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Exhibit 10.33.
Translation from Russian
Registered by
Administration of Vanino district
of Khabarovsk territory
Agreement
on lease of timber tracts
Tuluchi Settlement March 13, 1998
1. Parties to the Agreement
The owner of the timber tracts in Tumninsky leskhoz, represented by its
Director S.I. Radchenko, acting on the basis of Protocol No. 23 of the
resolution of the Territorial Commission on forest usage, dated November 5,
1997, hereinafter referred to as "Lessor", on the one hand, and JSC
"Forest-Starma", represented by its General Director V.A. Limarenko, acting on
the basis of the charter, hereinafter referred to as the "Lessee", on the other
hand, have entered into this Agreement on the lease of forest tracts.
2. Subject of the lease, usage types and volumes
2.1. The following timber tracts shall be subject to leasing:
--I grade: in Siziman leskhoz tracts Nos. 1-20, 23-28, 31-36, 39-41, 45,
46, 52, 54, 56-59, 64-67, 71-78, 81-85, 88-90, 104, 104-109, 113-116, 121-123,
126-130, 133-135, 139-173, 176, 178, 180, 184, 190, total 81,3 thousand
hectares with production capacity of 12,743 thousand cubic meters of mature and
overmature trees.
--III grade: in Siziman leskhoz tracts Nos.: 21, 22, 29, 30, 37, 38, 42-44,
48, 49, 55, 60-63, 68-70, 79, 80, 86, 87, 91, 95-103, 110-112, 117-120, 124,
125, 131, 132, 136-138; Mulinsky leskhoz tracts Nos.: 12-14, 17-20, 23-26,
29-32, 35-39, 43-50, 53-61, 64-70, 73-78, 81-87, 90-96, 100-106, 112-117,
125-128, 137-140; total 88,2 thousand hectares with production capacity of
10,312 thousand cubic meters.
2.2. The timber tracts shall be assigned to the Lessee for the following
types of activities -- timber harvesting.
2.3. Annual volume of timber harvesting shall be:
I grade forests -- 80 thousand cubic meters;
III grade forests -- 235 thousand cubic meters.
2.4. The harvesting volume may be changed, if necessary, upon mutual
agreement between the Lessor and the Lessee.
3. Term of lease
The term of this lease agreement shall be 49 years, starting "___"________,
199 until "___"___________.
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4. Specific obligations of the Lessee.
4.1. To implement fire safety measures on the territory of the leased
forest and adjourning tracts.
4.2. Specific obligations of the Lessee shall be determined in
accordance with annually executed agreements on forest regeneration and
fire safety measures (see Appendix to this Agreement).
5. Rights and obligations of the Lessor (leskhoz).
5.1. The Lessor shall have the right:
5.1.1. To suggest changes to the provisions of this Agreement.
5.1.2. To lease or transfer under other conditions same timber tracts
with multiple timber resources simultaneously to different users in order
to promote multi-purpose timber harvesting under the condition that such
arrangement does not violate rights and responsibilities set forth in this
Agreement.
5.1.3. To implement control over the condition of the forest and
protective measures employed, to enforce compliance with the timber
legislation, norms and procedures in force.
5.1.4. To implement all kinds of timber harvesting, including
cleaning and sanitary felling, on the leased tracts, in the event the
Lessee is not able to do so.
5.1.5. To submit indemnification claims to the Lessee with regard to
violation of cutting rules and damages to the forest as a result of the
Lessee's commercial activities.
5.1.6. To obtain from the Lessee information, reference and other
materials with respect to use, regeneration and protection of forest.
5.1.7. To suspend or limit work under the following conditions:
- violation by the Lessee of the conditions provided for in the
license and the agreement on lease of timber tracts;
- use by the Lessee of the subject of lease without approved,
according to the set procedure, plans on timber harvesting;
- nonpayment of fees for timber tract use within the set time limits.
5.1.8. To stop, upon approval from local authorities, timber
harvesting effected by the Lessee in the event that such actions are in
violation of the timber legislation and other legislation in force and
this Agreement until such violation shall be eliminated.
5.1.9. To withdraw for governmental use, in cases provided for in
legislation, certain leased timber tracts with mandatory compensation for
monetary damages, as agreed upon by the Lessee.
5.1.10. To draft the Lessee, in accordance with the resolution of the
local administration, to assist in forest fires.
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5.1.11. To demand termination of this Agreement and indemnification of
damages in the event the Lessee fails to fulfill its obligations under this
Agreement.
5.2. The Lessor shall:
5.2.1. Implement control over the Lessee's forest usage and regeneration
activities on the leased territory.
5.2.2. Keep a forest cadastre, report timber tracts dynamics and make
changes to it on a timely manner.
5.2.3. Oversee forest management and inventory.
5.2.4. Provide the Lessee with materials, necessary for appropriate use of
timber resources, on a temporary basis.
5.2.5. Provide the Lessee with necessary materials on forest management at
the Lessee's expense.
5.2.6. Conduct annual marking out and appraisal of coupes, provide the
Lessee with logging tickets and other permits.
5.2.7. Examine logging sites.
5.2.8. Provide specialized forest pathology control on leased tracts and
draft plans on pest and forest decease control.
5.2.9. Provide aerial forest control.
5.2.10. Finance forest management and regeneration measures in a timely
manner upon completion of such measures by the Lessee and acceptance of such
work by the Lessor.
5.2.11. Advance money for forest management and regeneration measures in
the amount of up to 30% of the sum allocated for this work.
5.2.12. Coordinate with the Lessee location of commercial buildings,
storage facilities, forest roads, parking, measures on territorial improvement
necessary for timber harvesting.
5.2.13. Assist the Lessee with choosing forest regeneration methods,
timber species, provide the Lessee with planting material on a contractual
basis.
5.2.14. Lease timber equipment for timber harvesting and regeneration to
Lessee, if necessary.
5.2.15. Reimburse the costs of putting out forest fires to the Lessee
which occurred through no fault of the Lessee.
5.2.16. Indemnify the Lessee for losses it sustained as a result of an
unlawful suspension of his activities by the Lessor upon a court decision.
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6. Rights and obligations of the Lessee
6.1. The Lessee shall have the right:
6.1.1. To effect timber harvesting on the territory of the allocated
timber tracts on conditions provided for in this Agreement and legislation in
force.
6.1.2. To build road in accordance with set procedures, temporary
commercial and lodging facilities and buildings on the leased territory
necessary for effective timber harvesting in accordance with the agreement with
the Lessor.
6.1.3. To independently choose the method for its commercial activities
with regard to the timber resources, handle harvested timber and profits
received from leasing timber tracts.
6.1.4. To suggest changes to the terms and conditions of this Agreement.
6.1.5. To effect principal and intermediate logging of timber on the
leased tracts.
6.1.6. To determine fees and receive expense reimbursement for buildings,
roads and other facilities constructed by the Lessee, in the event such
facilities are used for other purposes, excluding use of such facilities for
the purposes of the Lessor.
6.1.7. To participate in examinations of the leased forest tracts to
assess its condition, compliance with the timber legislation, forest usage
norms and terms of this Agreement.
6.1.8. To use the Lessor's materials on condition, usage and protection of
the leased timber tracts.
6.1.9. To exercise preferential right with regard to assignment of forest
tracks for available machinery within the limits of a planned felling area.
6.1.10. To use equipment and machinery unless their use is prohibited by
applicable documents.
6.1.11. To demand termination of this Agreement and compensation of
damages in the event the Lessee violates terms and conditions of this Agreement.
6.1.12. To protect its interests by means of arbitration or court
proceedings in the event such interests are infringed upon.
6.2. The Lessee shall:
6.2.1. Use the lease timber tracts in accordance with legislation in force,
rules on timber harvesting, resolutions of local administration and terms of
this Agreement.
6.2.2. To ensure an inexhaustible and efficient use of forest resources,
their regeneration and preservation of ecological habitat of the forest.
6.2.3. Use methods that would prevent soil erosion, negative effects on
reservoirs and other natural sites.
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6.2.4. Follow fire safety rules and effect fire prevention measures,
help in putting them out and assist in putting out massive forest fires on the
territory upon applicable decisions of the local administration.
6.2.5. Implement forest usage and regeneration measures, as well as
other conditions, in accordance with annually executed agreements with the
Lessor.
6.2.6. Conduct regeneration measures at its own expense in excess of the
volumes provided for in this Agreements in the areas where the undergrowth was
destroyed as a result of commercial activity.
6.2.7. Take care of the regrown forest until it can be classified as
forest-covered area.
6.2.8. Refrain from undercutting forest (unfinished coupes) and leaving
harvested timber in the forest upon expiration of harvesting and removal terms.
6.2.9. Clear logging sites from pulp.
6.2.10. Restore, at its own expense, timber tracts damaged as a result of
its commercial activity on the conditions suitable for their future use as
provided in permits.
6.2.11. Turn in timber tracts to the owner upon the completing of
logging.
6.2.12. Provide the Lessor with information necessary for inventory of
the timber resources and calculation of lease payments, as well as other
information on timber tracts' usage.
6.2.13. Make payments for the use of timber tracts in a timely manner and
in accordance with set procedures.
6.2.14. Implement the Lessor's recommendations with regard to detected
violations in accordance with the timber legislation within a determined time
frame.
6.2.15. Have a 5-year operations plan and an ecological passport.
6.2.16. Submit for acceptance by the Lessor completed facilities and
logging sites.
6.2.17. Assist with forest management and inventory.
6.2.18. Create and sustain in working order borders, rides between
quadrants, survey lines, forest management marks.
6.2.19. Participate in local ecological programs.
6.2.20. Comply with other requirements set forth in forest management
rules and regulations.
7. Payment for timber resources
7.1. Lease payments shall be set annually on the basis of the allowed
cutting volumes.
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7.2. Terms and procedure of making lease payments: 02.15. - 15%; 03.15.
- 10%; 04.15. - 10%; 06.15. - 10%; 07.15. - 10%; 09.15. - 15%; 11.15. - 15%,
12.15. - 15%.
7.3. Forest dues shall be paid by the Lessee upon receipt of
timber-cutting tickets (permits) indicating specific volumes and types of usage.
7.4. Any preferential payments for use of timber resources shall be
determined in accordance with Resolution No. 1199, dated September 19, 1997, "On
minimum payments for logging timber".
8. Responsibilities of the parties
8.1. The Lessor shall be responsible for violation of timber legislation,
requirement on use of forest resources in accordance with the legislation of the
Russian Federation and legal regulations within the jurisdiction of local
authorities.
8.2. In the event of late response to forest fires, the Lessee shall
compensate damages in accordance with forest and environmental legislation in
force.
8.3. In the event the Lessee fails to perform regeneration procedures
during current calendar year, the incomplete amount of work shall be transferred
onto the next year along with proportional reduction in allocated forest tracts.
8.4. Upon termination of this Agreement, the guilty party shall pay
penalty in the amount of 10% of yearly lease payments.
8.5. In the event of repeated non-fulfillment of obligations under this
Agreement (during two consecutive years), if termination is not discussed, the
guilty party shall pay penalty in the amount of 10% of annual lease payments.
8.6. In the event of late payments for timber resources and financing of
forest usage works, the guilty party shall pay penalties in the amount of 0,7%
of such amounts for each day of delay.
8.7. Any disputes arising with regard to this Agreement shall be resolved
in court or through arbitration.
9. General provisions
9.1. Upon mutual agreement, the parties can make amendments and changes to
this Agreement.
9.2. With regard to issues not provided for in this Agreement, the parties
shall be governed by legislation in force.
9.3. The provisions of this Agreement shall be subject to change in
compliance with changes in timber legislation.
9.4. The parties shall discuss fulfillment of the terms of this Agreement
on an annual basis.
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9.5. This Agreement shall become effective as of the date of issuance of
an applicable license.
9.6. The Lessor shall, within a 2-month period after the effective date of
this Agreement, transfer leased forest tracts and all necessary documentation
to the Lessee.
9.7. This Agreement is drafted in three copies, one of which shall be
distributed to the Lessee, one shall be forwarded to the local administration,
and one shall be kept at the leskhoz.
10. Legal addresses of the parties
10.1. Lessor: Tumninsky leskhoz
Address: Tuluchi Settlement
Vanino District
Khabarovsk Territory
Tel: 9-89
Banking requisites:
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10.2. Lessee: JSC "Forest-Starma"
Alleya Truda, 1
Komsomolsk-on-Amur
Xxxxxxxxxx Xxxxxxxxx
Xxxxxxx Xxxxxxxxxx 000000
Tel: 4-72-61
Banking requisites: Account No. 40702810608030000405
in Regiobank at Komsomolsk-on-Amur branch
BIK 040825721
General Director Director
JSC "Forest-Starma" Tumninsky leskhoz
/s/ V.A. Limarenko /s/ S.I. Radchenko
V.A. Limarenko S.I. Radchencko
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THE PIONEER GROUP, INC.
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000-0000
000-000-0000
[PIONEER LOGO]
The undersigned hereby certifies that the translation of Agreement on Lease
of Timber Tracts dated as of March 13, 1998 by and between Tumninsky Leskhoz and
Closed Joint-Stock Company "Forest-Starma" to which this certification is
attached is a fair and accurate translation of the original document executed in
Russian.
Dated: May 22, 2000
/s/ Xxxxxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxxxxx Xxxxxxx
Title: Vice President and Assistant
General Counsel, The Pioneer Group,
Inc.
