect of the Notes,

all of which together with the Charge shall comprise the underlying assets for the
Notes.

(b)

Realisation of the Secured Property upon enforcement

At any time after the Security shall have become enforceable the Trustee at its
discretion may, and on receipt of whichever of a Holder Request (as defined in the
Trust Deed), an Extraordinary Resolution Direction (as defined in the Trust Deed) or
a Creditor Direction (as defined in the Trust Deed) shall (in each case subject to it
having been indemnified and/or secured to its reasonable satisfaction against any
Liability (as defined in the Trust Deed) which may be incurred or claim which may be
made against it in connection therewith), enforce the Security over the Secured
Property. To do this it may, at its discretion, take possession of all or part of the
Secured Property over which the Security shall have become enforceable and may in
its discretion sell, call in, collect and convert into money all or part of the Secured
Property in such manner and on such terms as it shall think fit. The power of sale
under Section 101 of the Law of Property Act 1925 (but without the restrictions
imposed by Sections 93 and 103 of such Act) shall apply and have effect on the
basis that the Trust Deed constitutes a mortgage within the meaning of that Act and
the Trustee is a mortgagee exercising the power of sale conferred on mortgagees by
that Act with limited title guarantee.

(c)

Application of proceeds upon enforcement

The Trustee shall (subject to the provisions of the Trust Deed), in relation to the
Notes, hold all moneys received by it under the Notes, these Terms and Conditions
or the Trust Deed in connection with the realisation or enforcement of the Secured
Property on trust to apply them as follows:

(i)

(ii)

(iii)

(iv)

firstly, in payment or satisfaction, or provision for the payment or satisfaction,
of all Liabilities incurred or, in the opinion of the Trustee, to be incurred by the
Trustee under the Notes, the conditions of the Trust Deed and all
remuneration payable to the Trustee and/or any Appointee;

secondly, in payment or satisfaction, or provision for the payment or
satisfaction, of all liabilities by way of taxation incurred or in the opinion of the
Issuer, to be incurred the Issuer under the Notes, these Conditions or the
Trust Deed and in payment of operational costs of the Issuer, including fees
and reimbursable expenses of any Agents (as defined in the Agency
Agreement) appointed under the Agency Agreement;

thirdly, in or toward payment of all claims of the Holders to all principal and
interest then due and unpaid in respect of the Notes and the Coupons; and

fourthly, the balance (if any) in payment to the Issuer for itself (without
prejudice to, or liability in respect of, any question as to how such payment to
the Issuer shall be dealt with as between the Issuer and any other person).

(d)

Shortfall after application of proceeds

– 65 –

If the net proceeds of the realisation of the Secured Property under Condition 4.2(b)
are not sufficient for the Issuer to make all payments due in respect of the Notes, the
Coupons and the Receipts or otherwise due to the Trustee, any Agent, the Arranger
or the Dealers, the other assets of the Issuer will not be available for payment of any
shortfall arising therefrom. Any such shortfall shall be borne by the holders of Notes.
Claims in respect of any such shortfall remaining after realisation of the Secured
Property and application of the proceeds in accordance with the Trust Deed shall be
extinguished and neither the Trustee nor any Holder, may take any further action to
recover such shortfall and the right to receive any such sum shall be extinguished.
Failure to make any payment in respect of any such shortfall shall not constitute an
Event of Default under Condition 10.

(e)

Issuer’s rights as holder of the Secured Property

The Issuer may, with the prior written consent of the Trustee (or if directed or
requested so to do by an Extraordinary Resolution of the Noteholders):

(i)

take such action in relation to the Secured Property as it thinks expedient;
and

(ii)

exercise the rights incidental to the ownership of the Secured Property.

In particular, the Issuer may exercise (without responsibility for such exercise) any
voting rights in respect of such property and all rights to enforce it.

The Issuer will not take any such action or exercise any such rights with respect to
the Secured Property as aforesaid unless it has the Trustee’s written consent (or is
directed or requested so to do by an Extraordinary Resolution of the holders of the
Notes).

4.3

Restrictions

So long as any Note remains outstanding the Issuer shall not, without the prior written
consent of the Trustee:

(a)

engage in any activity or do any thing whatsoever, except:

(i)

issue and enter into the Notes and other notes, securities or obligations as
provided in these Conditions and the Trust Deed;

(ii)

purchase Securities;

(iii)

grant or make loans;

(iv)

perform its obligations or enforce any of its rights under the Notes, the
Agency Agreement, the Trust Deed, the Distribution Agreement and
agreements incidental to the issue and constitution of other issues of Notes;
and

(v)

perform any act incidental to or necessary in connection with any of the
above;

(b)

(c)

have any subsidiaries or subsidiary undertakings (as defined in the Companies Act,
1985);

subject to (i) above, transfer, sell, lend, part with or otherwise dispose of any of its
assets or any part of or interest, right or title in them;

(d)

(e)

– 66 –
incur any indebtedness whatsoever;

issue any shares in its capital or issue any warrants or options in respect of shares or
securities convertible into or exchangeable into shares;

(f)

have any employees or facilities;

(g)

(h)

(i)

(j)

grant, create or permit to subsist any security or encumbrance over its assets or
undertaking;

purchase, and it shall procure that no person shall purchase for its account, any of
the Notes;

give any guarantee or indemnity, save as permitted by these Conditions or the Trust
Deed; or

consolidate or merge with any other person or convey or transfer its properties or
assets as an entirety, or substantially as an entirety to any person.

INTEREST

5.1

Fixed Rate Notes

(a)

Interest Payment Dates and Limited Recourse

Interest on the Notes is payable in US Dollars. Interest on the Notes will be paid one
Business Day following each date on which interest under the Loan is paid into the
Account, such dates of payment of interest under the Loan being the last business
day of each interest period under the Loan Agreement, and on the Principal Payment
Date, provided that the Issuer’s obligation to pay interest in respect of the Notes will
be subject to the receipt by the Issuer of equivalent amounts of interest under the
terms of the Loan Agreement as such amounts are distributed in accordance with the
Priority (Application of Proceeds) specified at 3.2(c) of these Conditions. Accordingly,
the Issuer will account to the Noteholders solely for amounts equivalent to those (if
any) received by or for the account of the Issuer pursuant to the Loan Agreement.
For the avoidance of doubt, each Interest Payment Date under the Notes shall be
one Business Day following the relevant interest payment date under the Loan
Agreement.

Notwithstanding any other Condition, interest for any Interest Period shall be
calculated by reference to the same principal amount against which interest is
calculated for the equivalent interest period under the Loan Agreement.

Interest on the outstanding amount of the Loan is payable in US Dollars to the
Issuer’s account with account number 1424728400, held with The Bank of New York,
New York (SWIFT code: IRVTUS3N) (correspondent account number 8900285451
The Bank of New York, Brussels (SWIFT code: IRVTBEBB) (the “Account”) on the
last business day of each interest period under the Loan. Interest periods under the
Loan end on the next Interest Payment Date. Following receipt of the interest under
the Loan in cleared funds into the Account (as defined below) (the “Interest”), the
Principal Paying Agent will then pay the amount in the Account to Noteholders pro
rata to their holdings in accordance with clause 7 of the Agency Agreement.

If the date on which any payment is due to be made is not a Business Day, such
payment shall be made on the next consecutive Business Day, and the amount of
Interest shall be recalculated accordingly.

The Day Count fraction is 30/360 and the Maturity Date of the Notes is 30 June
2013.

– 67 –

(b)

Payments

(i)

The Issuer’s obligation to repay principal in respect of the Notes is:

(1)

(2)

subject to the receipt by the Issuer of equivalent amounts of principal
under the terms of the Loan Agreement, as such amounts are
distributed in accordance with Priority (Application of Proceeds)
specified at Condition 3.2(c); and

will arise on the Business Day following the Maturity Date. For the
avoidance of doubt, no interest will accrue on the Notes between the
Maturity Date and the Principal Payment Date.

Following receipt by the Issuer in the Account of principal under the Loan, the
Principal Paying Agent will pay the amount in the Account to Noteholders pro rata to
their holdings in accordance with clause 7 of the Agency Agreement on each
Principal Payment Date.

The Redemption Amount in relation to each Note is an amount equivalent to its share
of the Principal amount received into the Issuer’s Account under the Loan on the
Maturity Date.

(ii)

(iii)

(iv)

Payments of principal due in respect of Notes will be made in US Dollars
(U.S.$) by cheque against presentation and (save in the case of partial
payment or payment of an Instalment Amount (other than the final Instalment
Amount)) surrender of the relevant Notes at the specified office of the
Registrar, a Transfer Agent or a Paying Agent. If the due date for payment of
the final redemption amount of any Note is not a Business Day, then the
Holder thereof will not be entitled to payment thereof until the next day which
is such a day and no further interest or any other payment in respect of such
delay shall be made.

Payments of interest due in respect of Notes will be made in U.S. Dollars
(U.S.$) by cheque and posted on the Relevant Banking Day (as defined in
Condition 2.2) immediately preceding the relevant due date for payment to
the Holder thereof (or, in the case of joint Holders, the first-named) as
appearing in the Register kept by the Registrar as at the opening of business
(local time in the place of the specified office of the Registrar) on the fifteenth
Relevant Banking Day before the due date for such payment (the “Record
Date”).

If prior to the third Relevant Banking Day before the relevant due date for
payment the relevant Holder (or, in the case of joint Holders, the first-named)
has applied to the Registrar, and the Registrar has acknowledged such
application, for payment to be made to a designated account denominated in
U.S. Dollars (U.S.$), then payment shall be made on the relevant due date
for payment by transfer to such account.

(c)

Accrual of Interest

Each Note (or in the case of the redemption of part only of a Note that part only of
such Note) will cease to bear interest (if any) from the date for its redemption unless,
upon due presentation thereof, payment of principal is improperly withheld or
refused. In such event, interest will continue to accrue as provided in the Trust
Deed.

REDEMPTION AND PURCHASE

6.1

At Maturity

– 68 –

In relation to each Note, the Redemption Amount is an amount equivalent to its share of the
Principal amount received into the Issuer’s Account under the Loan on the Maturity Date.

6.2

Redemption at the Option of the Issuer

(a)

Change of Control

The Notes may be redeemed at their face value at the Issuer’s option following
receipt by the Issuer of a Change of Control Event Notice under the Loan
Agreement.

If the Issuer elects to demand early repayment of all or part of the Loan following
receipt of a Change of Control Event Notice, the Issuer shall upon giving:

(i) not less than 5 days’ notice to the Holders of the Notes in accordance
with Condition 16; and

(ii) not less than 5 days before the giving of the notice referred to in (a),
notice to the Trustee and the Agent;

(which notices shall be irrevocable), redeem all of the Notes then outstanding on the
date specified in such notice (the “Change of Control Redemption Date”) at their
face value together with interest accrued to, but excluding, the Change of Control
Redemption Date.

(b)

Put Option

Noteholders will have the option to require the Issuer to redeem any Note on 30 June
2010 (the “Put Settlement Date”), in accordance with the terms of Condition 6.3
save that the notice provisions shall be modified as set out below, at its principal
amount together with accrued interest (if any) to the Put Settlement Date. In order to
exercise the Put Option, a Noteholder must, during the period from (and including) 26
February 2010 to (but excluding) 30 March 2010, deliver to the specified office of the
Principal Paying Agent a duly completed put option notice (a “Put Option Notice”)
specifying the principal amount of the Notes in respect of which the Put Option is
exercised, in the form obtainable from the Principal Paying Agent. On 6 April 2010,
the Principal Paying Agent shall notify the Issuer and the Borrower in writing of the
exercise of the Put Option specifying the aggregate principal amount of the Notes to
be redeemed in accordance with the Put Option. Provided that the Notes that are the
subject of any such Put Option Notice have been delivered to the Principal Paying
Agent or delivered in accordance with the procedures of the relevant clearing system
prior to 30 April 2010, then the Issuer shall (subject to the receipt of sufficient funds
to do so from the Borrower) redeem all such Notes on the Put Settlement Date. No
Put Option Notice, once delivered, may be withdrawn.

(c)

Redemption at the Request of the Borrower

The Borrower will have the option to deliver to the Issuer Notes, having an aggregate
principal value of at least U.S.$500,000, together with a request for the Issuer to
present such Notes to the Registrar for cancellation, and may also from time to time
procure the delivery to the Registrar of the relevant Global Note with instructions to
cancel a specified aggregate principal amount of Notes (being at least U.S.$500,000)
represented
instructions shall be accompanied by evidence
satisfactory to the Registrar that the Borrower is entitled to give such instructions),

thereby (which

whereupon the Issuer shall request the Registrar to cancel such Notes (or specified
aggregate principal amount of Notes represented by the Global Note).

– 69 –

6.3

Purchases

The Issuer may at any time purchase Notes at any price in the open market or otherwise. In
the case of a purchase by tender, such tender must be made available to all Holders of
Notes alike. The Notes so purchased shall be cancelled forthwith.

6.4

Cancellation

All Notes which are redeemed will forthwith be cancelled. All Notes so cancelled and all
Notes purchased and cancelled pursuant to Condition 6.5 shall be forwarded to the Agent
(which shall notify the Registrar of such cancelled Notes if recorded on the Register) and
cannot be re-issued or re-sold.

6.5

Mandatory early redemption

If any of the Securities becomes payable or repayable or becomes capable of being
declared due and payable or repayable prior to its stated date of maturity for whatever
reason or (unless the Trustee otherwise agrees) there is a payment default in respect of any
of the Securities, all such Securities which have become so payable or repayable or in
respect of which there has been a payment default together with any or all remaining
Securities, as specified in the Trust Deed (which may or may not form obligations of the
same person as those which have become repayable or in respect of which there has been
such a payment default), shall be deemed to have become immediately repayable (the
“Repayable Assets”). The Issuer shall then forthwith give notice as soon as reasonably
practicable (unless otherwise specified in the Trust Deed) to the Trustee and the
Noteholders and upon the giving of such notice shall redeem each Note at its Early
Redemption Amount either in whole or, as the case may be, in part on a pro rata basis in a
proportion of its Final Redemption Amount equal to the proportion that the nominal amount
of the Repayable Assets bears to the nominal amount of all the Securities (including the
Repayable Assets). Interest shall continue to accrue on the part of the nominal amount of
Notes becoming due for redemption until payment thereof has been made to the Trustee
and notice is given in accordance with Condition 16 that such amount is available for
payment.

In the event of Notes becoming mandatorily due for redemption and the Security becoming
enforceable:

(i)

(ii)

the Trustee may take such action as is provided in Condition 4.2(b); and

payment of the Early Redemption Amount shall be made subject to the
operation of Condition 4.2(d),

and may therefore be less than the principal amount of the Notes being redeemed.

TAXATION

All payments in respect of the Notes and the Coupons will be made free and clear of any
withholding or deduction for, or on account of, any taxes, duties, assessments or
governmental charges (together “Taxes”) of whatever nature imposed, levied, collected,
withheld or assessed by or on behalf of The Netherlands or any authority therein or thereof
having power to tax unless, in each case, such withholding or deduction is required by law.

As used in these Terms and Conditions, “Relevant Date” means the date on which such
payment first becomes due or (if the full amount of the money payable has not been
received by the Programme Agent or the Registrar or, as the case may be, the Trustee on or

prior to such due date) the date on which notice is duly given to the Holders of Notes in
accordance with Condition 16 that such moneys have been so received and are available for
payment.

– 70 –

PRESCRIPTION

Claims against the Issuer for payment in respect of the Notes and shall be prescribed and
become void unless made within ten years (in the case of principal) and five years (in the
case of interest) from the appropriate Relevant Date in respect thereof.

EVENTS OF DEFAULT

9.1

If any of the following events occur (each an “Event of Default”) then, subject as provided
below, the Trustee at its discretion may, and if so requested in writing by the Holders of at
least 25 per cent in principal amount of the Notes then outstanding or so directed by an
Extraordinary Resolution (as defined in the Trust Deed) of the Holders of the Notes shall
(subject in each case to being indemnified and/or secured to its satisfaction), give written
notice to the Issuer that the Notes are, and they shall thereupon become, immediately due
and repayable at their Early Redemption Amount (as described in Condition 6.5) together
with accrued interest as provided in the Trust Deed (and, in the case of secured Notes, the
security constituted by or pursuant to the Trust Deed shall become immediately enforceable
and the Trustee may take such action as is provided in the Trust Deed):

(a)

Non-payment

the Issuer fails to pay any amount of principal in respect of the Notes within 7 days of
the due date for payment thereof or fails to pay any amount of interest in respect of
the Notes within 14 days of the due date for payment thereof; or

(b)

Breach of other obligations

the Issuer defaults in the performance or compliance with any one or more of its
other obligations under the Notes or the Trust Deed which default is in the opinion of
the Trustee incapable of remedy or, if in the opinion of the Trustee it is capable of
remedy, is not remedied to the Trustee’s satisfaction within 30 days (or such longer
period as the Trustee may permit) after notice requiring such default to be remedied
shall have been given to the Issuer by the Trustee; or

(c)

Enforcement proceedings

a distress, attachment, execution or other legal process is levied, enforced or sued
out on or against any part of the property, assets or revenues of the Issuer and is not
discharged or stayed within 30 days; or

(d)

Security enforced

any mortgage, charge, pledge, lien or other encumbrance, present or future, created
or assumed by the Issuer becomes enforceable and any step is taken to enforce it
(including the taking of possession or the appointment of a receiver, manager or
other similar person); or

(e)

Insolvency

(i)

the Issuer becomes insolvent or is, or is deemed to be, unable to pay its
debts as they fall due;

(ii)

(iii)

– 71 –

an administrator or liquidator of the Issuer or of the whole or any part of the
undertaking, assets and revenues of the Issuer is appointed (or application
for such appointment is made); or

the Issuer takes any action for a readjustment or deferment of any of its
obligations or makes a general assignment or an arrangement or composition
with or for the benefit of its creditors or declares a moratorium in respect of
any of its indebtedness or any guarantee for, or indemnity in respect of, any
indebtedness of any other person; or

(f)

Winding-up, ceasing business or disposals

an order is made or an effective resolution passed for the winding-up, liquidation or
dissolution of the Issuer (otherwise than for the purpose of or pursuant to and
followed by a consolidation, amalgamation, merger, reconstruction or reorganisation
the terms of which have previously been approved by an Extraordinary Resolution of
the Holders of the Notes or in writing by the Trustee) or the Issuer ceases or
threatens to cease to carry on all or a material part of its business or operations or
transfers or otherwise disposes of all or substantially all of its assets, otherwise than
as aforementioned; or

(g)

Illegality

it becomes or will become unlawful for the Issuer to perform or comply with any one
or more of its obligations under any of the Notes, the Trust Deed or the Agency
Agreement; or

(h)

Analogous Events

any event occurs which under the laws of any relevant jurisdiction has an analogous
effect to any of the events referred to in the foregoing paragraphs, provided that, in
the case of any such Event of Default (other than the winding up, liquidation or
dissolution of the Issuer), it shall be reasonably likely to have a Material Adverse
Effect.

9.2

9.3

The Trustee may at its discretion and without further notice take such proceedings against
the Issuer as it may think fit to enforce the obligations of the Issuer under the Trust Deed and
the Notes, but it shall not be bound to do so or to take any other action unless (a) it shall
have been so requested by the Holders of at least 25 per cent in principal amount of the
Notes then outstanding or so directed by an Extraordinary Resolution of the Holders of the
Notes and (b) it shall have been indemnified and/or secured to its satisfaction. No Holder
shall be entitled to proceed directly against the Issuer unless the Trustee, having become
bound to do so, fails to do so within a reasonable period and such failure is continuing.

Having realised the security or, in the case of a partial redemption of Notes pursuant to
Condition 6.10, part of the security corresponding to the proportion of Notes redeemed, and
distributed the net proceeds in accordance with Condition 4, the Trustee may not take any
further steps against the Issuer to recover any sum still unpaid and any such liability shall be
extinguished. In particular, neither the Trustee nor any Noteholder shall be entitled to petition
or take any other step for the winding-up of the Issuer.

9.4

The claims of the Trustee and the Noteholder against the Issuer are limited, pursuant inter
alia to Condition 19.

10.

MEETINGS OF HOLDERS, MODIFICATION

10.1 The Trust Deed contains provisions for convening meetings of the Holders of the Notes to
consider any matter affecting their interests, including the sanctioning by Extraordinary

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Resolution of a modification of any of the provisions of the Notes, these Terms and
Conditions or the Trust Deed. Such a meeting may be convened by the Issuer or
requisitioned by Holders of Notes holding not less than 10 per cent. in principal amount of
the Notes for the time being remaining outstanding. The quorum at any such meeting for
passing an Extraordinary Resolution is one or more persons holding or representing a clear
majority in principal amount of the Notes for the time being outstanding, or at any adjourned
such meeting one or more persons being or representing Holders of Notes whatever the
principal amount of the Notes so held or represented, except that at any meeting the
business of which includes the modification of certain provisions of the Notes, these Terms
and Conditions or the Trust Deed (including modifying the date of maturity of the Notes or
any date for payment of interest thereon, or reducing or cancelling the amount of principal or
the rate of interest payable in respect of the Notes or altering the currency of payment of the
Notes), the quorum shall be one or more persons holding or representing not less than two-
thirds in principal amount of the Notes for the time being outstanding, or at any adjourned
such meeting one or more person holding or representing not less than one-third in principal
amount of the Notes for the time being outstanding. An Extraordinary Resolution passed at
any meeting of the Holders of Notes shall be binding on all the Holders of Notes, whether or
not they are present at the meeting.

10.2 The Trustee may agree, without the consent of the Holders, to:

(a)

(b)

any modification of any of the provisions of the Notes, the Coupons, these Terms
and Conditions or the Trust Deed which is not, in the opinion of the Trustee,
materially prejudicial to the interests of the Holders of the Notes; or

any modification of any of the provisions of the Notes, the Coupons, these Terms
and Conditions or the Trust Deed which is of a formal, minor or technical nature or is
made to correct a manifest or proven error or to comply with mandatory provisions of
the law of the jurisdiction in which the Issuer is incorporated.

The Trustee may also, without the consent of the Holders, waive or authorise any breach or
proposed breach of any of these Terms and Conditions or any of the provisions of the Trust
Deed or determine, without any such consent, that any Event of Default or Potential Event of
Default (as defined in the Trust Deed) shall not be treated as such, which in any case is not,
in the opinion of the Trustee, materially prejudicial to the interests of the Holders of the
Notes.

10.3 Any such modification, waiver, authorisation or determination shall be binding on the Holders
and, unless the Trustee otherwise agrees, notice of any such modification shall be given to
the Holders of the Notes by the Issuer in accordance with Condition 16 as soon as
practicable thereafter.

11.

REPLACEMENT OF NOTES

If any Note is lost, stolen, mutilated, defaced or destroyed it may be replaced at the specified
office of the Agent or of the Registrar subject to all applicable laws and stock exchange
requirements, upon payment by the claimant of the taxes and expenses incurred in
connection with such replacement and on such terms as to evidence, security, indemnity
and otherwise as the Issuer may require (provided that the requirement is reasonable in the
light of prevailing market practice). Mutilated or defaced Notes must be surrendered before
replacements will be issued.

12.

FURTHER ISSUES

12.1 The Issuer may from time to time, without the consent of the Holders of the Notes, but
provided that the Trustee is satisfied that the restrictions contained in this Condition will be
complied with, create and issue further notes having the same terms and conditions as the

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Notes in all respects (or in all respects except for the first payment of interest thereon) and
so that such further notes shall be consolidated and form a single Series with the
outstanding Notes. References in these Terms and Conditions to the Notes include (unless
the context requires otherwise) any further notes issued pursuant to this Condition 12 and
forming a single Series with the Notes. The Trust Deed contains provisions for convening a
single meeting of Holders of the Notes in certain circumstances where the Trustee so
decides. If such further notes are secured they shall be:

(a)

(b)

(c)

secured (save in the case of such further notes forming a single Series with the
outstanding Notes of any Series) on assets of the Issuer other than the Secured
Property and the Issuer’s Dutch Bank Account;

issued on terms in substantially the form contained in these Terms and Conditions
which provide for the extinction of all claims in respect of such further notes after
application of the proceeds of enforcement of the security over the assets on which
such further notes are secured to at least the same extent as the Notes (or
arrangements have been entered into that, to the satisfaction of the Trustee, have a
like result); and

in the case of such further notes forming a single Series with the outstanding Notes
of any Series, secured pari passu upon the Secured Property and such further
assets of the Issuer upon which such further notes are secured, all in accordance
with Condition 14.2.

If the above restrictions are not complied with then the prior consent of the Noteholders
affected by the proposed issue shall be obtained.

If unsecured, such further notes may only be issued if the amounts payable in respect of
them are limited to the amounts received by the Issuer from the asset acquired and/or
contract entered into by the Issuer using the net proceeds of the issue of such further notes
by the Issuer and on terms in substantially the form contained in these Terms and
Conditions and that provide for the extinction of all claims in respect of such further notes
which remain outstanding once such sums have been received by the Issuer.

12.2

If the Issuer issues further secured notes as permitted by Condition 14.1 that have, when
issued, the same terms and conditions as the Notes in all respects (or in all respects except
for the first payment of interest thereon) and that are consolidated and form a single series
with the outstanding Notes then (unless otherwise approved by an Extraordinary Resolution
of the Noteholders) the following provisions shall apply:

(a)

the Issuer shall provide additional security for such notes that comprises assets that
are fungible with, and have the same proportionate composition as, the Secured
Property in respect of the relevant outstanding Notes and that has an aggregate
principal amount at least equal to the principal amount of such existing security
multiplied by a fraction, the numerator of which is the aggregate principal amount of
such further notes and the denominator of which is the aggregate principal amount of
the relevant outstanding Notes; and

Upon issue of such further notes, the Notes and such further notes shall form a single series
and be secured on the Secured Property relating to the Notes and such additional security.
Such further notes shall be constituted secured by a supplemental trust deed.

13.

AGENTS

13.1 The names of the Agent(s), the Registrar and the Transfer Agents and their specified offices

are set out at the back of the Information Memorandum.

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13.2 The Issuer is entitled to terminate the appointment of the Agent(s), the Registrar or Transfer
Agent and/or appoint another Agent(s) and/or appoint additional Agent(s) Registrars or
Transfer Agents and/or approve any change in the specified office through which any of the
same acts, provided that:

(a)

(b)

there will at all times be a Paying Agent and, if appropriate, a Registrar and a
Transfer Agent with a specified office in such place as may be required by the rules
and regulations of the Irish Stock Exchange;

there will at all times be a Paying Agent and a Transfer Agent with a specified office
in a city in continental Europe.

13.3

In acting under the Agency Agreement, the Agents act solely as agents of the Issuer and, in
certain limited circumstances specified therein, of the Trustee and do not assume any
obligation or trust for or with any Holder.

14.

NOTICES

Notices to Holders of the Notes will be deemed to be validly given if sent by first class mail or
(if posted to an overseas address) by air mail to them at their respective addresses as
recorded in the Register, and will be deemed to have been validly given on the fourth day
after the date of such mailing and (so long as the Notes are listed on the Irish Stock
Exchange and the rules of the Irish Stock Exchange so require) by filing with the Companies
Announcement Office of the Irish Stock Exchange. Any such notice shall be deemed to
have been given on the date of such publication or, if published more than once or on
different dates, on the first date on which such publication is made.

In case by reason of any other cause it shall be impracticable to publish any notice to
Holders as provided above, then such notification to such Holders as shall be given with the
approval of the Trustee in accordance with the rules of the Irish Stock Exchange shall
constitute sufficient notice to such Holders for every purpose hereunder.

15.

THE TRUSTEE

15.1 The Trust Deed contains provisions for the indemnification of the Trustee and for its relief
from responsibility, including provisions relieving it from taking action unless indemnified to
its satisfaction. The Trustee is entitled to enter into business transactions with the Issuer
without accounting to the Noteholders for any profit resulting therefrom.

15.2 The Trustee is exempted from liability with respect to any loss or theft or reduction in value
of, or sufficiency of, the Secured Property, from any obligation to insure or to procure the
insuring of the Secured Property. The Trustee is not responsible for supervising the
obligations of any other person to the Issuer.

15.3

In connection with the exercise by it of any of its trusts, powers, authorities or discretions, the
Trustee shall have regard to the general interests of the Holders of the Notes as a class but
shall not have regard to any interests arising from circumstances particular to individual
Holders (whatever their number) and in particular, but without limitation, shall not have
regard to the consequences of such exercise for individual Holders (whatever their number)
resulting from their being for any purpose domiciled or resident in, or otherwise connected
with, or subject to the jurisdiction of, any particular territory and the Trustee shall not be
entitled to require, nor shall any such Holder be entitled to claim, from the Issuer any
indemnification or payment in respect of any tax consequences of any such exercise upon
individual Holders.

16.

GOVERNING LAW AND JURISDICTION

16.1 Governing Law

– 75 –

The Trust Deed, the Notes are governed by, and shall be construed in accordance with,
English law.

16.2

Jurisdiction

The Issuer has in the Trust Deed irrevocably agreed for the exclusive benefit of the Trustee
and the Holders that the courts of England are to have jurisdiction to settle any disputes
which may arise out of or in connection with the Trust Deed and/or the Notes and that
accordingly any suit, action or proceedings (together referred to as “Proceedings”) arising
out of or in connection with the Trust Deed and/or the Notes may be brought in such courts.
The Issuer has in the Trust Deed irrevocably and unconditionally waived and agreed not to
raise any objection which it may have now or hereafter to the laying of the venue of any such
Proceedings in any such court and any claim that any such Proceedings have been brought
in an inconvenient forum. The Issuer has in the Trust Deed appointed Law Debenture
Corporate Services Limited at its registered office at Fifth Floor, 100 Wood Street, London,
EC2V 7EX as its agent for service of process, and has undertaken in the Trust Deed that, in
the event of it ceasing so to act or ceasing to be registered in England, it will appoint another
person as its agent for service of process in England in respect of any Proceedings. Nothing
herein shall affect the right to serve process in any other manner permitted by law. The
Issuer has in the Trust Deed and the Agency Agreement irrevocably and unconditionally
waived with respect to the Trust Deed, the Agency Agreement and/or the Notes any right to
claim immunity from jurisdiction or execution and any similar defence and has irrevocably
and unconditionally consented to the giving of any relief or the issue of any process,
including without limitation, the making, enforcement or execution against any property
whatsoever (irrespective of its use or intended use) of any order or judgment made or given
in connection with any Proceedings.

17.

LIMITED RECOURSE AND NON-PETITION

17.1 Notwithstanding any other provision of these Terms and Conditions or any document
referred to herein or otherwise, the claims of the Trustee, the Agents, the Dealers, the
Arranger and the Holders against the Issuer will be limited to the proceeds the Issuer
receives from the Receivables. If the net proceeds of the enforcement of any Receivables
for such Series are not sufficient to make all payments due in respect of the Notes, no other
assets of the Issuer will be available to meet such shortfall and the claims of such Holders
and, if applicable, any counterparty in respect of any such shortfall shall be extinguished and
neither the Trustee nor any such counterparty or any holder of Notes may take any further
action to recover such shortfall. In such circumstances the Issuer’s Dutch Bank Account will
not be available for payment of such shortfall, which shortfall shall be borne by the creditors
of the Issuer (which includes the Holders), the rights of such persons to receive any further
amounts in respect of such obligations shall be extinguished and none of such creditors may
take any further action to recover such amounts.

17.2 The Holders will not, until one year and one day has elapsed since all obligations of the
Issuer under the Notes have been discharged in full, take or join in taking any corporate
action or other steps or legal proceedings for the winding-up, dissolution or re-organisation
or for the appointment of a receiver, administrator, administrative receiver, trustee, liquidator,
or similar officer of the Issuer or of any or all the Issuer’s revenues and assets.

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SUMMARY OF PROVISIONS RELATING TO THE NOTES IN GLOBAL FORM

Global Note Certificate

The Notes are represented by a Global Note Certificate which is registered in the name of The Bank
of New York Depository (Nominees) Limited and deposited with a common depositary for Euroclear
and Clearstream, Luxembourg.

For so long as all of the Notes are represented by a Global Note Certificate and such Global Note
Certificate is held on behalf of Euroclear and/or Clearstream, Luxembourg, the Trustee shall, for the
purposes of performing the functions under the Trust Deed be entitled to deem, treat and have
regard to the interests of each person (other than Euroclear or Clearstream, Luxembourg) who is for
the time being shown in the records of Euroclear or Clearstream, Luxembourg as the holder of a
particular principal amount of such Notes (each an ‘‘Accountholder’’) (in which regard any
certificate or other document issued by Euroclear or Clearstream, Luxembourg as to the principal
amount of such Notes standing to the account of such person shall be conclusive and binding for all
purposes) as the holder of such principal amount of such Notes for all purposes in place of the
holder of the Global Note Certificate (the ‘‘Holder’’) to the extent of the principal amount of Notes in
respect of which such person is an Accountholder.

Euroclear and Clearstream, Luxembourg

References in the Global Note Certificate and this summary to Euroclear and/or Clearstream,
Luxembourg shall be deemed to include references to any other clearing system approved by the
Trustee. The address of Euroclear is 1 Boulevard du Roi Albert II B 1210 Brussels Belgium. The
address of Clearstream Luxembourg is L 2967 Luxembourg.

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SUBSCRIPTION AND SALE

United States

At the time of issue, the Notes were not and will not be registered under the Securities Act and may
not be offered or sold within the United States or to, or for the account or benefit of, US persons
except in accordance with Regulation S or pursuant to an exemption from the registration
requirements of the Securities Act. In a distribution agreement dated 27 June 2008 (the
‘‘Distribution Agreement’’) BCP Securities LLC represented that it had not offered, sold or
delivered the Notes and agreed that it would not offer, sell or deliver the Notes: (i) as part of their
distribution at any time; and (ii) otherwise within the United States or to, or for the account or benefit
of, US persons (as defined in Regulation S under the Securities Act.

In the Distribution Agreement, BCP Securities LLC agreed that, at or prior to confirmation of sale of
the Notes, it would send to each distributor, dealer or person receiving a selling concession, fee or
other remuneration that purchased Notes from it a confirmation or notice of the above US selling
restriction.

Terms used in this section have the meanings given to them by Regulation S.

United Kingdom

In the Distribution Agreement, BCP Securities LLC represented and agreed that:

(a)

in relation to any Notes which have a maturity of less than one year:

(i)

(ii)

it is a person whose ordinary activities involve it in acquiring, holding,
managing or disposing of investments (as principal or agent) for the
purposes of its business; and

it has not offered or sold and will not offer or sell any Notes other than to
persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or as agent) for the
purposes of their businesses or who it is reasonable to expect will acquire,
hold, manage or dispose of investments (as principal or agent) for the
purposes of their businesses where the issue of the Notes would otherwise
constitute a contravention of Section 19 of the FSMA by the Issuer;

(b)

it has only communicated or caused to be communicated and will only communicate
or cause to be communicated an invitation or inducement to engage in investment
activity (within the meaning of Section 21 of the FSMA) received by it in connection
with the issue or sale of any Notes in circumstances in which Section 21(1) of the
FSMA does not apply to the Issuer or the Guarantors; and

(c)

it has complied and will comply with all applicable provisions of the FSMA with
respect to anything done by it in relation to any Notes in, from or otherwise involving
the United Kingdom.

The Netherlands

In the Distribution Agreement, BCP Securities LLC represented and agreed that it:

(a)

has mentioned and shall mention the relevant selling restriction in all offers, offer
advertisements, publications and other documents or advertisements in which such
an offer of the Notes is made or such a forthcoming offer is announced (whether
electronically or otherwise); and

(b)

shall not offer, sell or transfer or cause Zero Coupon Notes in definitive form and
other Notes in definitive form on which interest does not become due and payable
during their term but only at maturity, to be offered, sold or transferred directly or

indirectly, within, from or into the Netherlands, except in conformity with the
requirements of the SCA.

– 78 –

Italy

In the Distribution Agreement, BCP Securities LLC agreed that no Notes may be offered, sold or
delivered (including in the secondary market) except to professional investors (Operatori Qualificati)
as defined in article 31, second paragraph, of CONSOB regulation n.11522 of 1 July 1998 (as
amended from time to time) excluding individuals.

Japan

In the Distribution Agreement, BCP Securities LLC undertook that it will not offer or sell any Notes,
directly or indirectly, in Japan or to, or for the benefit of any resident of Japan (which term as used
herein means any person resident in Japan. including any corporation or other entity organised
under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a
resident of Japan except pursuant to an exemption from the registration requirements and otherwise
in compliance with the Securities and Exchange Law and any other applicable laws and regulations
of Japan.

The Russian Federation

In the Distribution Agreement, BCP Securities LLC represented to and agreed with the Issuer that it
has not offered or sold or transferred or otherwise disposed of, and will not offer or sell or transfer or
otherwise dispose of, any Notes (as part of their initial distribution or at any time thereafter) to, or for
the benefit of, any persons (including legal entities) resident, incorporated, established or having
their usual residence in the Russian Federation, or to any person located within the territory of the
Russian Federation, unless and to the extent otherwise permitted by Russian law.

General

Other than the approval of this document by the Financial Regulator, no action has been or will be
taken in any jurisdiction by the Issuer or BCP Securities that would, or is intended to, permit a public
offer of the Notes, or possession or distribution of any offering material in relation thereto, in any
country or jurisdiction where action for that purpose is required.

In the Distribution Agreement, each of BCP Securities LLC and the Issuer agreed that no action has
been or will be taken (except as specified in the Information Memorandum) in any country or
jurisdiction by the Dealers or the Issuer that would permit a public offering of Notes, or possession or
distribution of any offering material in relation thereto, in any country or jurisdiction where action for
that purpose is required. the Distribution Agreement, each of BCP Securities LLC and the Issuer
agreed that it will (to the best of its knowledge and belief) comply with all applicable laws and
regulations in each country or jurisdiction in which or from which it purchases, offers, sells or
delivers Notes or has in its possession or distributes such offering material, in all cases at its own
expense, and neither the Issuer nor any other Dealer shall have responsibility therefor.

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GENERAL INFORMATION

Application has been made to list the Notes on the Irish Stock Exchange by the Issuer, through the
listing agent, Arthur Cox Listing Services Limited (the “Listing Agent”). The Listing Agent is acting
solely in its capacity as listing agent for the Issuer in relation to the Notes and is not itself seeking
admission to the Official List of the Irish Stock Exchange or to trading on the Irish Stock Exchange’s
regulated market for the purposes of the Prospectus Directive.

The Notes were accepted for clearance through Euroclear and Clearstream, Luxembourg
with a Common Code of 037389927. The International Securities Identification Number for
the Notes is XS0373899276.

For so long as any of the Notes is outstanding, copies of the following documents may be
inspected in physical form at the registered office of the Issuer and at the specified offices of
each of the Paying and Transfer Agents during normal business hours:

(a)

the constitutional documents (including the charter) of the Borrower (with an English
translation);

(b)

the constitutional documents of the Issuer;

(c)

a copy of this Prospectus, together with any supplement to this Prospectus;

(d)

the Agency Agreement;

(e)

the Trust Deed and any amendments and supplements thereto:

(f)

Distribution Agreement;;

(g)

Information Memorandum;

(h)

(i)

the annual reports and the audited consolidated financial statements of the Borrower
in respect of the financial years ended 31 December 2007 and 2006;

copies of the most recent accounts and, if any, interim financial statements of the
Issuer; and

(j)

the Loan Agreement and any amendments and supplements thereto..

The Issuer obtained all necessary corporate consents, approvals and authorisations required
in connection with the Loan and the issue and performance of the Notes. The issuance of
the Notes and the granting of the Loan were authorised by the Issuer by a resolution of the
board of directors of the Issuer passed on 30 June 2008. The issue of this Prospectus was
authorised by the board of directors of the Issuer passed on 30 June 2008. The Borrower
obtained all necessary corporate consents, approvals and authorisations required in
connection with the Subordinated Loan. Entry into the Loan Agreement was authorised by
the Borrower by a resolution of the board of directors of the Borrower passed on 30 June
2008. Under Russian law, the Borrower is not required to approve the issue of this
Prospectus.

The auditors of the Borrower are HLB Univers-Audit, 41 bld. 13, 2nd Zvenigorodskaya str.
123100 Moscow, Russian Federation (“HLB”). HLB is a corporate member of the Institute of
Professional Accountants and Auditors of Russia, The Moscow Audit Chamber and
Association of Accountants and Auditors. The Borrower’s IFRS financial statements as at
and for the years ended 31 December 2006 and 31 December 2007 included in this
document have been audited without qualification by HLB, who have expressed an opinion
on those statements, as stated in their report appearing herein.

10.

11.

12.

13.

– 80 –

The Borrower is incorporated under the laws of the Russian Federation and was registered
with the Russian Federal Tax Service as an open joint-stock company on 15 January 1997
and has been established for an indefinite period of time. The Issuer is incorporated under
the laws of The Netherlands, having its registered office at Locatellikade 1, Parnassustoren,
1076 AZ Amsterdam, The Netherlands, registered with the trade register of the Amsterdam
Chamber of Commerce, The Netherlands under number 33203015.

None of the Borrower, its subsidiaries or the Issuer are, or have been involved in any
material governmental, legal or arbitration proceedings (including any such proceedings
which are pending or threatened of which any of the Borrower, its subsidiaries or the Issuer
are aware) during the 12 months before the date of this Prospectus which may have, or have
had in the recent past, significant effects on any of the Borrower’s, its subsidiaries’ or the
Issuer’s financial position or profitability.

There has been no material adverse change in the prospects of the Borrower and its
subsidiaries since 31 December 2007 or of the Issuer since the Issuer’s date of
incorporation, nor has there been any significant change in the financial or trading position of
the Borrower and its subsidiaries, taken as a whole, which has occurred since 31 December
2007 or in the financial or trading position of the Issuer since the Issuer’s date of
incorporation.

Neither the Borrower nor the Issuer has entered into any material contracts outside the
ordinary course of its business which could result in the Borrower, its subsidiaries or the
Issuer being under an obligation or entitlement that is material to the Borrower’s ability to
meet its obligations under the Loan Agreement or the Issuer’s ability to make payments
under the Notes, as the case may be.

There are no potential conflicts of interest between any duties of the members of the
administrative, management or supervisory bodies of the Borrower towards the Issuer and/or
the Borrower and their private interests and/or other duties.

The Trust Deed provides, inter alia, that the Trustee may act and/or rely on the opinion or
advice of or a certificate of any information obtained from any lawyer, banker, valuer,
surveyor, broker, auctioneer, accountant, auditor or other expert (whether or not addressed
to the Trustee), notwithstanding that such opinion, advice, certificate or information contains
a monetary or other limit on the liability of any of the above mentioned persons in respect
thereof.

The Issuer does not intend to provide any post-listing transaction information regarding the
Notes or the Loan.

The total fees and expenses in connection with the admission of the Notes to trading on the
Irish Stock Exchange are expected to be approximately € 35,000.00 to be paid by FLC.

Copies of transfer notices and voting papers will also be available at the registered office of
the Issuer.

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APPENDIX 1

DEFINITIONS SCHEDULE

“Change of Control” means the Russian Government ceasing to own, directly or indirectly, at least
50.01 per cent. of the Borrower, such event being a “Change of Control Event”;

“Change of Control Event Notice” means the notice, substantially in the form of schedule 2 to the
Loan Agreement, from the Borrower stating that a Change of Control Event has occurred; and

“Russian Government” means the government of the Russian Federation;

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APPENDIX 2

LOAN AGREEMENT

DATED

30 JUNE 2008

OPEN JOINT STOCK COMPANY “FINANCE LEASING COMPANY”

as Borrower

– and –

GREENWICH AVENUE FINANCE B.V.

as Lender

– and –

BCP SECURITIES, LLC

as Lead Arranger

LOAN AGREEMENT

U.S.$150,000,000

5th Floor, Usadba Centre
22 Voznesensky Pereulok
Moscow, 125009
Russian Federation
LIB02/MP/JCWM/2231345
X0035/00038

This Agreement is dated 30 June 2008 and made

– 83 –

BETWEEN:

(1)

(2)

(3)

Open Joint Stock Company “Finance Leasing Company”, an open joint-stock company
incorporated under
the Russian Federation with registered number
1027739010507 and having its registered office at 6, Makarenko Street, Building 6, Moscow
105062, the Russian Federation (the “Borrower”);

laws of

the

Greenwich Avenue Finance B.V., a company with limited liability (besloten vennootschap
met beperkte aansprakelijkheid) organised and existing under the laws of The Netherlands,
registered with the Trade Register of the Chamber of Commerce Amsterdam under number
34303854, having its registered office at Locatellikade 1, Parnassustoren, 1076 AZ
Amsterdam, The Netherlands (the “Lender”); and

BCP Securities, LLC, a limited liability company incorporated under the laws of Connecticut,
U.S.A., having its principal office at 2nd Floor, 289 Greenwich Avenue, Greenwich CT, 06830
U.S.A. (the “Lead Arranger”).

WHEREAS:

(A)

(B)

The Lender has at the request of the Borrower agreed to make available to the Borrower a
loan facility in the amount of U.S.$150,000,000 (one hundred and fifty million) on the terms,
and subject to the conditions, of this Agreement.

The Borrower acknowledges that the Lender intends to finance the Facility and make the
Advance by issuing to investors, limited recourse credit linked notes on the terms set out or
referred to in a Prospectus dated on or about the date hereof (the “Prospectus”).

Now it is hereby agreed as follows:

DEFINITIONS AND INTERPRETATION

1.1

Definitions

In this Agreement (including the recitals), unless otherwise defined herein, the following
terms shall have the meanings indicated below:

“Advance” means the advance to be made under sub-Clause 3.1 of the sum equal to the
amount of the Facility;

“Affiliate” of any specified Person means (a) any other Person, directly or indirectly,
controlling or controlled by or under direct or indirect common control with such specified
Person or (b) any other Person who is a director or officer (i) of such specified Person, (ii) of
any Subsidiary of such specified Person or (iii) of any Person described in sub-clause (a)
above. For the purpose of this definition, “control” when used with respect to any Person
means the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or otherwise; and
the terms “controlling” and “controlled” have meanings correlative to the foregoing;

“Agency Agreement” means the agency agreement dated 27 June 2008 between the
Lender, The Bank of New York acting through its London Branch, the Trustee and the Lead
Arranger as such agency agreement may be amended, supplemented or restated from time
to time;

“Agreed Form” means that the form of the document in question has been agreed between
the proposed parties thereto and that such document has been signed on behalf of the
parties thereto and delivered to Lovells to be held in escrow pending release on the Closing

Date;

– 84 –

“Agreement” means this Agreement as originally executed or as it may be amended from
time to time;

“Borrower’s Account” means the account of the Borrower with account number
(SWIFT code: ABSLRUMM)
40702840122000012072, held with Absolut Bank
(correspondent account number 18301701 with KBC BANK NV, 1177 Avenue of the
Americas New York, NY 10036 USA, SWIFT: KREDUS33);

“Borrowings” means any of the following obligations of any member of the Core Group
(without duplication):

(a)

obligations to repay monies borrowed or raised;

(b)

(c)

Indebtedness arising under debentures, bonds, notes, loan stock, commercial paper
or similar instruments or acceptance credit, bill discounting or note purchase
facilities;

any counter-indemnity obligations (whether future or contingent) for letters of credit,
guarantees or similar instruments issued by banks or financial institutions;

(d)

any potential recourse in respect of receivables sold, assigned or discounted;

(e)

(f)

(g)

(h)

the capital element of conditional purchase, hire purchase and leases which would,
in accordance with the applicable accounting policies, be treated as a finance or
capital lease;

the net amount which that company would be required to pay on closing out any
outstanding interest or currency swap, floor, collar or other derivative transaction;

any actual or Contingent Liability of that company under any other transaction having
the commercial effect of borrowing (including liabilities not shown as borrowings on
the balance sheet by reason of being contingent, conditional or otherwise); and

liability under any guarantee, indemnity or other assurance against financial loss for
the Indebtedness of any other person;

“Business Day” means a day on which (a) the London Interbank Market is open for dealings
between banks generally, and (b) if on that day a payment is to be made hereunder,
commercial banks generally are open for business in Amsterdam, Moscow, London, New
York City and in the city where the specified office of the Paying Agent is located;

“Change of Control” means the Government of the Russian Federation ceasing to control
(either directly or indirectly) the Borrower, such event being a “Change of Control Event”.
For the purpose of this definition, “control” (including the terms “controlled by” and “under
common control with”) when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or credit arrangement, as trustee or executor, or
otherwise; and the terms “controlling” and “controlled” have meanings correlative to the
foregoing;

“Change of Control Event Notice” means the notice, substantially in the form of schedule 2
hereto, from the Borrower stating that a Change of Control Event has occurred;

“Consolidated EBIT” means the consolidated profits of the Group from ordinary activities
before taxation:

(i)

before deducting any Consolidated Net Finance Charges;

(j)

(k)

before taking into account any items treated as exceptional or extraordinary items;
and

– 85 –

after deducting the amount of any profit of any member of the Group which is
attributable to minority interests,

in each case, to the extent added, deducted or taken into account, as the case may
be, for the purposes of determining the profits of the Group from ordinary activities
before taxation.

“Consolidated Net Finance Charges” means the aggregate amount of the accrued interest,
commission, fees, discounts, prepayment penalties or premiums and other finance payments
in respect of Indebtedness whether paid, payable or capitalised by any member of the
Group:

(a)

excluding any such obligations owed to any other member of the Group;

(b)

including the interest element of leasing and hire purchase payments;

(c)

(d)

(e)

including any accrued commission, fees, discounts and other finance payments
payable by any member of the Group under any interest rate hedging arrangement;

deducting any accrued commission, fees, discounts and other finance payments
owing to any member of the Group under any interest rate hedging instrument; and

deducting any accrued interest owing to any member of the Group on any deposit or
bank account.

“Consolidated Tangible Net Worth” means at any time the aggregate of the amounts paid
up or credited as paid up on the issued ordinary share capital and the aggregate amount of
the reserves of the Borrower, including:

(a)

any amount credited to the share premium account;

(b)

any capital redemption reserve fund; and

(c)

any balance standing to the credit of the consolidated profit and loss account of the
Borrower,

but deducting:

(d)

any debit balance on the consolidated profit and loss account of the Borrower;

(e)

(f)

(g)

(h)

(to the extent included) any amount shown in respect of goodwill (including goodwill
arising only on consolidation) or other intangible assets of the Borrower;

any amount in respect of interests of non-Group members in the Borrower’s
subsidiaries;

(to the extent included) any amount set aside for taxation, deferred taxation or bad
debts; and

any amount in respect of any dividend or distribution declared, recommended or
made by any member of the Group to the extent payable to a person who is not a
member of the Group and to the extent such distribution is not provided for in the
most recent financial statements,

and so that no amount shall be included or excluded more than once.

“Capital Stock” means, with respect to any Person, any and all shares or other equivalents

(however designated) of corporate stock, partnership interests or any other participation,
right, warrant, option or other interest in the nature of an equity interest in such Person, but
excluding any debt security convertible or exchangeable into such equity interest;

– 86 –

“Closed Circle” means a closed circle (besloten kring) of the Borrower as defined in the
Policy Rule on key concepts of market access and enforcement of the Act on the
Supervision of the Credit System 1992 of The Netherlands (published in the Dutch
Government Gazette on 10 July 2002, nr. 129);

“Closing Date” means 30 June 2008, subject to all the conditions precedent set out in
Clause 7 of this Agreement have been satisfied or completed;

“Contingent Liability” means any agreement, undertaking, or arrangement by which any
Person guarantees, endorses, or otherwise becomes or is contingently liable upon (by direct
or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds
to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the
Indebtedness, obligation, or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the payment of
dividends or other distributions upon the shares of any other Person. The amount of any
Person’s obligation under any Contingent Liability shall (subject to any limitation set forth
therein) be deemed to be the outstanding principal amount (or maximum principal amount, if
larger) of the debt, obligation, or other liability guaranteed thereby;

“Core Group” means the Borrower and any Group member (i) whose assets constitute five
(5) per cent. or more of the total assets of the Core Group, or (ii) whose revenues represent
five (5) per cent. or more of the total revenues of the Core Group;

“Default” means any event which is, or after notice or passage of time or after making any
determination under this Agreement (or any combination of the foregoing) would be, an
Event of Default;

“Distribution Agreement” means the distribution agreement dated 27 June 2008 between
the Lender, the Lead Arranger and the Dealers named therein concerning the sale and
the Notes, as such agreement may be amended,
subscription and purchase of
supplemented or restated from time to time;

“Dollars”, “$” and “U.S.$” means the lawful currency of the United States of America;

“Encumbrance” includes any mortgage, pledge, lien, hypothecation, charge, assignment or
deposit by way of security or any other agreement having the effect of providing or giving
security or preferential ranking to a creditor (including set off, title retention or other similar
arrangements) which in each case do not arise in the ordinary course of trade;

“Environmental Laws” means all laws, rules, regulations, ordinances, judgments, orders,
decrees and agreements with, and licences, permits or franchises from, governmental
entities, and all other regulatory restrictions (whether or not having the force of law) that (a)
have been, are or may become applicable to the Core Group or any properties or business
now or in the past owned, leased, occupied or operated by the Core Group and (b) relate to
the environment or the use, possession, collection, storage, processing, treatment, emission,
release, discharge, disposal, transfer or transport of Materials of Environmental Concern, or
similar matters, or the remediation of any of the foregoing;

“Event of Default” has the meaning assigned to such term in sub-Clause 11.1;

“Facility” means the loan facility specified in Clause 2;

“Group” means the Borrower and its Subsidiaries taken as a whole;

- 87 –

“guarantee” means any obligation, contingent or otherwise, of any Person directly or
indirectly guaranteeing any Indebtedness or other obligation of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such Person (a) to purchase or pay
(or advance or supply funds for the purchase or payment of) such Indebtedness or other
obligation of such other Person (whether arising by virtue of partnership arrangements, or by
agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay or
to maintain financial statement conditions or otherwise) or (b) entered into for purposes of
assuring in any other manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in whole or in
part); provided, however, that the term “guarantee” will not include endorsements for
collection or deposit in the ordinary course of business. The term “guarantee” used as a
verb has a corresponding meaning;

“incur” means issue, assume, guarantee, incur or otherwise become liable for; provided,
however, that any Indebtedness or Capital Stock of a Person existing at the time such
Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise)
or is merged into a Subsidiary will be deemed to be incurred or issued by such Subsidiary at
the time it becomes or is so merged into a Subsidiary;

“Indebtedness” means any indebtedness, in respect of any Person for, or in respect of,
moneys borrowed or deposits received; any amount raised by acceptance under any
acceptance credit facility; any amount raised pursuant to any note purchase facility or the
issue of bonds, notes, debentures, loan stock or any similar instrument; the amount of any
liability in respect of any lease or hire purchase contract which would, in accordance with
RAS, be treated as a finance or capital lease; receivables sold or discounted (other than any
receivables to the extent they are sold on a non-recourse basis); any amount raised
pursuant to any issue of shares which are expressed to be redeemable; any amount raised
under any other transaction (including any forward sale or purchase agreement) having the
commercial effect of a borrowing; any derivative transaction entered into in connection with
protection against or benefit from fluctuation in any rate or price (and, when calculating the
value of any derivative transaction, only the marked to market value shall be taken into
account); any counter-indemnity obligation in respect of a guarantee, indemnity, bond,
standby or documentary letter of credit or any other instrument issued by a bank or financial
institution; and the amount of any liability in respect of any guarantee or indemnity for any of
the items referred to above;

“Interest Payment Date” means 30 June and 30 December of each year;

“Interest Period” means each period beginning on (and including) an Interest Payment Date
(or, in the case of the first Interest Period, the Closing Date and, in the case of the third
Interest Period, the Optional Repayment Date) and ending on (but excluding) the next
Interest Payment Date, provided that the last Interest Period shall end (but exclude) the
Repayment Date.

“Issue Documents” means this Agreement, the Trust Deed, the Supplemental Trust Deed,
the Prospectus, the Distribution Agreement, and the Agency Agreement and “Issue
Document” means any one of them;

“Lender’s Account” means the account of the Lender with account number 1424728400,
held with The Bank of New York, New York (SWIFT code: IRVTUS3N) (correspondent
account number 8900285451 The Bank of New York, Brussels (SWIFT code: IRVTBEBB);

“Loan”, at any time, means an amount equal to the aggregate principal amount of the
Facility granted by the Lender pursuant to this Agreement and outstanding at such time;

“Lovells” means Lovells CIS, located at 5th Floor, Usadba Centre, 22 Voznesensky
Pereulok, Moscow, 125009, Russian Federation, as legal counsel for the Lead Arranger;

”Material Adverse Effect” means in the opinion of the Lender a material adverse effect on:

– 88 –

(a)

the business, operations, property, condition (financial or otherwise) or prospects of
the Core Group taken as a whole;

(b)

the ability of the Borrower to perform its obligations under this Agreement; or

(c)

the validity or enforceability of this Agreement or the rights or remedies of the Lender
under this Agreement;

“Materials of Environmental Concern” means any toxic, ignitable, corrosive, reactive,
radioactive or caustic substance, and any other substance considered by applicable law to
be a pollutant, contaminant or hazardous or potentially hazardous substance or waste;

“Notes” means the U.S.$150,000,000 Loan Participation Notes due 2013 proposed to be
issued by the Lender and constituted and secured by the Trust Deed and the Supplemental
Trust Deed on terms and subject to conditions set out in the Prospectus;

“Noteholders” means the holders of the Notes (as more particularly defined in the Trust
Deed);

“Officers’ Certificate” means a certificate signed by two officers of the Borrower at least one
of whom shall be the principal executive officer, principal accounting officer or principal
financial officer of the Borrower;

“Optional Repayment Date” means 30 June 2010;

“Payables” means:

(a)

(b)

the amount due or to become due in respect of goods and services supplied to the
company, where the consideration is expressed to be payable more than ninety (90)
days after the supply;

amounts received by that company in relation to goods and services to be supplied
by it, where the money is received more than ninety (90) days before the due date for
the supply;

“Permitted Borrowings” means:

(a)

Borrowings which have been created prior to the date of this Agreement and are
existing as at the date of this Agreement;

(b)

Borrowings between the members of the Core Group; and

(c)

Borrowings committed or incurred as at the date of this Agreement and any
Borrowings entered into after the date of this Agreement up to the total amount of
U.S.$100,000,000;

“Permitted Encumbrances” means:

(a)

(b)

any Encumbrance granted by any member of the Group which has been created
prior to the date of this Agreement and is existing as at the date of this Agreement;

any netting or set-off arrangement entered into by any member of the Group in the
ordinary course of its banking arrangements for the purpose of netting debit and
credit balances;

(c)

any Encumbrance arising by operation of law or in the ordinary course of business
and not as a result of a Default, including any rights of set-off arising as a matter of
law;

– 89 –

(d)

any Encumbrance entered into pursuant to any Issue Document;

(e)

(f)

(g)

(h)

(i)

(j)

(k)

(l)

(i) any bankers liens in respect of deposit accounts, (ii) any statutory landlord’s liens,
(iii) any Encumbrance created to secure the performance of bids, trade contracts,
government contracts, leases, statutory obligations, surety and appeal bonds,
performance and return-of-money bonds or liabilities to insurance carriers under
insurance or self-insurance arrangements or other obligations of like nature (so long
as, in each cases with respect to the items described in (i), (ii) and (iii) above of this
paragraph (e), such Encumbrance does not secure obligations constituting
Indebtedness for borrowed money and is incurred in the ordinary course of
business), and (iv) any Encumbrance arising from any legal proceeding, judgment,
decree or other order which does not constitute an Event of Default;

any Encumbrance granted by any member of the Group in favour of the Borrower or
any other member of the Group,

any Encumbrance in respect of any funds deposited by a member of the Group as
collateral for the Indebtedness of any other member of the Group;

any Encumbrance on any property, income or assets of a Person existing at the time
that such Person is acquired, merged into or consolidated with any member of the
Group other than the Borrower; provided that such Encumbrance was not created in
contemplation of such event and do not extend to any property, income or assets of
the Borrower or any member of the Group;

any Encumbrance on any property, income or assets acquired by the Borrower or
any member of the Core Group; provided that such Encumbrance was not created in
contemplation of such acquisition and do not extend to any other property, income or
assets (other than the proceeds of such acquired assets or property);

any Encumbrance on any property or assets of the Borrower or any of its
Subsidiaries securing Indebtedness incurred for the purpose of financing all or part of
the acquisition of such property or assets provided that (i) no such Encumbrance
shall extend to any other property or assets of the Borrower or any of its Subsidiaries
and (ii) the aggregate principal amount of all Indebtedness secured by Encumbrance
under this paragraph on such property or assets does not exceed the purchase price
of such property or assets (including customs duties,
insurance,
construction and installation costs and other incidental costs and expenses of
purchase and any VAT or similar taxes thereon);

transport,

any Encumbrance for ad valorem, income or property taxes or assessments and
similar charges which are not delinquent;

easements, rights of way, restrictions (including zoning restrictions), reservations,
permits, servitudes, minor defects or irregularities in title and other similar charges or
encumbrances, and any Encumbrance arising under leases or subleases granted to
others, in each case, not interfering in any respect with the business of the Borrower
or any member of the Group and existing, arising or incurred in the ordinary course of
business;

(m)

any Encumbrance securing Indebtedness incurred to refinance other Indebtedness
permitted to be secured by any Encumbrance permitted under paragraphs (a) to (l)
(inclusive) above provided that the replacement Encumbrance does not cover any

(n)

(o)

assets other than the original assets subject to the original Encumbrance and that the
principal amount secured thereby is not increased;

– 90 –

any Encumbrance (other than any such Encumbrance as is referred to in paragraphs
(a) to (m) above and other than any Encumbrance over any inventories or shares as
referred to in paragraph (o)) where the aggregate value of assets or revenues subject
to such Encumbrance does not exceed five (5) per cent. of the assets of the Group;

any Encumbrance on the assets of the Borrower or any other member of the Group,
provided that the aggregate amount of such Security does not at any time exceed
U.S.$100,000,000 (one hundred million Dollars) or, with effect from the Optional
Repayment Date, such other amount as the Borrower may determine in its sole
discretion, provided that it has given a written notice of the same to the Lender and
the Lead Arranger not later than two (2) months prior to the Optional Repayment
Date; and

(p)

PROVIDED THAT the total aggregate amount of Permitted Encumbrances described
in paragraphs (a) to (o) above shall not at any time exceed seventy (70) per cent. of
the assets of the Group;

“Person” means any individual, corporation, partnership, limited liability company, joint
venture, association, joint-stock company, trust, unincorporated organisation, government, or
any agency or political subdivision thereof or any other entity;

“Project Financing” means any financing of all or part of the costs of the acquisition,
construction, development or operation of any asset or project if the person (or persons)
providing such financing expressly agrees to limit its recourse solely to the asset or project
financed and the revenues derived from such asset or project as the principal source of
repayment for the moneys advanced;

“Professional Market Party” has the meaning assigned to this term (professionele
marktpartij) in article 1:1 of the Dutch Financial Supervision Act (Wet op het financieel
toezicht);

“RAS” means the accounting standards and principles established by applicable Russian
law from time to time;

“Rate of Interest” has the meaning assigned to such term in sub-Clause 4.1(a);

“Repayment Date” means 30 June 2013;

“Sale and Repurchase Transaction” means a transaction which involves the transfer by a
credit institution or customer (the “transferor”) to another credit institution or customer (the
“transferee”) of assets subject to an agreement that the same assets or (in the case of
fungible assets) equivalent assets, will subsequently be transferred back to the transferor at
a specified price on a date specified or to be specified by the transferor;

“Sale/Leaseback Transaction” means an arrangement relating to property now owned or
hereafter acquired whereby the Borrower or any Subsidiary of the Borrower transfers such
property to a Person and the Borrower or such Subsidiary leases it from such Person;

“Same-Day Funds” means Dollar funds settled through the New York Clearing House
Interbank Payments System or such other funds for payment in Dollars as the Lender may at
any time reasonably determine to be customary for the settlement of international
transactions in New York City of the type contemplated hereby;

”Subsequent Rate of Interest” has the meaning assigned to such term in sub-Clause
4.1(b);

– 91 –

“Subsidiary” of any specified Person means any corporation, partnership, joint venture,
association or other business entity, whether now existing or hereafter organised or
acquired, (a) in the case of a corporation, of which at least 50 per cent of the total voting
power is held by such first-named Person and/or any of its Subsidiaries and such first-named
Person or any of its Subsidiaries has the power to direct the management, policies and
affairs thereof; or (b) in the case of a partnership, joint venture, association, or other
business/entity, with respect to which such first-named Person or any of its Subsidiaries has
the power to direct or cause the direction of the management and policies of such entity by
contract or otherwise if in accordance with RAS such entity would be consolidated with the
first-named Person for financial statement purposes;

“Supplemental Trust Deed” means the supplemental trust deed entered into between the
Lender and the Trustee concerning the constitution of the Notes, dated on or about the date
hereof as amended, supplemented or restated from time to time;

“Taxes” means any taxes (including interest or penalties thereon) which are now or at any
time hereafter imposed, assessed, charged, levied, collected, demanded, withheld or
claimed by the Russian Federation, the United Kingdom, The Netherlands or any taxing
authority thereof or therein or any organisation of which the Russian Federation or the
United Kingdom or The Netherlands may be a member or with which the Russian
Federation, The Netherlands or the United Kingdom may be associated or any country or
state from or through which the Borrower makes payments hereunder, provided, however,
that for the purposes of this definition the references to the United Kingdom shall, upon the
occurrence of the Credit Event (as this term is defined in the Prospectus), be deemed to be
references to the jurisdiction in which the Trustee is domiciled for tax purposes; and the term
“Taxation” shall be construed accordingly;

“Trust Deed” means the trust deed dated 27 June 2008 between the Lender and the
Trustee, as such trust deed may be amended, supplemented or restated from time to time;
and

“Trustee” means BNY Corporate Trustee Services Limited as trustee under the Trust Deed
and any successor thereto as provided thereunder.

1.2

Other Definitions

Unless the context otherwise requires, terms used in this Agreement which are not defined
in this Agreement but which are defined in the Trust Deed, the Supplemental Trust Deed, the
Prospectus, the Notes, the Agency Agreement, the Distribution Agreement shall have the
meanings assigned to such terms therein.

1.3

Interpretation

Unless the context or the express provisions of this Agreement otherwise require, the
following shall govern the interpretation of this Agreement:

(a)

(b)

All references to “Clause” or “sub-Clause” are references to a Clause or sub-Clause
of this Agreement.

The terms “hereof”, “herein” and “hereunder” and other words of similar import shall
mean this Agreement as a whole and not any particular part hereof.

(c)

Words importing the singular number include the plural and vice versa.

(d)

The table of contents and the headings are for convenience only and shall not affect

the construction hereof.

– 92 –

FACILITY

2.1

Facility

On the terms and subject to the conditions set forth herein, the Lender hereby agrees to lend
to
the Lender
U.S.$150,000,000 (one hundred and fifty million Dollars).

the Borrower hereby agrees

the Borrower and

to borrow

from

2.2

Purpose

The proceeds of the Advance will be used for

(a)

refinancing of the Borrower’s short-term liabilities due to Indebtedness; and

(b)

the Borrower’s general corporate purposes.

DRAWDOWN

3.1

Drawdown

On the terms and subject to the conditions set forth herein, on the Closing Date the Lender
shall make the Advance to the Borrower and the Borrower shall make a single drawing in the
full amount of the Facility, less an amount of the fees and expenses set out in the Fees and
Expenses Side Letter (as defined in 3.2 below).

3.2

Fees and Expenses

In consideration of the Lead Arranger arranging the issue of Notes to finance the liquidity in
the Facility, the Borrower hereby agrees that it shall pay to the Lead Arranger, in Same-Day
Funds, the amount of the reimbursable expenses of the Lead Arranger which expenses shall
include the aggregate amount of commissions, concessions, costs and expenses, all as set
out in a fees and expenses side letter between the Borrower, the Lender and the Lead
Arranger dated on or about the date hereof (“Fees and Expenses Side Letter”).

3.3

Disbursements

Subject to the conditions set forth herein, on the Closing Date the Lender shall transfer the
amount of the Advance to the Borrower’s Account in Same-Day Funds.

INTEREST

4.1

Rate of Interest

(a)

The Borrower will pay interest in Dollars to the Lender on the outstanding principal
amount of the Loan from time to time hereunder at the rate of 10 per cent. per
annum, which rate (the “Rate of Interest”) shall apply to the period starting from the
Closing Date and ending on the Optional Repayment Date or, in the event that the
Borrower does not exercise its right to declare a Subsequent Rate of Interest in
accordance with sub-Clause (b) below, to the period starting from the Closing Date
and ending on the Repayment Date.

- 93 –

(b)

The Borrower has the right at its own discretion to declare a new rate of interest for
the period starting from the Optional Repayment Date and ending on the Repayment
Date (the “Subsequent Rate of Interest”) provided that it has given a written notice
to the Lender and the Lead Arranger not later than two (2) months prior to the
Optional Repayment Date.

4.2

Payment

Interest at the Rate of Interest or the Subsequent Rate of Interest (as applicable) shall
accrue from day to day, starting from (and including) the Closing Date or the Optional
Repayment Date, as the case may be, and shall be paid in arrear not later than 10.00 a.m.
(New York City time) one Business Day prior to each Interest Payment Date. Interest on the
Loan will cease to accrue from the due date for repayment thereof unless payment of
principal is not made for any reason, in which event interest will continue to accrue (before
as well as after any judgment) at the Rate of Interest or the Subsequent Rate of Interest, as
the case may be, to (but excluding) the date on which payment in full of the principal thereof
is made. The amount of interest payable in respect of the Loan for any Interest Period shall
be calculated by applying the Rate of Interest or the Subsequent Rate of Interest, as the
case may be, to the Loan, dividing the product by two and rounding the resulting figure to the
nearest cent (half a cent being rounded upwards). If interest is required to be calculated for
any other period, it will be calculated on the basis of a 360-day year consisting of 12 months
of 30 days each and, in the case of an incomplete month, the number of days elapsed.

4.3

Default Interest

If the Borrower fails to pay any amount payable by it under this Agreement on its due date,
interest shall accrue on the overdue amount from the due date up to the date of actual
payment (both before and after judgment) at a rate two (2) per cent higher than the rate
which would have been payable if the overdue amount had, during the period of non-
payment, constituted the Loan for successive Interest Periods, each of a duration selected
by the Lender (acting reasonably). Any interest accruing under this Clause 4.3 shall be
immediately payable by the Borrower on demand by the Lender.

REPAYMENT AND PREPAYMENT

5.1

Repayment

(a)

(b)

Except as otherwise provided herein, the Borrower shall repay the Loan in full
together with all outstanding interest and other amounts payable to the Lender by the
Borrower under this Agreement not later than 10.00 a.m. (New York City time) one
Business Day prior to the Repayment Date.

The Lender may by fourteen (14) days prior written notice require the Borrower, and
the Borrower agrees to, prepay the Loan in full together with all outstanding interest
and other amounts payable to the Lender by the Borrower under this Agreement not
later than 10.00 a.m. (New York City time) one Business Day prior to the Optional
Repayment Date. Any amount prepaid may not be re-borrowed.

5.2

Prepayment in the event of Taxes

If, as a result of the application of any amendments to, or change in, the laws or regulations
of the Russian Federation, the United Kingdom or The Netherlands, or of any political sub-
division thereof or any authority therein, (the “Taxing Jurisdiction”) or the enforcement of
the security provided for in the Trust Deed or the Supplemental Trust Deed, the Borrower
would thereby be required to increase the payment of principal or interest or any other
payment due hereunder as provided in sub-Clauses 6.2 or 6.3, or if (for whatever reason)
the Borrower would have to or has been required to pay additional amounts pursuant to

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Clause 8, then the Borrower may (without premium or penalty), upon not less than thirty (30)
Business Days’ notice to the Lender (which notice shall be irrevocable) and, only in respect
of the requirement to increase the payment of principal or interest due or any other payment
due hereunder as a result of the application of any amendments to, or change in, the laws or
regulations of the Russian Federation, United Kingdom and/or The Netherlands, upon
delivery to the Lender of an Officer’s Certificate confirming that the Borrower would be
required to pay such additional amounts, prepay the Loan in whole (but not in part), without
premium or penalty, on the next Interest Payment Date.

5.3

Prepayment in the event of Illegality

If, at any time, the Lender reasonably determines that it is or would be unlawful or contrary to
any applicable law or regulation or regulatory requirement or directive of any agency of any
state or otherwise for the Lender to allow all or part of the Loan or the Notes to remain
outstanding or for the Lender to maintain or give effect to any of its obligations in connection
with this Agreement and/or to charge or receive or to be paid interest at the rate then
applicable to the Loan, then upon notice by the Lender to the Borrower in writing, the
Borrower and the Lender shall consult in good faith as to a basis which eliminates the
application of such circumstances; provided, however, that the Lender shall be under no
obligation to continue such consultation if a basis has not been determined within twenty
(20) Business Days of the date on which it so notified the Borrower. If such a basis has not
been determined within the twenty (20) Business Days, then upon seven (7) Business Days’
notice by the Lender to the Borrower in writing, the Borrower shall prepay the Loan in whole
(but not in part), without premium or penalty, on the next Interest Payment Date falling after
the expiry of such seven (7) Business Days’ notice or on such earlier date as the Lender
shall certify to be necessary to comply with such requirements.

5.4

Prepayment upon a Change of Control Event

(a)

Prior to, and in any event at least 30 days before any Change of Control Event, the
Borrower shall give notice of that fact to the Lender (an “Approval Notice”).

(b)

Following receipt of an Approval Notice, the Lender may either:

(c)

(d)

(e)

(i)

(ii)

approve the proposed Change of Control Event by notice to the Borrower (an
“Approval”); or

decline to approve the proposed Change of Control Event by notice to the
Borrower (a “Disapproval”).

Following receipt of an Approval Notice, if the Lender has failed to send either an
Approval or Disapproval within 30 days of receipt of any Approval Notice, the Lender
will be deemed to have granted an Approval.

Promptly, and in any event within 2 Business Days of the occurrence of a Change of
Control Event, the Borrower shall give a Change of Control Event Notice to the
Lender.

If, following a Disapproval, a Change of Control Event occurs or a Change of Control
Event Notice is given to the Lender, the Lender may notify the Borrower in writing
that the Lender requires the Borrower to repay all or part of the Advance. Following
receipt of such notice or the occurrence of such event, the Borrower shall repay the
amount of principal of the Advance specified in that notice (together with any interest
or other amounts accrued but unpaid thereon) on the next Interest Payment Date
falling after the date of such notice.

5.5

Reduction of Loan upon Cancellation of Notes

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The Borrower may from time to time deliver to the Lender Notes, having an aggregate
principal value of at least U.S.$500,000, together with a request for the Lender to present
such Notes to the Registrar for cancellation, and may also from time to time procure the
delivery to the Registrar of the relevant Global Note with instructions to cancel a specified
aggregate principal amount of Notes (being at least U.S.$500,000) represented thereby
(which instructions shall be accompanied by evidence satisfactory to the Registrar that the
Borrower is entitled to give such instructions), whereupon the Lender shall, pursuant to
clause 10.2 of the Agency Agreement, request the Registrar to cancel such Notes (or
specified aggregate principal amount of Notes represented by the Global Note). Upon any
such cancellation by or on behalf of the Registrar, the principal amount of the Loan
corresponding to the principal amount of such Notes together with accrued interest and other
amount (if any) therein shall be deemed to have been reduced as of the date of such
cancellation.

5.6

Voluntary prepayment

The Borrower may not voluntarily prepay the Loan except in accordance with the express
terms of this Agreement. Any amount prepaid may not be re-borrowed.

5.7

Payment of other amounts

If the Loan is to be prepaid by the Borrower pursuant to any of the provisions of sub-Clauses
5.2, 5.3 or 5.4, the Borrower shall, simultaneously with such prepayment, pay to the Lender
accrued interest thereon to (but excluding) the date of actual payment and all other sums
then due and payable by the Borrower pursuant to this Agreement.

PAYMENTS

6.1

Making of Payments

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All payments of principal, interest and other additional amounts to be made by the Borrower
under this Agreement shall be made not later than 10.00 a.m. (New York City time) on each
Interest Payment Date or on the Repayment Date or on the relevant prepayment date (as
the case may be) in Same-Day Funds to the Lender’s Account. Payment of such amounts by
the Borrower hereunder to the Lender’s Account shall comprise discharge of the Borrower’s
payment obligations hereunder in respect of such amounts.

6.2

No Set-Off, Counterclaim or Withholding; Gross-Up

(a)

(b)

(c)

All payments to be made by the Borrower under this Agreement shall be made in full
without set-off or counterclaim and (except to the extent required by law) free and
clear of and without deduction for or on account of any Taxes. If the Borrower shall
be required by applicable law to make any deduction or withholding from any
payment under this Agreement for or on account of any such Taxes, it shall increase
the payment of principal or interest or any other payment due hereunder to such
amount as may be necessary to ensure that the Lender receives a net amount in
Dollars equal to the full amount which it would have received had payment not been
made subject to such Taxes. The Borrower shall promptly account to the relevant
authorities for the relevant amount of such Taxes so withheld or deducted and shall
deliver to the Lender without undue delay evidence satisfactory to the Lender of such
deduction or withholding and of the accounting therefore to the relevant taxing
authority. If the Lender pays any amount in respect of such Taxes, penalties or
interest, the Borrower shall reimburse to the Lender in Dollars on demand an amount
equal to such payment provided that the Lender provides to the Borrower a
certificate certifying the amount of such payment and supporting documents. Any
such certificate, in the absence of a manifest error, shall be conclusive evidence of
the amount of such payment;

If, following any increase in any sum payable by the Borrower under this Agreement
pursuant to Clause 6.2.(a) or following any payment made by the Borrower pursuant
to Clause 8, the Lender shall receive or be granted a credit against or remission for
any tax payable by it, the Lender shall, subject to the Borrower having made any
increased payment in accordance with Clause 6.2.(a) or Clause 8 and to the extent
that the Lender can do so without prejudicing the retention of the amount of such
credit or remission and without prejudice to its right to obtain any other relief or
allowance which may be available to it and to the conduct of its own tax affairs as it
thinks fit, reimburse to the Borrower such amount as the Lender shall certify to be the
proportion of such credit or remission as will leave the Lender (after such
reimbursement) in no worse position than it would have been had no increase been
required under Clause 6.2.(a) or, as the case may be, no payment has been required
under Clause 8, provided that this would not oblige the Lender to disclose to the
Borrower any information regarding its tax affairs or computations;

If circumstances arise which would result in any payment to be made by the Borrower
pursuant to Clause 6.2, 6.3 or 8, the Lender shall notify the Borrower as soon as
reasonably practicable after becoming aware of such circumstances and shall, if
requested by the Borrower, and at the cost of the Borrower, make reasonable efforts
to communicate with the relevant tax, regulatory or prudent authority and to file any
document reasonably requested of it, to mitigate the effects of such circumstances;
provided, however, that the Lender shall, in no circumstances, be required to take any
action which, may be prejudicial to its business, operations, prospects or reputation or
undertake any material expense prior to being assured to its satisfaction that it will be
reimbursed therefore.

6.3 Withholding on Notes

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Upon becoming so aware, the Lender shall, as soon as reasonably practical, notify the
Borrower that the Lender has become obliged to make any withholding or deduction for or
on account of any Taxes from any payment which the Lender is obliged to make under or in
respect of the Notes, and provide the Borrower with a certificate describing in reasonable
detail the basis for such withholding or deduction and setting out additional amounts required
to be paid by the Borrower to the Lender pursuant to this Clause 6.3. The Borrower agrees
to pay into the Lender’s Account on the date on which payment is due to the Noteholders
such additional amounts as are equal to the additional amounts which the Lender would
have to pay in order that the net amounts received by the Noteholders, after such
withholding or deduction, will equal the respective amounts which would have been received
by the Noteholders in the absence of such withholding or deduction; provided, however, that
the Lender shall immediately upon receipt by the Lender of any reimbursement of any sums
paid pursuant to this provision, to the extent that the Noteholders are not entitled to such
sums pursuant to the terms and conditions of the Notes, procure payment of such sums to
the Borrower (it being understood that neither the Lender, the Trustee, the Paying Agent nor
the Programme Agent shall have any obligation to determine whether any Noteholder is
entitled to any such additional amount).

CONDITIONS PRECEDENT

7.1

Documents to be delivered

The obligation of the Lender to make the Advance shall be subject to the receipt by the
Lender on or before the Closing Date of the executed copies of legal opinions of Lovells
regarding issues of Russian law, Dutch law and taxation, and English law, each dated the
Closing Date and in the Agreed Form.

7.2

Further Conditions

The obligation of the Lender to make the Advance shall be subject to the further conditions
precedent that as at the Closing Date:

(a)

(b)

(c)

the representations and warranties made and given by the Borrower in Clause 9
shall be true and accurate as if made and given on the Closing Date with respect to
the facts and circumstances then existing;

no event shall have occurred that constitutes, or that, with the giving of notice or the
lapse of time, or both, would constitute, an Event of Default;

the Borrower shall not be in breach of any of the terms, conditions and provisions of
this Agreement;

(d)

each of:

(i)

(ii)

the Prospectus;

the Supplemental Trust Deed; and

(iii)

the Fees and Expenses Side Letter,

shall have been executed and delivered;

(e)

(f)

the Lender is satisfied with the amount of commitments that the Lender and the Lead
Arranger have received from potential investors into the Notes; and

the Lender has confirmed to the Borrower receipt of all the documents listed in
Schedule 1 hereto in form and substance, satisfactory to the Lender, and the

completion of all other conditions precedent as set out in this Clause 7.2, save as the
Lender and the Lead Arranger may jointly otherwise agree.

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CHANGE IN LAW OR PRACTICES; INCREASE IN COST

8.1

Compensation

If by reason of any change in or introduction of any tax, law, regulation, regulatory
requirement or official directive (whether or not having the force of law but, if not having the
force of law, the observance of which is in accordance with the generally accepted financial
practice of financial institutions in the country concerned) or in the interpretation or
application thereof by any Person charged with the administration thereof and/or any
compliance by the Lender in respect of the Loan, the Facility or the Notes with any request,
policy or guideline (whether or not having the force of law but, if not having the force of law,
the observances of which is in accordance with the generally accepted financial practice of
financial institutions in the country concerned) from or of any central or other fiscal, monetary
or other authority, agency or any official of any such authority (including for the avoidance of
doubt, any recommendations regarding capital adequacy standards published by the Basle
Committee on Banking Regulations and Supervisory Practices at the Bank for International
Settlements), in all cases occurring after the date of this Agreement:

(a)

(b)

(c)

the cost to the Lender of making, funding or maintaining the Loan or the Facility is
increased; or

the amount of principal, interest or other amount payable to or received by the
Lender hereunder is reduced; or

the Lender makes any payment or foregoes any interest or other return on or
calculated by reference to the gross amount of any sum receivable by it from the
Borrower hereunder or makes any payment or foregoes any interest or other return
on or calculated by reference to the gross amount of the Loan,

then subject to the following, and in each such case:

(i)

(ii)

the Lender shall, as soon as practicable after becoming aware of such
increased cost, reduced amount or payment made or foregone, give written
notice to the Borrower together with a certificate describing in reasonable
detail the introduction or change or request which has occurred and the
country or jurisdiction concerned and the nature and date thereof and
demonstrating the connection between such introduction, change or request
and such increased cost, reduced amount or payment made or foregone, and
all relevant supporting documents evidencing the matters set out in such
certificates, provided, however, that in the case of sub-Clause 8.1 (c), the
amount of such increased cost shall be deemed not to exceed an amount
equal to the proportion thereof which is directly attributable to this Agreement;

upon demand by the Lender to the Borrower, the Borrower, in the case of
Clauses (a) and (c) above, shall within five (5) Business Days pay to the
Lender such additional amount as shall be necessary to compensate the
Lender for such increased cost, and, in the case of Clause (b) above, at the
time the amount so reduced would otherwise have been payable, pay to the
Lender such additional amount as shall be necessary to compensate the
Lender for such reduction, payment or foregone interest or other return.

8.2

Exceptions

Clause 8.1 does not apply to the extent that any increased cost referred to in Clause 8.1(a),
any reduction referred to in Clause 8.1(b) or any additional cost or a reduction in the return

referred to in Clause 8.1(c) is:

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(a)

attributable to any Taxes referred to in Clause 6.2.(a) or Clause 6.3;

(b)

attributable to any Taxes payable by the Lender on its overall net income; or

(c)

attributable to the wilful breach by the Lender of any law or regulation.

REPRESENTATIONS AND WARRANTIES

9.1

The Borrower’s Representations and Warranties

The Borrower represents and warrants to the Lender, with the intent that such
representations and warranties shall form the basis of this Agreement and shall remain in full
force and effect at the date hereof and shall be deemed to be repeated by the Borrower by
reference to the facts and circumstances then existing on the Closing Date and on each
Interest Payment Date as if made at each such time, that:

(a)

it and each member of the Core Group is duly organised and incorporated and validly
existing under the laws of its respective jurisdiction of incorporation and has the
power and legal right to own its property, to conduct its business as currently
conducted and, in the case of the Borrower only, to enter into and to perform its
obligations under this Agreement and to borrow the Advance; the Borrower has
taken all necessary corporate, legal and other action required to authorise the
borrowing of the Advance on the terms and subject to the conditions of this
Agreement and to authorise the execution and delivery of this Agreement and all
other documents to be executed and delivered by it in connection with this
Agreement, and the performance of this Agreement in accordance with their
respective terms;

(b)

this Agreement has been duly executed and delivered by the Borrower and
constitutes legal, valid and binding obligations of the Borrower enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium
and similar laws affecting creditors’ rights generally, and subject, as to enforceability,
to general principles of equity and other mandatory legal requirements;

(c)

the execution, delivery and performance of this Agreement by the Borrower will not
conflict with or result in any breach or violation of:

(i)

any law or regulation or any order of any governmental, judicial or public
body or authority in The Netherlands and/or the Russian Federation;

(ii)

the constitutive documents, rules and regulations of the Borrower; or

(iii)

to the best of the Borrower’s knowledge after due inquiry, any agreement or
other undertaking or instrument to which the Borrower or any other member
of the Core Group is a party or which is binding upon the Borrower or any
other member of the Core Group or any of their respective assets, nor result
in the creation or imposition of any Encumbrance on any of their respective
assets pursuant to the provisions of any such agreement or other undertaking
or instrument;

(d)

all consents, licences, notifications, authorisations or approvals of, or filings with, any
governmental, judicial or public bodies or authorities of the Russian Federation
required from the Borrower in connection with the execution, delivery, performance,
legality, validity, enforceability, or admissibility in evidence of this Agreement have
been obtained or effected and are and shall remain in full force and effect;

(e)

(f)

(g)

(h)

(i)

(j)

no Default under this Agreement has occurred and is continuing, and no Default will
occur upon the making of the Advance;

– 100 –

no Default under the agreement or instrument evidencing any Indebtedness of the
Borrower or any other member of the Core Group has occurred and is continuing
where such default is likely to have a Material Adverse Effect, and no such default
will occur upon the making of the Advance;

there are no judicial, arbitral or administrative actions, proceedings or claims which
have been commenced or are, to the knowledge of the Borrower, threatened, against
the Borrower or any other Core Group member, the adverse determination of which
is likely to have a Material Adverse Effect;

except for Permitted Encumbrances, the Borrower and each other member of the
Core Group owns its property free and clear of all Encumbrances;

no member of the Core Group has or owes any Borrowings other than Permitted
Borrowings;

the Borrower’s obligations under the Loan rank at least pari passu with all its other
unsecured and unsubordinated Indebtedness;

(k)

the most recent audited financial statements of the Group:

(i)

(ii)

(iii)

were prepared in accordance with IFRS and applicable law;

disclose all liabilities (contingent or otherwise) and all unrealised or
anticipated losses of the Group; and

present fairly in all material respects the assets and liabilities as at that date
and the results of operations of the Borrower during the relevant financial
year;

(l)

there has been no material adverse change since 31 December 2007 (the date on
which the reviewed financial statements of the Group were prepared) in:

(i)

the condition (financial or otherwise), results of business, operations or
prospects of the Borrower or the Core Group; or

(ii)

the ability of the Borrower to perform its obligations under this Agreement;

(m)

(n)

(o)

(p)

the execution, delivery and enforceability of this Agreement is not subject to any tax,
duty, fee or other charge, including, without limitation, any registration or transfer tax,
stamp duty or similar levy, imposed by or with the Russian Federation or any political
subdivision or taxing authority thereof or therein and it is not necessary that this
Agreement be filed, recorded or enrolled with any court or other authority in such
jurisdiction;

neither the Borrower nor its property has any right of immunity from suit, execution,
attachment or other legal process on the grounds of sovereignty or otherwise in
respect of any action or proceeding relating in any way to this Agreement;

the Borrower and each other member of the Core Group are in compliance in all
material respects with all applicable provisions of law;

there are no strikes or other employment disputes against the Borrower or any other
member of the Core Group which have been started or are, to the Borrower’s
knowledge, threatened;

(q)

(r)

(s)

(t)

(u)

(v)

(w)

(x)

– 101 –

in any proceedings taken in the Russian Federation in relation to this Agreement, the
choice of English law as the governing law of this Agreement and any arbitration
award obtained in England in relation thereto will be recognised and enforced in the
Russian Federation after compliance with the applicable procedural rules and all
other legal requirements in the Russian Federation;

to the best of the Borrower’s knowledge after due inquiry, no withholding in respect of
any Taxes is required to be made from any payment by the Borrower under this
Agreement;

licences, consents, examinations, clearances,

registrations and
all
authorisations which are necessary to enable the Borrower and any other member of
the Core Group to own their assets and carry on their businesses are in full force and
effect;

filings,

with respect to the offer and sale of the Notes pursuant to the Distribution
Agreement, (i) neither the Borrower nor any of its Affiliates nor any Person acting on
its or their behalf has engaged or will engage in any directed selling efforts (as
defined in Regulation S under the U.S. Securities Act of 1933 (“Regulation S”)) and
(ii) the Borrower, its Affiliates and any Person acting on its or their behalf have
complied and will comply with the offering restrictions requirement of Regulation S;

None of the Borrower, any of its Subsidiaries and, to the best of the Borrower’s
knowledge after due and careful enquiry, any director, officer, agent, employee or
affiliate of the Borrower or any of its Subsidiaries is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S.
Department of the Treasury (“OFAC”); the Borrower will not directly or indirectly use
the proceeds of the Loan, or lend, contribute or otherwise make available such
proceeds to any Subsidiary, joint venture partner or other person or entity, for the
purpose of financing the activities of any person currently subject to any U.S.
sanctions administered by OFAC or in violation of the U.S. International Emergency
Economic Powers Act (as amended), or any of the foreign assets control regulations
of the U.S. Department of the Treasury (as modified in 31 CFR, Subtitle B, Chapter
V, as amended) or any enabling legislation or executive order relating thereto;

the Borrower and each other member of the Core Group (i) has duly complied with,
and has operated, used and only permitted the use of all properties and businesses
owned, leased, occupied or operated by it in compliance with, all Environmental
Laws, failure to comply with which would have a Material Adverse Effect, (ii) is not
aware that any property or business now owned, leased, occupied or operated by it
is contaminated by or used in connection with, any Material of Environmental
Concern, (iii) has not received any written notice of any violation or alleged violation
of any provision of any Environmental Law for which the Borrower can reasonably be
expected to be held responsible and which, if adversely determined, would have a
Material Adverse Effect and (iii) to the best of its knowledge, has no obligations or
liabilities, contingent or absolute, relating to the use, possession, collection, storage,
processing, treatment, emission, release, discharge, disposal, transfer or transport of
Materials of Environmental Concern, or the remediation of any of the foregoing;

it is subject to civil and commercial law with respect to its obligations under this
Agreement, and its execution of this Agreement constitutes, and its exercise of its
rights and performance of its obligations hereunder will constitute, private and
commercial acts done and performed for private and commercial purposes;

all written information supplied by the Borrower and any of its Core Group members
to the Lender or the Lead Arranger in connection with this transaction is true and
accurate as at the date it was given and is not misleading whether by omission or

otherwise;

– 102 –

(y)

(z)

(aa)

the factual information contained in or appendixeded to the Prospectus is true,
complete and accurate in all material respects, the financial projections contained in
the Prospectus have been prepared on the basis of recent historical information and
on the basis of reasonable assumptions and nothing has occurred or been omitted
that renders the said information untrue or misleading;

neither it nor any other member of the Core Group, has overdue tax liabilities which
(i) exceed ten (10) per cent. of the total assets of such company as reported in its
last RAS balance sheet and (ii) would have a Material Adverse Effect; and

no withdrawable funds are obained, held or attracted by the Borrower directly or
indirectly from parties incoroporated or resident within The Netherlands other than
from the Lender, Professional Market Parties or the Closed Circle.

10.

COVENANTS

The covenants in this Clause remain in force from the date of this Agreement for so long as
any amount is outstanding under the Issue Documents.

10.1 Negative Pledge

(a)

The Borrower shall not (and the Borrower shall ensure that no other Core Group
member shall) create or permit to subsist any Encumbrances over any of their
respective assets.

(b)

The provisions of sub-Clause 10.1.(a) do not apply to Permitted Encumbrances.

10.2 Maintenance of Authorisation

The Borrower shall:

(a)

(b)

(c)

take all necessary action to obtain, and do or cause to be done all things reasonably
necessary to ensure the continuance of, all consents, licences, approvals and
authorisations which are at any time required to be obtained or made in the Russian
Federation for the conduct of its business and the execution, delivery or performance
of this Agreement or for the validity or enforceability thereof;

make or cause to be made all registrations, recordings and filings which are at any
time required to be obtained or made in the Russian Federation for the execution,
delivery or performance of this Agreement or for the validity or enforceability thereof;
and

supply certified copies to the Lender of any consent, licence, approval, authorisation,
registration, recording or filing obtained or made pursuant to sub-Clauses 10.2.(a)
and 10.2.(b).

10.3 Mergers

Subject to sub-Clause 10.4:

(a)

(b)

The Borrower shall not enter into any reorganisation, whether by way of a merger,
accession, division or separation, as these terms are construed by applicable law, or
otherwise, except with the prior written consent of the Lender; and

The Borrower shall ensure that no other Core Group member enters into any
reorganisation, whether by way of a merger, accession, division, separation or
transformation, as these terms are construed by applicable law, or participates in any

- 103 –
other type of corporate reconstruction.

10.4 Disposals by Group

The Borrower shall ensure that neither it nor any other member of the Core Group shall sell,
lease, transfer or otherwise dispose of, to a Person that is not a member of the Group, by
one or more transactions or series of transactions (whether related or not), the whole or any
part of its revenues or its assets if such sale, lease, transfer or disposal is likely to have a
Material Adverse Effect.

10.5 Transactions with Affiliates

The Borrower shall not, and shall not permit any other member of the Group, to directly or
indirectly, conduct any business, enter into or permit to exist any transaction or series of
related transactions (including the purchase, sale, transfer, assignment, lease, conveyance
or exchange of any property or the rendering of any service) with, or for the benefit of, any
Affiliate (an “Affiliate Transaction”) including intercompany loans, unless (a) the terms of
such Affiliate Transaction are no less favourable to the Borrower or such Group member, as
the case may be, than those that could be obtained in a comparable arm’s-length transaction
with a Person that is not an Affiliate of the Borrower or such Group member; or (b) such
Affiliate Transaction is made pursuant to a contract existing on the Closing Date (excluding
any amendments or modifications thereof made after the Closing Date).

This sub-Clause 10.5 shall not apply to (i) compensation or employee benefit arrangements
with any officer or director of the Borrower or such Group member arising as a result of their
employment contract or (ii) transactions between the Borrower and any Group member or
between such Group members.

10.6 Maintenance of Property

The Borrower shall (and shall procure that each other Core Group member shall) cause all
material property used in the conduct of its business to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment and shall
cause to be made all such repairs, renewals, replacements and improvements thereof as
are, in the judgement of the Borrower or the relevant Core Group member, reasonably
necessary to enable the business of the Borrower, or, as the case may be, the relevant Core
Group member, carried on in connection therewith to be properly conducted at all times.

10.7 Payment of Taxes and Other Claims

The Borrower shall (and shall ensure that all members of the Core Group shall) pay or
discharge or cause to be paid or discharged, before the same shall become overdue and
without incurring penalties, (a) all taxes, assessments and governmental charges levied or
imposed upon, or upon the income, profits or property of the Borrower or all members of the
Core Group and (b) all lawful claims for labour, materials and supplies which, if unpaid,
would by law become an Encumbrance (other than a Permitted Encumbrance) upon the
property of the Borrower or any members of the Core Group; provided that neither the
Borrower nor any members of the Core Group shall be required to pay or discharge or cause
to be paid or discharged any such tax, assessment, charge or claim (i) whose amount,
applicability or validity is being contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with RAS or other appropriate provision have been
made and (ii) whose amount, together with all such other unpaid or undischarged taxes,
assessments, charges and claims, does not in the aggregate exceed U.S.$1,000,000 (one
million) (or the equivalent thereof in any other currency).

10.8 Maintenance of Insurance

Each Core Group member shall keep those of their material properties which are of an

- 104 –

insurable nature insured with insurers, reasonably believed by such Core Group member to
be of good standing, against loss or damage to the extent that property of similar character
is usually so insured by corporations in the same jurisdictions similarly situated, owning like
properties in the same jurisdictions and operating similar businesses.

10.9 Financial Information

(a)

(b)

(c)

The Borrower shall deliver to the Lender and the Lead Arranger as soon as
practicable but no later than within seven (7) months after the end of each of its
financial years, copies of the Group’s audited financial statements for such financial
year, prepared in accordance with IFRS consistently applied with the corresponding
financial statements for the preceding period.

The Borrower shall deliver to the Lender and the Lead Arranger as soon as
practicable but no later than within 60 (sixty) days after the end of the first half-year of
each of its financial years, copies of the Group’s reviewed financial statements for
that half-year, prepared in accordance with RAS consistently applied with the
corresponding financial statements for the preceding period.

The Borrower shall deliver to the Lender and the Lead Arranger, without undue
delay, such additional information regarding the financial position or the business of
the Borrower and the Core Group as the Lender may reasonably request including
providing to the Lender and the Lead Arranger, promptly upon becoming aware of
them, the details of any litigation, arbitration or administrative proceedings which are
current, threatened or pending against any member of the Core Group, and which, if
adversely determined, are likely to have a Material Adverse Effect.

10.10 Compliance Certificates

On each Interest Payment Date (other than the final Interest Payment Date that falls on the
Repayment Date) or promptly upon request by the Lender (and in any event within fifteen
(15) Business Days after such request), the Borrower shall deliver to the Lender written
notice in the form of an Officer’s Certificate stating whether any Default or Event of Default
has occurred and, if it has occurred, what action the Borrower is taking or proposes to take
with respect thereto.

10.11 Restricted Payments, etc.

The Borrower shall not (and shall ensure that no Core Group member shall) reduce its share
capital or make a distribution of assets (other than by way of payment of duly declared
dividends) if such reduction or distribution is reasonably likely to result in a Material Adverse
Effect.

10.12 Change of business

The Borrower shall procure that no material change is made to the general nature of the
business of the Borrower or any other Core Group member from that carried on at the date
of this Agreement.

10.13 Books and Records

The Borrower shall, and shall ensure that all other members of the Core Group shall, keep
books and records which accurately reflect in all material respects all of its business affairs
and transactions as required by applicable law, IFRS and RAS, and, while any amount is
outstanding under
its respective
representatives, at reasonable times and intervals, to visit all of its offices, to discuss its
financial matters with its officers and to examine such books and records, provided that two
(2) Business Days prior notice is given to the Borrower.

the Lender or any of

this Agreement, permit

10.14 Accounting Matters; Financial Year

– 105 –

The Borrower shall not make or permit and shall ensure that no other member of the Core
Group shall make or permit, any change in its accounting policies, reporting practices or its
financial year, except as required or permitted by applicable law or RAS.

10.15 Compliance with laws

The Borrower shall, and shall ensure that each member of the Core Group shall, comply in
all material respects with all laws to which it may be subject, if failure so to comply would
impair its ability to perform its obligations under the Issue Documents.

10.16 Ranking of Claims

The Borrower shall ensure that at all times the claims of the Lender against it under this
Agreement rank at least pari passu with the claims of all its other unsecured creditors save
those whose claims are preferred by any bankruptcy, insolvency, liquidation or similar laws
of general application.

10.17 Financial Covenants

The Borrower shall procure that for as long as any amount remains outstanding hereunder
the Consolidated Tangible Net Worth shall not at any time be less than U.S.$400,000,000
(four hundred million Dollars).

10.18

Investments

The Borrower shall not, and shall not permit any member of the Core Group to, make, incur,
assume or suffer to exist any investments in any other Person, except”

(a)

(b)

in the ordinary course of business, investments in any of their respective
Subsidiaries, or by any such Subsidiary in any of its Subsidiaries, by way of
contributions to capital or loans or advances; or

any investments by any Core Group member in Capital Stock of a Person in
aggregate amount at any one time not exceeding 20 (twenty) per cent. of the total
value of the assets of the Group as shown in the latest audited financial statements
of the Group.

11.

EVENTS OF DEFAULT

11.1 Events of Default

If one or more of the following events of default (each, an “Event of Default”) shall occur
and be continuing, the Lender shall be entitled to the remedies set forth in sub-Clause 11.3.

(a)

Failure to Pay: The Borrower fails to pay any amount payable hereunder (in the
currency and in the manner specified herein) on the date on which such payment is
due hereunder or within two (2) Business Days of such date where the Borrower fails
to pay due to an error in the transmission of funds which was not the fault of the
Borrower.

(b)

Non-Performance, Termination or Repudiation of this Agreement:

(i)

The Borrower fails to duly perform or comply with any of its obligations
expressed to be assumed by it in this where such Default (if in the Lender’s
opinion capable of remedy) is not remedied within five (5) Business Days ; or

(ii)

Any provision of this Agreement is cancelled, suspended (including, without

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limitation, by reason of force majeure), terminated or revoked, or ceases to
be legal, valid, binding and enforceable on and against the Borrower; or

(iii)

The Borrower repudiates an Issue Document, or does or causes to be done
any act or thing evidencing an intention to repudiate an Issue Document.

(c)

Misrepresentation: Any representation or warranty of the Borrower or any statement
deemed to be made by the Borrower in this Agreement or any other document,
certificate or notice delivered by the Borrower in connection with this Agreement or
the issue of the Notes, the Distribution Agreement, the Agency Agreement or the
Prospectus proves to have been inaccurate, incomplete or misleading in any material
respect at the time it was made or repeated or deemed to have been made or
repeated.

(d)

Cross-default:

Any Indebtedness of the Borrower or any Core Group member is not paid when due,
or any Indebtedness of the Borrower or any Core Group member is declared to be or
otherwise becomes due and payable prior to its specified maturity otherwise than at
the option of the Borrower or such Core Group member;

(e)

Bankruptcy Proceedings against Core Group members incorporated under the
laws of the Russian Federation: The occurrence of any of the following events in
relation to any Core Group members incorporated under the laws of the Russian
Federation:

(i)

(ii)

(iii)

(iv)

(v)

any Core Group member seeking, consenting or acquiescing in the
introduction of proceedings
the
its
appointment of a liquidation commission (likvidatsionnaya komissiya) or a
similar officer of any Core Group member;

liquidation or bankruptcy or

for

the acceptance by a court of a petition in respect of any Core Group member
in any court, arbitration court or before any agency alleging, or for, the
(or any analogous
bankruptcy,
proceedings) of such Core Group member, unless such petition is contested
by such Core Group member in good faith within seven (7) days of the
acceptance by the court of the petition;

insolvency, dissolution,

liquidation

the institution of the supervision (nablyudeniye), financial rehabilitation
(finansovoye ozdorovlenye), external management (vneshneye upravleniye),
or bankruptcy management (konkursnoye proizvodstvo), as the above terms
are defined in Federal Law No. 127-FZ “On Insolvency (Bankruptcy)” of 26
October 2002 of the Russian Federation (as amended or replaced from time
to time) with respect to the Borrower;

the freezing of or a moratorium being decreed in respect of 5 per cent. or
more of the Core Group’s assets or contractual obligations (by nominal value)
where it is likely to have, in the opinion of the Lender, a Material Adverse
Effect;

the entry by any Core Group member or the agreeing by any Core Group
member to enter into, amicable settlement (mirovoe soglashenie ) with its
creditors, as the above term is defined in Federal Law No. 127-FZ “On
Insolvency (Bankruptcy)” of 26 October 2002 of the Russian Federation (as
amended or replaced from time to time);

(vi)

any extra-judicial liquidation or analogous act in respect of any Core Group
member by any governmental, regulatory or supervisory body in or of the

Russian Federation, or in any relevant jurisdiction; or

– 107 –

(vii)

any act of the competent body in any relevant jurisdiction in relation to any
Core Group member having the effect of the events described in paragraphs
(i) to (v) above.

(f)

Bankruptcy Proceedings against other Core Group members: Any corporate
action, legal proceedings or other procedure or step is taken in relation to any Core
Group member not incorporated under the laws of the Russian Federation:

(i)

(ii)

(iii)

the suspension of payments, a moratorium of any indebtedness, winding-up,
dissolution, administration or
(by way of voluntary
arrangement, scheme of arrangement or otherwise) of such Core Group
member;

reorganisation

a composition, compromise, assignment or arrangement with any creditor of
such Core Group member;

the appointment of a liquidator, receiver, administrator, administrative
receiver, compulsory manager or other similar officer in respect of such Core
Group member or any of its assets; or

(iv)

enforcement of any Encumbrance over any material assets of such Core
Group member,

or any analogous procedure or step is taken in any jurisdiction.

(g)

Insolvency and Rescheduling: Any member of the Core Group:

(i)

(ii)

(iii)

(iv)

(v)

(vi)

admits its inability to pay its debts as they fall due; or

ceases or suspends payment on all or any class of its debts (or announces
an intention to do so) or is unable to pay its debts generally or is deemed
unable to pay its debts generally; or

commences, or announces an intention to commence, negotiations with its
creditors with a view to the general readjustment or rescheduling of all or any
class of its Indebtedness; or

enters into any composition, assignment or other arrangement for the benefit
of its creditors generally or any class of creditors; or

is the subject of any voluntary or involuntary proceedings under any law
relating to reconstruction or readjustment of its debts; or

takes any corporate action, legal proceedings or other procedure or step for a
moratorium of all or any class of its Indebtedness.

(h)

(i)

Execution or Distress: Any distress, attachment, sequestration, execution or other
legal process is levied against, or an encumbrancer takes possession of or sells, the
whole or any part of, the property, undertaking, revenues or assets of the Borrower
or any member of the Core Group, which has a Material Adverse Effect.

Expropriation: At any time after the date of this Agreement by any competent
authority of any government any authorised body appointed pursuant to the charter
of any Core Group member is wholly or partially displaced or the authority of any
Core Group member in the conduct of a material portion of its business is wholly or
partially curtailed.

(j)

Revocation of Consents, Licences and Authorisations: At any time any law,
regulation, decree, licence, approval, act, condition or thing required to be done,
fulfilled or performed in order.

– 108 –

(i)

(ii)

to enable the Borrower lawfully to enter into, exercise their respective rights
under and perform and comply with the obligations expressed to be assumed
by them in this Agreement;

to ensure that the obligations expressed to be assumed by the Borrower in
this Agreement are legal, valid, binding and enforceable in accordance with
their terms; or

(iii)

to make this Agreement admissible in evidence in any relevant court,

is not done, fulfilled, performed or expires or is terminated, withheld or revoked.

(k)

(l)

(m)

(n)

(o)

Illegality: At any time it is or becomes unlawful for the Borrower to perform or comply
with any or all of its obligations under this Agreement or any of such obligations is
not, or ceases to be, legal, valid, binding and enforceable.

Litigation: Any governmental authority or court takes any action that, in the opinion
of the Lender, materially and adversely affects the condition of the Borrower or the
ability of the Borrower to perform its obligations under this Agreement or adversely
affects the validity or enforceability of this Agreement or the rights or remedies of the
Lender under this Agreement.

Dissolution: The shareholders of the Borrower shall have approved any plan of
liquidation or dissolution of the Borrower.

Charter: The charter of the Borrower is amended in a way which would contravene
or result in a contravention of any of the provisions of this Agreement, and/or would
have, in the opinion of the Lender, a Material Adverse Effect.

Enforcement of Judgments: The aggregate amount of unsatisfied judgements,
decrees or orders of courts or other appropriate law-enforcement bodies for the
payment of money against the Borrower or any other member of the Core Group in
the aggregate exceeds U.S.$ 10,000,000 (ten million) or the equivalent thereof in any
other currency or currencies;

(p)

Foreign Exchange Restrictions:

(i)

Any foreign exchange law is enacted or introduced or in the reasonable
opinion of the Lender is threatened to be enacted or introduced in the
Russian Federation (or any unit thereof exercising jurisdiction over the
Borrower or any of its respective assets) which has or may reasonably be
expected to have in the opinion of the Lender, the effect of prohibiting,
restricting or delaying any payment that the Borrower is required to make
pursuant to the terms of this Agreement or which in the opinion of the Lender
is prejudicial to the interests of the Lender under or in connection with this
Agreement; or

(ii)

A moratorium is established on the payment of interest or repayment of
principal on international debts of Russian borrowers or guarantors (sureties)
generally or a class thereof into which the Borrower falls.

(q)

Political and Economic Deterioration: A deterioration occurs in the political or
economic situation in the Russian Federation or an act of war or hostilities, invasion,
armed conflict or act of foreign enemy, revolution, insurrection, insurgency or threat

thereof occurs in or involving the Russian Federation which (in any such case) is
likely to have, in the reasonable opinion of the Lender, a Material Adverse Effect.

– 109 –

(r)

(s)

(t)

Material Adverse Effect: Any event or circumstance not otherwise specified in this
Clause 11 occurs which, in the reasonable opinion of the Lender, has or is likely to
have a Material Adverse Effect including any destruction or damage to all or a
material part of any of the Core Group’s assets by an event of force majeure or
otherwise.

Ceasing Business: Any Core Group member ceases to carry on the principal
business it carries on as at the date of this Agreement.

Analogous Events: Any event occurs which under the laws of any relevant
jurisdiction has an analogous effect to any of the events referred to in any of the
foregoing paragraphs.

11.2 Notice of Default

The Borrower shall deliver to the Lender with a copy to each Person named in Clause 14.4,
within seven (7) Business Days after the occurrence thereof, written notice in the form of an
Officers’ Certificate of any event which is, or with the giving of notice or the lapse of time, or
both, would become, an Event of Default, its status and what action the Borrower is taking or
proposes to take with respect thereto.

11.3 Default Remedies

If any Event of Default shall occur and be continuing, the Lender may, by notice in writing to
the Borrower:

(a)

(b)

declare the obligations of the Lender hereunder to be terminated, whereupon such
obligations shall terminate; and

declare all amounts payable hereunder by the Borrower that would otherwise be due
after the date of such termination to be immediately due and payable (provided that
any interest shall be payable only in the amount as accrued on the date on which the
payment is made in accordance with this clause 11.3(b)), whereupon all such
amounts shall become immediately due and payable, all without diligence,
presentment, demand of payment, protest or notice of any kind, which are expressly
waived by the Borrower;

provided, however, that if any event of any kind referred to in sub-Clause 11.1 (f) occurs, the
obligations of the Lender hereunder shall immediately terminate, and all amounts payable
hereunder by the Borrower that would otherwise be due after the occurrence of such event
shall become immediately due and payable, all without diligence, presentment, demand of
payment, protest or notice of any kind, which are expressly waived by the Borrower.

11.4 Right of Set off

If any amount payable hereunder is not paid as and when due, the Borrower authorises the
Lender and each Affiliate of the Lender to proceed, to the fullest extent permitted by
applicable law, without prior notice, by right of set off, banker’s lien, counterclaim or
otherwise, against any assets of the Borrower in any currency that may at any time be in the
possession of the Lender or such Affiliate, at any branch or office, to the full extent of all
amounts payable to the Lender hereunder.

12.

INDEMNITY

12.1

Indemnification

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The Borrower undertakes to the Lender, that if the Lender or any of its Affiliates, any
director, officer or employee of the Lender or any Person controlling the Lender (each a
“relevant party”) properly incurs any loss, liability, cost, claim, charge, expense (including,
without limitation, legal fees, costs and expenses), demand or damage (each, a “Loss”) as a
result of or in connection with the Loan, this Agreement (or enforcement of any of them),
and/or the issue, constitution, sale, and/or enforcement of the Notes and/or the Notes being
outstanding (excluding any loss that may arise as a result of the Indemnities contained in
Clauses 8, 13, 14.2 and 14.7 (it being understood that the Lender may not recover twice in
respect of the same loss)) the Borrower shall pay to the Lender on demand an amount equal
to such Loss and all costs, charges and expenses which it or any relevant party may pay or
incur in connection with investigating, disputing or defending any such action or claim as
such costs, charges and expenses are incurred unless such Loss was either caused by such
relevant party’s gross negligence or wilful misconduct. The Lender shall not have any duty or
obligation whether as fiduciary or trustee for any relevant party or otherwise, to recover any
such payment or to account to any other Person for any amounts paid to it under this sub-
Clause.

12.2

Independent Obligation

Sub-Clause 12.1 constitutes a separate and independent obligation of the Borrower from its
other obligations under or in connection with this Agreement or any other obligations of the
Borrower in connection with the issue of the Notes by the Lender and shall not affect, or be
construed to affect, any other provision of this Agreement or any such other obligations.

12.3 Evidence of Loss

A certificate of the Lender setting forth the amount of a Loss and specifying in full detail the
basis therefor shall, in the absence of manifest error, be conclusive evidence of the amount
of such Loss.

12.4 Survival

The obligations of the Borrower pursuant to sub-Clauses 6.2, 6.3 and 12.1 shall survive the
execution and delivery of this Agreement, the drawdown of the Facility and the repayment of
the Loan, in each case by the Borrower.

13.

REIMBURSEMENT OF EXPENSES

13.1 Reimbursement of Front-end Expenses for the Extension of the Loan by the Borrower

The Borrower shall, subject to the terms contained in the Fees and Expenses Side Letter,
reimburse the Lender and the Lead Arranger in Dollars on demand for all reasonable costs
and expenses (documented to an extent which is reasonable in the circumstances) incurred
by the Lender and/or the Lead Arranger in connection with the negotiation, preparation and
execution of this Agreement and all related documents, the Notes and all related documents
including, without limitation, the fees and expenses of legal counsel.

13.2 Payment of Ongoing Expenses

In addition, the Borrower hereby agrees to pay to the Lender on demand in Dollars all
ongoing documented costs and expenses (including, without limitation, amendment costs
and enforcement costs), payable by the Lender under or in respect of this Agreement and
the Issue Documents, except for the negotiation, preparation and execution of the Issue
Documents. The Borrower shall also pay the Lender for any indemnification or other
payment obligations of the Lender under or in respect of the Issue Documents. Payments to
the Lender referred to in this sub-Clause 13.2 shall be made by the Borrower at least two (2)
Business Days before the relevant payment is to be made or expense incurred.

14.

GENERAL

14.1 Evidence of Debt

– 111 –

The entries made in the Borrower’s Account shall, in the absence of manifest error,
constitute conclusive evidence of the existence and amounts of the Borrower’s obligations
recorded therein.

14.2 Stamp Duties

(a)

(b)

The Borrower shall pay all stamp, registration and documentary taxes or similar
charges (if any) imposed by any Person in the Russian Federation, The Netherlands
or the United Kingdom which may be payable or determined to be payable in
connection with
transfer,
enforcement, or admissibility into evidence of this Agreement and shall indemnify the
Lender against any and all costs and expenses which may be incurred or suffered by
the Lender with respect to, or resulting from, delay or failure to pay such taxes or
similar charges.

the execution, delivery, performance, assignment,

The Borrower agrees that if the Lender incurs a liability to pay any stamp, registration
and documentary taxes or similar charges (if any) imposed by any Person in the
Russian Federation, The Netherlands or the United Kingdom which may be payable
or determined to be payable in connection with the execution, delivery, performance,
enforcement, or admissibility into evidence of this Agreement, the Borrower shall
reimburse the Lender on demand an amount equal to such stamp or other
documentary taxes or duties and shall indemnify the Lender against any and all costs
and expenses which may be incurred or suffered by the Lender with respect to, or
resulting from, delay or failure by the Borrower to procure the payment of such taxes
or similar charges.

14.3 Waivers

No failure to exercise and no delay in exercising, on the part of the Lender or the Borrower,
any right, power or privilege hereunder and no course of dealing between the Borrower and
the Lender shall operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege preclude any other or further exercise thereof, or the exercise of any
other right, power or privilege. The rights and remedies herein provided are cumulative and
not exclusive of any rights, or remedies provided by applicable law.

14.4 Notices

All notices, requests, demands or other communications to or upon the respective parties
hereto shall be given or made in the English language in writing and shall be deemed to
have been duly given or made at the time of delivery, if delivered by hand or courier or at the
time of dispatch if sent by facsimile transmission or seven (7) days after dispatch if sent by
airmail, to the party to which such notice, request, demand or other communication is
required or permitted to be given or made under this Agreement addressed as follows:

if to the Borrower:

Open Joint-Stock Company “Finance Leasing Company”
6, Makarenko Street, Building 1
Moscow 105062
Russian Federation
Tel.: +7 495 232 0630
Fax: + 7 495 232 0631
Attention: Konstantin Koledenko

- 112 –

if to the Lender:

Greenwich Avenue Finance B.V.
Locatellikade 1
1076 AZ Amsterdam
The Netherlands
Tel: +31 20 5755 600
Fax: +31 20 673 0016
Attention: Management Board

with a copy to the Trustee at:

BNY Corporate Trustee Services Limited
One Canada Square
London E14 5AL
United Kingdom
Fax: +44 (0) 20 7964 4272
Attention: Jason Blondell

and with a copy to the Lead Arranger at:

BCP Securities, LLC
289 Greenwich Avenue
Greenwich
CT 06830 USA
Tel.: +1 203 618 9359
Fax: +1 203 629 2188
Attention: James Harper

or to such other address or facsimile number as any party may hereafter specify in writing to
the other.

14.5 Assignment

(a)

(b)

(c)

This Agreement shall inure to the benefit of and be binding upon the parties, their
respective successors and any permitted assignee or transferee of some or all of a
party’s rights or obligations under this Agreement. Any reference in this Agreement to
any party shall be construed accordingly and, in particular, references to the exercise
of rights and discretions by the Lender, following the enforcement of the security
and/or assignment referred to in sub-Clause 14.5.(c) below, shall be references to
the exercise of such rights or discretions by the Lender or, as the case may be, the
Trustee.

The Borrower shall not assign or transfer all or any part of its rights or obligations
hereunder to any other party.

The Lender may at any time assign to any one or more third parties, this Agreement
or any of the Lender’s rights under this Agreement without the consent of the
Borrower, provided that:

(i)

the Lender may not assign any part of its rights to any other person if such
person is incorporated in the Netherlands;

(ii)

If the Lender assigns all of its rights under this Agreement to more than one

- 113 –

person it may not assign its rights to such persons if such persons are
incorporated or resident in The Netherlands, unless each of these persons
qualify as:

(1)

a Professional Market Party; and/or

(2)

a person belonging to the Closed Circle.

The Lender shall notify the Borrower of the assignment of its rights hereunder and
the Borrower hereby undertakes to acknowledge the receipt of such notice and to
continue performance of its obligations under this Agreement to the person or
persons specified in such notice.

(d)

As a waiver of any constraints imposed by data secrecy to that effect the Borrower
hereby gives its express consent for the processing, disclosure and submission by
the Lender of all information and data concerning the Borrower and/or any member
of the Core Group (including but not limited to information relating to its financial
standing and ability to service the Loan, balance sheets and other data relevant for
risk assessment) which become known to the Lender within the context of the
business relationship with the Borrower, or with any member of the Core Group. This
authorisation shall include the Lender’s employees, and any domestic or foreign
companies of the group of companies of which the Lender is part.

14.6 Confidentiality waiver

The Lender may disclose any information about the Borrower or any other Group member
and this Agreement as may be reasonably deemed by the Lender necessary for risk
assessment and other purposes to any Person (including its professional advisors):

(i)

(ii)

to (or through) whom the Lender assigns or transfers (or may potentially assign or
transfer) all or any of its rights, benefits and obligations under this Agreement;

with (or through) whom the Lender enters into (or may potentially enter into) any
arrangement in relation to, or any other transaction under which payments are to be
made by reference to, this Agreement or the Borrower; or

(iii)

being a subsidiary or holding company (or a subsidiary of a holding company) of the
Lender.

14.7 Currency Indemnity

The Dollar is the currency of account and (unless otherwise expressly provided) the currency
of the payment of any sum due from the Borrower under this Agreement. To the fullest
extent permitted by law, the obligation of the Borrower in respect of any amount due in
Dollars under this Agreement shall, notwithstanding any payment in any other currency
(whether pursuant to a judgment or otherwise), be discharged only to the extent of the
amount in Dollars that the party entitled to receive such payment may, in accordance with
normal banking procedures, purchase with the sum paid in such other currency (after any
premium and costs of exchange) on the Business Day immediately following the day on
which such party receives such payment. If the amount in Dollars that may be so purchased
for any reason falls short of the amount originally due, the Borrower hereby agrees to
indemnify and hold harmless the Lender against any deficiency in Dollars. Any obligation of
the Borrower not discharged by payment in Dollars shall, to the fullest extent permitted by
applicable law, be due as a separate and independent obligation and, until discharged as
provided herein, shall continue in full force and effect.

14.8 Prescription

- 114 –

Subject to the Lender having received the principal amount thereof or interest thereon from
the Borrower, the Lender shall forthwith repay to the Borrower the principal amount or the
interest amount thereon, respectively, of any Notes upon claims thereto becoming void
pursuant to Condition 11 of the Notes.

14.9 Contracts (Rights of Third Parties) Act 1999

A Person who is not a party to this Agreement has no right under the Contracts (Rights of
Third Parties) Act 1999 to enforce any term of this Agreement.

14.10 Choice of Law

This Agreement shall be governed by, and construed in accordance with, the laws of
England.

14.11 Jurisdiction

(a)

(b)

(c)

(d)

For the exclusive benefit of the other party, each of the Borrower and the Lender
hereby irrevocably agrees that the courts of England shall have jurisdiction to settle
any disputes which may arise out of or in connection with this Agreement and that
accordingly any suit, action or proceeding (collectively, “Proceedings”) arising out of
or in connection with this Agreement may be brought in such courts.

Each of the parties irrevocably waives any objection which it may now or hereafter
have to the bringing of any Proceedings in any such court referred to in this Clause
14 and any claim that any such Proceedings have been brought in an inconvenient
forum.

Nothing contained in this Agreement shall limit the right of any party to take
Proceedings against another party in any other court of competent jurisdiction to the
extent permitted by any applicable law, nor shall the taking of Proceedings in
connection with this Agreement in one or more jurisdictions preclude the taking of
Proceedings in any other jurisdiction or in any other court of competent jurisdiction in
connection with this Agreement to the extent permitted by any applicable law.

The Borrower hereby agrees that, at the option of the Lender, any controversy, claim
or cause of action brought by any party against another party or arising out of or
relating to this Agreement may be settled by arbitration in accordance with the Rules
of the LCIA (formerly the London Court of International Arbitration), which rules are
deemed to be incorporated by reference into this Clause. The place of arbitration
shall be London, England and the language of the arbitration shall be English. The
number of arbitrators shall be three, each of whom shall be disinterested in the
dispute or controversy, shall have no connection with any party thereto and shall be
an attorney experienced in international securities transactions. Each party shall
nominate an arbitrator, who, in turn, shall nominate the Chairman of the Tribunal. If a
dispute, controversy or cause of action shall involve more than two parties, the
parties thereto shall attempt to align themselves in two sides (i.e. claimant and
respondent) each of which shall appoint an arbitrator as if there were only two sides
to such dispute, controversy or cause of action. If such alignment and appointment
shall not have occurred within twenty (20) days after the initiating party serves the
arbitration demand or if a Chairman has not been selected within thirty (30) days of
the selection of the second arbitrator, the Arbitration Court of the LCIA shall appoint
the three arbitrators or the Chairman, as the case may be. The parties and the
Arbitration Court may appoint arbitrators from among the nationals of any country,
whether or not a party is a national of that country.

Fees of the arbitration (excluding each party’s preparation, travel, attorneys’ fees and

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similar costs) shall be borne in accordance with the decision of the arbitrators. The
decision of the arbitrators shall be final, binding and enforceable upon the parties and
judgment upon any award rendered by the arbitrators may be entered in any court
having jurisdiction thereover. In the event that the failure of a party to comply with the
decision of the arbitrators requires any other party to apply to any court for
enforcement of such award, the non-complying party shall be liable to the other for all
costs of such litigation, including reasonable attorneys’ fees.

(e)

The Borrower irrevocably appoints Law Debenture Corporate Services Limited at its
registered office at Fifth Floor, 100 Wood Street, London EC2V 7EX, England as its
authorised agent for service of process in England. If for any reason such agent shall
cease to be such agent for service of process, the Borrower shall forthwith, on
request of the Lender, appoint a new agent for service of process in England and
deliver to the Lender a copy of the new agent’s acceptance of that appointment
within thirty (30) days. Nothing in this Agreement shall affect the right to serve
process in any manner permitted by law.

14.12 Counterparts

This Agreement may be executed in any number of counterparts including by facsimile
(which shall be a valid means of execution) and all of such counterparts taken together shall
be deemed to constitute one and the same agreement.

14.13 Language

The language which governs the interpretation of this Agreement is the English language. If
this Agreement is translated into any other language, then in the event of any discrepancy
between the English language version and such other translation, the English language
version shall prevail.

14.14 Amendments

Except as otherwise provided by its terms, this Agreement may not be varied except by an
agreement in writing signed by the parties.

14.15 Partial Invalidity

The illegality, invalidity or unenforceability to any extent of any provision of this Agreement
under the law of any jurisdiction shall affect its legality, validity or enforceability in such
jurisdiction to such extent only and shall not affect its legality, validity or enforceability under
the law of any other jurisdiction, nor the legality, validity or enforceability of any other
provision.

In witness whereof, the parties hereto have caused this Agreement to be executed on the date first
written above.

For and on behalf of Open Joint-Stock Company “Finance Leasing Company”:

– 116 –
SIGNATURES

By:

Name:

Title:

By:

Name:

Title:

For and on behalf of Greenwich Avenue Finance B.V.

By:

Name:

Title:

By:

Name:

Title:

For and on behalf of BCP Securities, LLC

By:

Name:

Title:

By:

Name:

Title:

- 117 –
SCHEDULE 1

CONDITIONS PRECEDENT DOCUMENTS

BORROWER

1.1

1.2

1.3

Notarised copies of the constituent documents of the Borrower and any amendments
thereto, each duly registered.

A notarised copy of any certificates of registration of (i) the charter of the Borrower; and (ii)
any amendments to the charter of the Borrower in the Russian language.

An extract of the shareholders’ register of the Borrower certified by the registrar together with
details of the beneficial ownership of the entire issued share capital of the Borrower.

1.4

A notarised copy of the certificate of registration of the Borrower.

1.5

1.6

1.7

1.8

A notarised copy of the certificate of re-registration of the Borrower under Federal Law No.
129 – ФЗ of 8 August 2001.

A copy certified a true copy by an authorised signatory of the Borrower of all necessary
corporate resolutions of the Borrower in the Russian language authorising the execution and
performance of its obligations under the Loan Agreement and any related documents,
subject to items 1.7-1.8 below;

A copy certified a true copy by an authorised signatory of the Borrower of the resolution
approving the execution and performance by the Borrower of the Loan Agreement and any
related documents as an interested parties transaction, as defined in Article 81 of the Law on
Joint Stock Companies of the Russian Federation or, as the case may be, in Article 45 of the
Law on Limited Liability Companies of the Russian Federation (if applicable).

A copy certified a true copy by an authorised signatory of the Borrower and of the resolution
approving the execution and performance by the Borrower of the Loan Agreement and any
related documents as a major transaction, as defined in Article 78 of the Law on Joint Stock
Companies of the Russian Federation or, as the case may be, in Article 46 of the Law on
Limited Liability Companies of the Russian Federation (if applicable).

1.9

A copy certified a true copy by an authorised signatory of the Borrower, of the resolutions or
orders in the Russian language appointing the general director and the chief accountant of
the Borrower.

1.10 Notarised copies of powers of attorney in the Russian language in favour of the signatories
of the Borrower authorising execution of the Loan Agreement and any related agreements or
documents, duly executed by the general director of the Borrower save for such signatories
so authorised expressly by the charter of the Borrower.

1.11 A notarised original or a notarised copy of the notarised original in the Russian language of
the signature card of the Borrower with sample signatures of the signatories of the Borrower
to the Loan Agreement and any related documents.

1.12 A copy certified a true copy by an authorised signatory of the Borrower of the audited
financial statements of the Borrower, prepared in accordance with RAS, for the period
ending 31 December 2007.

1.13 A copy certified a true copy by an authorised signatory of the Borrower of the most recent

balance sheet of the Borrower filed with local tax authorities.

1.14 Written confirmation in the Russian language executed by the general director of the

Borrower stating that:

(a)

(b)

there has been no material adverse change since 31 December 2007 in the financial
condition of the Borrower; and

– 118 –

the documents provided under items 1.1 to 1.13 above are originals or copies of
current versions of such documents which are in full force and effect.

1.15 Evidence that the agent for service of process in England has been appointed in relation to

the Loan Agreement.

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SCHEDULE 2

CHANGE OF CONTROL EVENT NOTICE

Date: [●] 200[●]

To:

Greenwich Avenue Finance B.V. (as Lender)
Locatellikade 1
Parnassustoren
1076 AZ Amsterdam
The Netherlands

Dear Sirs,

Re: U.S.$150,000,000 Loan Agreement dated 30 June 2008 between Open Joint-Stock
Company “Finance Leasing Company” as Borrower, Greenwich Avenue Finance B.V as
Lender and BCP Securities, LLC as Lead Arranger (the “Agreement”)

In accordance with the provisions of clause 5.4 of the Agreement, we hereby give you notice that a
Change of Control Event (as defined in the Agreement) has occurred on [date].

Capitalised terms in this Change of Control Event Notice shall have the meanings ascribed to them
in the Agreement.

Any enquiries relating to the above should be directed to: [●].

(telephone: + [●] /Fax: + [●]).

Yours sincerely,

Open Joint-Stock Company “Finance Leasing Company”

- 120 –
APPENDIX 3
COMFORT LETTER FROM UAC

Building 1, 22 Ulansky Pereulok
Moscow 101000, P.O. Box 624

MOODY’S Investor Service Ltd

United Aircraft Corporation

No. ____

Dear Sirs,

Ref. No. 334 dated 22.02.2008

Comfort Letter

We, United Aircraft Corporation (Open Joint Stock Company), registered under the laws of the
Russian Federation and controlled by the Russian Government of the Russian Federation, acting on
behalf of the Russian Federation, hereby apply to you in connection with the intention of Financial
Leasing Company (Open Joint Stock Company), Moscow (hereinafter referred to as OAO “Finance-
Leasing”) to obtain a credit rating from Moody’s Investors Service Ltd.

With a view to assist OAO “Finance-Leasing” in its intention to obtain a credit rating from Moody’s
Investors Service Ltd., we, hereby, represent and ascertain the following:

1. In accordance with Decree No. 140 of the President of the Russian Federation dated 20
February 2006, Decree No. 122 of the President of the Russian Federation dated 3 February 2007,
Resolution of the Russian Government No. 224 dated 20 April 2006, and Resolution of the Russian
Government No. 119 dated 22 February 2007, we acquired 54,162,000 shares (representing 51.8
per cent. of the total amount of voting shares) in OAO “Finance-Leasing”.

As of 20 February 2008, we are the legal and beneficial owner of 51.8 per cent. of the voting shares
in OAO “Finance-Leasing”.

As a strategic shareholder, we currently intend to retain our controlling stake consisting of at least 50
per cent. plus one voting share. We do not plan to transfer our controlling shareholding in the
company, and we do not anticipate having any such plans in the future, since the investments in the
company complies with our strategic business objectives. We undertake to notify you forthwith of
any changes in such intentions, and to consult with you in advance of any potential changes in the
structure of the company’s shareholders.

2. We are concerned that OAO “Finance-Leasing” continues to conduct its business as a leasing
company in accordance with Russian legal requirements.

3. We are concerned that OAO “Finance-Leasing” and its subsidiaries timely perform their financial
obligations. In accordance with our principles, we are ready to provide the company with such
support and assistance as it may require to ensure the adequacy of its capital and liquidity
necessary to timely perform its financial obligations.

President,
Chairman of the Board of Directors

A.I. Fedorov

- 121 –
APPENDIX 4
COMFORT LETTER FROM THE TRANSPORT MINISTRY OF THE RUSSIAN FEDERATION

MOODY’S Investor Service Ltd

The Transport Ministry of the Russian Federation

1 Roghdestvenka, building 1, 109012, Moscow

telephone: (495) 626-10-00, fax: (495) 626-90-38

30.04.08 № IL – 21/3181

to №_________________ from____________

Dear Sirs

The Transport Ministry of the Russian Federation, which is responsible for the realisation of Russian
transport strategy, writes with reference to the intention of the open joint-stock company “Financial
Leasing Company” (“OJSC Finance-Lease”) to obtain a credit rating from Moody’s Investor Service
Ltd.

It is important to note that OJSC Finance-Lease is currently one of the leading companies in the
Russian aviation leasing sector. Aircraft and aviation equipment leasing together comprise 90 per
cent of OJSC Finance-Lease’s total leasing portfolio. More than 10 long haul Russian aircraft have
been built.

The Transport Ministry of the Russian Federation is concerned in OJSC Finance-Lease’s continued
activity as a leasing company in close cooperation with Russian airlines.

A credit rating for OJSC Finance-Lease, which is essential to attract credit, will contribute to the
development of civil aviation infrastructure of Russian Federation.

I.E. Levitin

- 122 –
INDEX TO THE FINANCIAL STATEMENTS

Financial Statements of Open Joint-Stock Company Finance Leasing Company as at and for
the year ended 31 December 2007

Financial Statements for the Year Ended 31 December 2006……………………………………………. 126

Financial Statements for the Year Ended 31 December 2007……………………………………………..151

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REGISTERED OFFICE OF THE ISSUER

– 178 –

Greenwich Avenue Finance B.V.
Parnassustoren,
Locatellikade 1
1076 AZ Amsterdam
The Netherlands

ARRANGER AND DEALER
BCP Securities, LLC
289 Greenwich Avenue
Greenwich
CT 06830 USA

TRUSTEE
BNY Corporate Trustee Services Limited
One Canada Square,
London E14 5AL

to the Arranger and Dealer as
to Russian law
Lovells CIS
Usadba Centre,
22 Voznesensky Pereulok
125009 Moscow

PRINCIPAL PAYING AGENT
The Bank of New York
One Canada Square,
London E14 5AL

LEGAL ADVISERS

to the Arranger and Dealer as
to English Law
Lovells LLP
Atlantic House
Holborn Viaduct
London
EC1A 2FG

to the Trustee as to English law
Ashurst LLP
Broadwalk House
5 Appold Street
London
EC2A 2HA

to the Issuer as to Dutch
law
Lovells LLP
Keizersgracht 555,
1017 DR Amsterdam,
The Netherlands

LISTING AGENT
Arthur Cox Listing Services Limited
Earlsfort Centre
Earlsfort Terrace
Dublin 2
Ireland

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