<PAGE>   1
                                                                   Exhibit 10.1


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



                                FINANCE AGREEMENT






                                     BETWEEN


                           CLOSED JOINT-STOCK COMPANY
                                 "FOREST STARMA"




                                       AND

                    OVERSEAS PRIVATE INVESTMENT CORPORATION












                          DATED AS OF DECEMBER 21, 1995



                                                              OPIC/118-94-162-IG
================================================================================




<PAGE>   2

                               TABLE OF CONTENTS

                                                                           PAGE
                                                                           ----

ARTICLE I.   DEFINITIONS ....................................................1
     Section 1.01.  Definitions .............................................1
     Section 1.02.  Interpretation ..........................................9
     Section 1.03.  Project Cost; Financial Plan ...........................10
                                                                        
ARTICLE II.  AMOUNT AND TERMS OF THE LOAN ..................................10
     Section 2.01.  Amount and Disbursement ................................10
     Section 2.02.  Commitment Fee .........................................10
     Section 2.03.  Cancellation of the Commitment .........................11
     Section 2.04.  Interest ...............................................11
     Section 2.05.  Repayment of the Loan ..................................11
     Section 2.06.  Voluntary Prepayment ...................................11
     Section 2.07.  Mandatory Prepayment ...................................12
     Section 2.08.  Facility Fee ...........................................12
     Section 2.09.  Taxes ..................................................12
     Section 2.10.  Miscellaneous ..........................................13
                                                                        
ARTICLE III.   REPRESENTATIONS AND WARRANTIES ..............................14
     Section 3.01.  Existence and Power of the Company .....................14
     Section 3.02.  Authority of the Company ...............................14
     Section 3.03.  Financial Condition ....................................15
     Section 3.04.  Capitalization of the Company ..........................15
     Section 3.05.  Subsidiaries ...........................................16
     Section 3.06.  Liens ..................................................16
     Section 3.07.  Taxes and Reports ......................................16
     Section 3.08.  Defaults ...............................................17
     Section 3.09.  Litigation .............................................17
     Section 3.10.  Compliance with Law ....................................17
     Section 3.11.  Easements, Property Interests, Utilities, Etc ..........17
     Section 3.12.  Environmental Matters ..................................18
     Section 3.13.  Project Cost and Project Completion ....................18
     Section 3.14.  Disclosure .............................................18
     Section 3.15.  Charter Documents ......................................18
               
ARTICLE IV.  CONDITIONS PRECEDENT TO DISBURSEMENT ..........................19
     Section 4.01.  Corporate Authorization ................................19
     Section 4.02.  Representations and Defaults ...........................19
     Section 4.03.  Change in Circumstances ................................20
     Section 4.04.  Certification ..........................................20
     Section 4.05.  Funding Arrangements ...................................20
     Section 4.06.  Financing Documents ....................................20
     Section 4.07.  Sponsor Investment; Subordinated Loan ..................22
               

      
   
      
      
      
      
      
      
      







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                                      -ii-

     Section 4.08.  Harvesting Plan ........................................22 
     Section 4.09.  Government Approvals ...................................22 
     Section 4.10.  Land ...................................................23 
     Section 4.11.  Insurance ..............................................23 
     Section 4.12.  Financial Information and Construction Progress ........23 
     Section 4.13.  Appointment of Agent ...................................23 
     Section 4.14.  Legal Opinions .........................................24 
     Section 4.15.  Payment or Reimbursement of Expenses ...................24 
     Section 4.16.  Other Documents ........................................24 
               
ARTICLE V.   AFFIRMATIVE COVENANTS .........................................24
     Section 5.01.  Project Completion .....................................24 
     Section 5.02.  Company Operations .....................................25 
     Section 5.03.  Maintenance of Rights and Compliance with Laws .........25 
     Section 5.04.  Government Approvals; Foreign Exchange Consents ........25 
     Section 5.05.  Maintenance of Insurance ...............................25 
     Section 5.06.  Accounting and Financial Management ....................28 
     Section 5.07.  Financial Statements and Other Information .............29 
     Section 5.08.  Access to Records; Inspection; Meetings ................30 
     Section 5.09.  Notice of Default and Other Matters ....................30 
     Section 5.10.  Security Documents .....................................30 
     Section 5.11.  Financial Ratios .......................................31 
     Section 5.12.  Environmental Compliance ...............................31 
     Section 5.13.  Designated Accounts and Russian Bank Accounts ..........32 
               
ARTICLE VI.  NEGATIVE COVENANTS ............................................32
     Section 6.01.  Liens ..................................................32 
     Section 6.02.  Indebtedness ...........................................33 
     Section 6.03.  No Alteration of Agreements ............................33 
     Section 6.04.  Dividends and Share Redemptions and 
                    Subordinated Loan Payments .............................34
     Section 6.05.  Conduct of Business with Sponsors and Shareholders .....34 
     Section 6.06.  Sale of Assets; Mergers ................................35 
     Section 6.07.  Lease Obligations ......................................35 
     Section 6.08.  Hedging Arrangements ...................................35 
     Section 6.09   Ordinary Conduct of Business ...........................35 
     Section 6.10.  Worker Rights ..........................................36 
        
ARTICLE VII. DEFAULTS AND REMEDIES .........................................36
     Section 7.01.  Events of Default ......................................36
     Section 7.02.  Remedies upon Event of Default .........................39  
     Section 7.03.  Jurisdiction and Consent to Suit .......................39  
     Section 7.04.  Arbitration ............................................40  
     Section 7.05.  Judgment Currency ......................................42  
     Section 7.06.  Immunity ...............................................42  
               












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                                      -iii-

ARTICLE VIII. MISCELLANEOUS ................................................43
     Section 8.01. Notices .................................................43
     Section 8.02. English Language ........................................44
     Section 8.03. Governing Law ...........................................44
     Section 8.04. Succession ..............................................44
     Section 8.05. Survival of Agreements ..................................44
     Section 8.06. Integration; Amendments .................................45
     Section 8.07. Severability ............................................45
     Section 8.08. No Waiver ...............................................45
     Section 8.09. Waiver of Jury Trial ....................................45
     Section 8.10. Waiver of Litigation Payments ...........................46
     Section 8.11. Indemnity ...............................................46
     Section 8.12. Further Assurances ......................................46
     Section 8.13. Counterparts ............................................46
              
EXHIBITS
--------

     A      Form of Promissory Note                                           
                                                                              
     B      Form of Disbursement Request                                      
                                                                              
     C      Form of Corporate Authorization Certificate (pursuant to 
            Section 4.01) 
                                                                              
     D      Form of Disbursement Certificate (pursuant to Section 4.04)       
                                                                              
     E      Form of Self-Monitoring Questionnaire                             
                                                                              
     F      Project Completion Agreement                                      
                                                                              
     G      Subordination Agreement                                           
                                                                              
     H      Security and Accounts Deed                                        
                                                                              
     I      Form of Subordinated Promissory Note                              
                                                                              
     J      Form of Letter of Acknowledgment                                  
       

SCHEDULES
---------

     1.01   Application                           
                                             
     1.03   Financial Plan                        
                                             
     4.09   Government Registrations and Consents 
                                             
     5.12   Guidelines Schedule                   
       









<PAGE>   5


                                FINANCE AGREEMENT

      AGREEMENT, dated as of December 21, 1995, between CLOSED JOINT-STOCK
COMPANY "FOREST STARMA", a closed joint-stock company, organized and existing
under the laws of the Russian Federation (the "COMPANY"), and OVERSEAS PRIVATE
INVESTMENT CORPORATION, an agency oft he United States of America ("OPIC"),

                                   WITNESSETH:

      WHEREAS, the Company intends to construct and operate the Project (as
hereinafter defined); and

      WHEREAS, to secure a portion of the financing for the Project, the Company
has requested that OPIC provide a credit facility to the Company in an amount up
to $9,300,000 pursuant to Section 234(b) of the Foreign Assistance Act of 1961,
as amended, which OPIC is willing to do on the terms and conditions set forth
herein;

      NOW, THEREFORE, in consideration of the premises and of the agreements
contained herein, it is hereby agreed as follows:



                                   ARTICLE I.
                                   DEFINITIONS


SECTION 1.01.  DEFINITIONS.

      Unless otherwise provided, capitalized terms used herein shall have the
definitions specified below:

      "ADJUSTED CASH FLOW" means, as of any date, the sum of the following
            amounts for the preceding six months, multiplied by two: (i) Net
            Income of the Company; (ii) all depreciation, amortization, deferred
            taxes and other non-cash charges of the Company, excluding bad and
            doubtful debts; and (iii) interest payments made by the Company on
            all loans and all fees due to OPIC for the next succeeding Fiscal
            Year.

      "ADJUSTED NET WORTH" means, as of any date, (i) the Company's total
            stockholders' equity (including capital stock, paid-in capital and
            retained earnings and/or accumulated








<PAGE>   6

                                       -2-

            losses, after deducting treasury stock and reserves) that would
            appear on the Company's Financial Statements prepared as of that
            date, and (ii) the Subordinated Loan.

      "AFFILIATE" means, with respect to any Person, (i)any other Person that is
            directly or indirectly controlled by, under common control with or
            controlling such Person; (ii) any other Person owning beneficially
            or controlling five percent (5%) or more of the equity interest in
            such Person; (iii) any officer, director or parmer of such Person;
            or (iv)any spouse or relative of such Person. As used herein, the
            term "control" means possession, directly or indirectly, of the
            power to direct or cause the direction of the management and
            policies of a Person, whether through the ownership of partnership
            interests or voting securities, by contract or otherwise.

      "AGREEMENT" means this Finance Agreement between the Company and OPIC.

      "APPLICATION" means the Company's application to OPIC for the Loan,
            consisting of the Commitment Letter and the items described in
            Schedule 1.01.

      "AUTHORIZED OFFICER" means, with respect to any Person, its Chairperson,
            Managing Director, President, Secretary or Treasurer, any Vice
            President, Assistant Secretary or Assistant Treasurer thereof, and
            any other officer designated in writing by such Person as having
            been authorized to execute and deliver this Agreement, the Notes,
            any of the other Financing Documents to which it is or will be a
            party, or any other notice or instrument contemplated hereunder.

      "BUSINESS DAY" means any day other than a Saturday, Sunday or day on which
            commercial banks are authorized by law to close in the City of New
            York or Washington, D.C., United States of America.

      "CAPITAL EXPENDITURE AND U.S.$ OPERATING EXPENDITURE ACCOUNT" means a
            Designated Account into which the Company shall deposit the amount
            of the Proceeds in excess of the Cash Collateral Amount.

      "CASH COLLATERAL ACCOUNT" means a Dollar Designated Account in which the
            Company shall maintain the Cash Collateral Amount so long as any
            amount remains outstanding under the Loan or any fees are due to
            OPIC.

      "CASH COLLATERAL AMOUNT" means (i) prior to the Project Completion, an
            amount equal to the Debt Service for one Interest Period and (ii)
            subsequent to Project Completion, an amount equal to the Debt
            Service for two Interest Periods.

 





<PAGE>   7

                                     -3-


      "CHARTER DOCUMENTS" means, in respect of any company, corporation,
            partnership, governmental agency or other enterprise, its founding
            act, charter, articles of incorporation and by-laws, memorandum and
            articles of association, statute, or similar instrument.

      "CLOSING DATE" means any Business Day on which a Disbursement is made.

      "COMMITMENT" means OPIC's commitment to guarantee an amount not to exceed
            $9,300,000 less (i)the portion thereof which pursuant to Section
            2.03 has been cancelled or has been deemed cancelled and (ii)any
            Loan amounts repaid or prepaid.

      "COMMITMENT FEE" has the meaning set forth in Section 2.02.

      "COMMITMENT LETTER" means the letter agreement among the Company, the
            Sponsors and OPIC, dated November 28, 1994, as amended, in which
            OPIC and the Company have agreed to enter into this credit facility,
            subject to the conditions stated therein.

      "COMMITMENT PERIOD" means the period Commencing on the date hereof and
            ending on the earlier of (i) the first date on which the amount of
            the Loan equals the amount of the Commitment and (ii) February 28,
            1996.

      "COMPANY" means Closed Joint-Stock Company "Forest Starma", a closed
            joint-stock company organized and existing under the laws of Russia.

      "CONTRACT OF PLEDGE OF SHARES" has the meaning set forth in Section 4.06.

      "CURRENT ASSETS" means assets treated as current assets under U.S. GAAP.

      "CURRENT LIABILITIES" means all Indebtedness and liabilities due on demand
            or to become due within one year and other liabilities treated as
            current liabilities under U.S. GAAP.

      "CUTTING LICENSE" means the license entitled "Siziman Forest Cutting
            License" dated October 24, 1994 issued by the Federal Forest Service
            of Russia.

      "DAY COUNT FRACTION" means 360-day years consisting of twelve 30-day
            months.

      "DEBT SERVICE" means principal of and interest on the Loan and all fees
            due to OPIC.

      "DEBT SERVICE RATIO" means the ratio of Adjusted Cash Flow to the Debt
            Service Requirement.







<PAGE>   8
                                      -4-


      "DEBT SERVICE REQUIREMENT" means an amount equal to the principal,
            interest and all fees due to OPIC for the next succeeding one year
            period.

      "DESIGNATED ACCOUNTS" means one or more accounts opened and maintained by
            the Company with the Escrow Agent, pursuant to the applicable
            Russian Central Bank License for offshore bank accounts and the
            terms of the Security and Accounts Deed, and subject to a pledge in
            favor of OPIC. The Designated Accounts shall include the Funding
            Account, the Timber Proceeds Account, the Cash Collateral Account
            and the Capital Expenditure and U.S.$ Operating Expenditure Account.

      "DISBURSEMENT" means the disbursement of the Loan.

      "DISBURSEMENT REQUEST" means a request for a Disbursement substantially in
            the form of Exhibit B.

      "DOLLARS" or "$" means United States dollars.

      "ESCROW AGENT" means Moscow Narodny Bank, London, or a successor financial
            institution acceptable to OPIC, as escrow agent pursuant to the
            terms of the Security and Accounts Deed.

      "EVENT OF DEFAULT" has the meaning set forth in Section 7.01.

      "FACILITY FEE" has the meaning set forth in Section 2.08.

      "FINANCIAL PLAN" has the meaning set forth in Section 1.03.

      "FINANCIAL STATEMENTS" means, with respect to any Person, such Person's
            quarterly or annual balance sheet and statements of income, retained
            earnings, and sources and application of funds for such fiscal
            period, together with all notes thereto and with comparable figures
            for the corresponding period of its previous Fiscal Year, each
            prepared in Dollars, and in the case of such Person's annual
            statements, prepared in accordance with U.S. GAAP.

      "FINANCING DOCUMENTS" has the meaning set forth in Section 4.06.

      "FISCAL YEAR" means, with respect to the Company, the period beginning on
            January 1 and ending on December 31 of each year.

      "FUNDING ACCOUNT" means a Designated Account into which the Company shall
            receive the Disbursement.






<PAGE>   9

                                       -5-

      "FUNDING DOCUMENTS" has the meaning set forth in Section 4.05.

      "HARVESTING PLAN" has the meaning set forth in Section 4.08.

      "HEDGING ARRANGEMENT" means any interest rate or currency swap, future,
            option, cap, collar, ceiling, hedge, or other interest rate
            protection agreement or foreign exchange contract, or any other
            agreement or arrangement designed to protect against fluctuations in
            interest rates or currency values.

      "INDEBTEDNESS" of any Person means, at any date, all or any liabilities,
            obligations and reserves, contingent or otherwise, which, in
            accordance with U.S. GAAP, would be reflected as a liability on a
            balance sheet, including without limitation, (i)any obligation of
            such Person for borrowed .money or arising out of any credit
            facility, (ii) any obligation of such Person evidenced by bonds,
            debentures, notes or other similar instruments, (iii) any obligation
            of such Person to pay the deferred purchase price of property or
            services, (iv) any obligation of such Person under conditional sales
            or other title retention agreements, (v)the net aggregate rentals
            under any lease by such Person as lessee that under U.S. GAAP would
            be capitalized on the books of the lessee or is the substantial
            equivalent of the financing of the property so leased, (vi)any
            obligation of such Person to purchase securities or other property
            which arises out of or in connection with the sale of the same or
            substantially similar securities or property, (vii)any obligation of
            such Person secured by any Lien upon property, (viii) any
            Indebtedness of others secured by a Lien on any asset of such
            Person, and (ix) any Indebtedness of others guaranteed, directly or
            indirectly, by such Person.

      "INDEMNIFIED PERSONS" has the meaning set forth in Section 8.11.

      "INTEREST PERIOD" means the period (i)from and including the day following
            the immediately preceding Payment Date or, if later, the Closing
            Date (ii)to and including the next succeeding Payment Date or, if
            earlier, the Loan Maturity Date.

      "INTEREST RATE" means the rate of interest specified in the Note.

      "LIEN" means any lien, pledge, mortgage, security interest, deed of trust,
            charge, assignment, hypothecation, title retention or other
            encumbrance on or with respect to, or any preferential arrangement
            having the practical effect of constituting a security interest with
            respect to the payment of any obligation with, or from the proceeds
            of, any asset or revenue of any kind.

      "LITIGATION PAYMENT" has the meaning set forth in Section 8.10.

 



<PAGE>   10
                                       -6-

      "LOAN" means, on any date, the aggregate of the outstanding unpaid
            principal amounts of the Notes then outstanding.

      "LOAN DOCUMENTS" has the meaning set forth in Section 4.06.

      "LOAN MATURITY DATE" means December 15, 2003.

      "LOCAL CURRENCY" or "LC(s)" means the official currency of the Russian
            Federation.

      "MATERIAL ADVERSE EFFECT" means a material adverse effect on (i)the
            Project, (ii) the business, operations, prospects, condition
            (financial or otherwise), or property of the Company, the Sponsors,
            or any other Person whose continuing viability, because of its
            guaranty or other undertaking, is essential to the Project, (iii)
            the ability of the Company or any other party to perform in a timely
            manner its material obligations under any of the Financing
            Documents, (iv)the validity or enforceability of any material
            provision of any Financing Document, (v) the rights and remedies of
            OPIC, if any, under any of the Financing Documents, or (vi) the
            Liens provided to OPIC under the Security Documents.

      "NET INCOME" means, with respect to any Person for any fiscal period, the
            net income of such Person for such period after Taxes but before
            extraordinary items, determined in accordance with U.S. GAAP.

      "NOTE" means any promissory note issued by the Company pursuant to this
            Agreement substantially in the form of Exhibit A.

      "NOTE INTEREST RATE" has the meaning set forth in Section 2.04.

      "OPIC" means Overseas Private Investment Corporation, an agency of the
            United States of America.

      "OPIC PLAINTIFF" has the meaning set forth in Section 8.10.

      "OPIC SPREAD" means (i) two and three quarters percent (2.75%) per annum
            on the outstanding balance of the Loan prior to Project Completion
            and five and one eighth percent (5.125%) per annum on the
            outstanding balance of the Loan subsequent to Project Completion.

      "OVERSIGHT GROUP" has the meaning set forth in Section 5.12.





<PAGE>   11
                                       -7-



      "PAYING AGENT" means a banking corporation designated as Paying Agent
            under the Funding Documents, or any successor or successors thereto.

      "PAYMENT DATE" means each June 15, and December 15 after the date hereof
            until the Loan and all amounts due hereunder or under the Note are
            paid in full, unless such date is not a Business Day, in which case
            the Payment Date will be the next succeeding Business Day.

      "PERSON" means and includes (i) an individual, (ii) a legal entity,
            including but not limited to, a partnership, a joint venture, a
            corporation, a trust, and an unincorporated organization, and (iii)
            a government or any department or agency thereof.

      "PGI" means The Pioneer Group, Inc.

      "PLACEMENT SPREAD" means the number of basis points in excess of the
            Interest Rate required in connection with the Funding Documents, as
            set forth in the Note.

      "PREPAYMENT PREMIUM" has the meaning set forth in Section 2.06.

      "PROCEEDS" means the Company's proceeds from the export of raw logs and
            timber.

      "PROJECT" means the development of a forestry tract and the construction
            of a jetty facility in the Siziman area, north east of Komsomolsk in
            the Khabarovsk administrative division of the Russian Federation, as
            more fully described in the Application and the items set forth in
            Schedule 1.01.

      "PROJECT COMPLETION" has the meaning set forth in Section 3 of the Project
            Completion Agreement.

      "PROJECT COMPLETION AGREEMENT" means the Project Completion Agreement
            among the Sponsors, the Company, and OPIC, dated December 21, 1995,
            a copy of which is attached hereto as Exhibit F.

      "PROJECT DOCUMENTS" has the meaning set forth in Section 4.06.

      "RUSSIAN BANK ACCOUNTS" means one or more Russian bank accounts opened and
            maintained by the Company with a Russian financial institution or a
            successor thereto, in either case acceptable to OPIC, and subject to
            a pledge in favor of OPIC.

      "SECURITY DOCUMENTS" has the meaning set forth in Section 4.06.





<PAGE>   12
                                       -8-

      "SECURITY AND ACCOUNTS DEED" means an agreement among the Company, OPIC
            and the Escrow Agent, substantially in the form attached hereto as
            Exhibit H, providing, among other things, for the deposit of the
            Company's Proceeds into the Timber Proceeds Account, for the deposit
            of the Cash Collateral Amount into the Cash Collateral Account, for
            the payment of all amounts payable by the Company hereunder or under
            the Notes from a Designated Account and establishing a first
            priority security interest in favor of OPIC over the Designated
            Accounts.

      "SELF-MONITORING QUESTIONNAIRE" means the Annual Self-Monitoring
            Questionnaire attached hereto as Exhibit E, as the same may be
            revised and supplemented by OPIC from time to time.

      "SHAREHOLDERS" means the Sponsors; Goskomsever; Sovgavan Complex Timber
            Industry, Vanino District Foundation and other local minority
            shareholders.

      "SPONSORS" means The Pioneer Group, Inc., a corporation organized and
            existing under the laws of Delaware, and International Joint-Stock
            Company "Starma Holding", a joint-stock company organized and
            existing under the laws of the Russian Federation.

      "SUBORDINATED LENDER" means PGI and/or a substitute financial institution,
            pursuant to an agreement with PGI, satisfactory to OPIC in form and
            substance (such agreement to include the provisions set forth in the
            Subordination Agreement attached hereto as Exhibit G unless the
            Subordinated Lender is a party to the Subordination Agreement).

      "SUBORDINATED LOAN" means the aggregate amount (principal and interest)
            outstanding from time to time to the Subordinated Lender pursuant to
            the Subordinated Promissory Note.

      "SUBORDINATED PROMISSORY NOTE" means one or more promissory notes issued
            by the Company to the Subordinated Lender, substantially in the form
            of Exhibit I, or such other forms of note or evidence of
            indebtedness as agreed to by the Company and the Subordinated
            Lender, pursuant to which the Subordinated Lender shall make the
            Subordinated Loan to the Company.

      "SUBORDINATION AGREEMENT" means the Subordination Agreement among the
            State Street Bank and Trust Company, PGI, Starma Holding, OPIC and
            the Company dated December 21, 1995, a copy of which is attached
            hereto as Exhibit G.

      "TAXES" has the meaning set forth in Section 2.09.






<PAGE>   13
                                       -9-

      "TIMBER PROCEEDS ACCOUNT" means a Dollar Designated Account into which the
            Company shall deposit the Proceeds.

      "TREASURY COST" means, with respect to any amount, the fixed borrowing
            cost that would be charged to OPIC for such amount by the United
            States Department of Treasury (which will approximate the interest
            rate on U.S. Treasury notes with a similar maturity.)

      "U.S. GAAP" means generally accepted accounting principles in the United
            States of America in effect from time to time, applied on a
            consistent basis both as to classification of items and amounts.

      "U.S. SPONSOR" means PGI.

SECTION 1.02. INTERPRETATION.

      In this Agreement, unless otherwise indicated or otherwise required by the
context:

      (a)   Reference to and the definition of any document (including this
Agreement) shall be deemed a reference to such document as it may be amended,
supplemented, revised, or modified from time to time;

      (b)   All references to an "Article", "Section", "Schedule", or "Exhibit"
are to an Article or Section hereof or to a Schedule or an Exhibit attached
hereto and made a part hereof;

      (c)   The table of contents, article and section headings, and other
captions in this Agreement are for the purpose of reference only and do not
limit or affect its meaning;

      (d)   Defined terms in the singular shall include the plural and vice
versa, and the masculine, feminine or neuter gender shall include all genders;

      (e)   Accounting terms used herein but not defined in Section 1.01 shall
have the respective meanings given to them under U.S. GAAP; and

      (f)   The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement.






<PAGE>   14
                                      -10-


SECTION 1.03. PROJECT COST; FINANCIAL PLAN.

      The total cost of the Project (including provisions for contingencies) is
estimated to be the equivalent of $28,400,000, based on the financial plan set
forth in Schedule 1.03 (the "FINANCIAL PLAN").


                                   ARTICLE II.
                          AMOUNT AND TERMS OF THE LOAN

SECTION 2.01. AMOUNT AND DISBURSEMENT.

      (a)   COMMITMENT. Subject to the terms and conditions hereof, OPIC agrees
to guarantee, and the Company agrees to accept, a Loan for the Project in the
principal amount of not more than $9,300,000. Disbursements of the Loan
hereunder shall only be made from the date hereof through the end of the
Commitment Period.

      (b)   DISBURSEMENT TERM. Subject to the satisfaction of the conditions
set forth in Article IV, the Company may request a Disbursement of the Loan by
delivering a Disbursement Request to OPIC not less than 20 Business Days prior
to the Closing Date. The Disbursement shall be evidenced by one or more (as OPIC
may specify) Notes aggregating the principal amount of the Disbursement and
dated the Closing Date. All Notes shall be issued for a term ending on or before
the Loan Maturity Date. The amount of the Loan shall not exceed the amount of
the Commitment.

      (c)   NUMBER AND AMOUNT OF DISBURSEMENTS. The Loan hereunder shall be
disbursed in not more than one Disbursement in an amount of not less than
$9,300,000, upon certification to OPIC's satisfaction that the contributions of
equity and subordinated loans set forth in the Financial Plan have been made and
satisfaction of the conditions set forth in Article IV.

SECTION 2.02. COMMITMENT FEE.

      Commencing from the date hereof and continuing through the Commitment
Period, a commitment fee (the "COMMITMENT FEE") shall accrue on a daily basis at
the rate of one half of one percent (0.5%) per annum on the difference,
calculated for each day during such period, between (i) the amount of the
Commitment, and (ii) the aggregate amount of the Loan outstanding on such day.
The Commitment Fee shall be payable in arrears to OPIC on each Payment Date and
on the date of expiration of the Commitment Period.






<PAGE>   15
                                      -11-

SECTION 2.03. CANCELLATION OF THE COMMITMENT.

      The Company may cancel all or any part of the Commitment at any time upon
payment to OPIC at the time of such cancellation of a fee (the "Cancellation
Fee") equal to one percent (1%) of the amount of the Commitment then cancelled.
Any part of the Commitment not disbursed at the end of the Commitment Period
shall be deemed to have been cancelled and the Cancellation Fee shall apply.

SECTION 2.04. INTEREST. (a)  NOTE INTEREST RATE. On each Payment Date the 
Company shall pay interest in arrears to the order of OPIC on the daily
outstanding principal balance of each Note at the rate specified in such Note,
PROVIDED that the first Payment Date for the payment of interest shall be June
17, 1996. Such rate shall be at a rate per annum equal to the sum of the
following (the "NOTE INTEREST RATE"):

          (i)      the Interest Rate;       
          (ii)     the Placement Spread; and
          (iii)    the OPIC Spread.         
         




      (b) DEFAULT INTEREST. If the Company fails to pay in full when due any
amount of principal or interest on any Note, the Company shall on demand pay
OPIC default interest on such unpaid amount (in lieu of the Interest Rate) at a
rate equal to the sum of (i) the Treasury Cost, (ii) the OPIC Spread, and (iii)
two percent (2.0%) (to the extent permitted by applicable law) from the date of
such payment default until the date on which such defaulted amount is paid in
full.

SECTION 2.05. REPAYMENT OF THE LOAN.

      The Company shall repay the Loan in fifteen (15) equal installments
payable on each Payment Date commencing on December 15, 1996 and ending on the
Loan Maturity Date.

SECTION 2.06. VOLUNTARY PREPAYMENT.

      In addition to any requirements set forth in the Funding Documents, on any
date following the last day of the Commitment Period, the Company may, upon 20
(twenty) Business Days' prior notice to OPIC, prepay the Loan in whole or in
part upon the payment to OPIC of a prepayment premium (the "PREPAYMENT PREMIUM")
of (i) three percent (3%) of the Loan amount prepaid during the twenty-four
month period immediately following the last day of the Commitment Period,
(ii) two percent (2%) of the Loan amount prepaid during the twenty-four month
period immediately following the third anniversary of the last day of the
Commitment Period, and (iii) no Prepayment Premium shall be payable thereafter.
The amount of any such voluntary prepayment shall be applied to the repayment
schedule provided for in Section 2.05 in the inverse order of maturity.

        





<PAGE>   16
                                      -12-

SECTION 2.07. MANDATORY PREPAYMENT.

      The Company shall reduce the amount of the Loan:

      (a)   in the event that, and in the amount by which, the aggregate amount
of insurance proceeds received by the Company for or in respect of its
properties or assets during any Fiscal Year in excess of $500,000 is not applied
or committed within 180 days after the receipt thereof to the repair or
replacement of such assets; and

      (b)   in the event that the aggregate amount of dividends or distributions
or payment or compensation of any type made during any Fiscal Year to a Sponsor,
Shareholder or an Affiliate of either of the foregoing exceeds fifty percent
(50%) of the Company's Net Income for the preceding Fiscal Year, as reflected in
the Company's audited Financial Statements, by an amount equal to fifty percent
(50%) of such excess.

      The Loan prepayment resulting from this Section 2.07 shall have the same
effect as if such prepayment occurred pursuant to Section 2.06, except that
solely with respect to Section 2.07(a) no Prepayment Premium shall be due.

SECTION 2.08. FACILITY FEE.

      The Company shall pay OPIC a facility fee (the "FACILITY FEE") in the
amount of one percent (1%) of the amount of the Commitment or $93,000, of which
$70,000 has previously been paid to OPIC. The outstanding balance of $23,000
shall be due and payable upon the execution and delivery of this Agreement by
the Company.

SECTION 2.09. TAXES.

      (a)   All sums payable by the Company hereunder or under the Notes,
whether of principal, interest, fees, expenses or otherwise, shall be paid in
full, free of any deductions or withholdings for any and all present and future
taxes, levies, imposts, stamps, duties, fees, assessments, deductions,
withholdings, and other governmental charges, and all liabilities with respect
thereto (collectively referred to as "TAXES"). In the event that the Company is
prohibited by law from making payments hereunder or under the Notes free of such
deductions or withholdings, then the Company shall pay such additional amount as
may be necessary in order that the actual amount received after such deduction
or withholding shall equal the full amount stated to be payable hereunder or
under the Notes.

      (b)   The Company shall pay directly to all appropriate taxing authorities
any and all present and future Taxes, and all liabilities with respect thereto
imposed by law or by any taxing







<PAGE>   17
                                      -13-

authority on or with regard to any aspect of the transactions contemplated by
this Agreement or the execution and delivery of this Agreement or the Notes,
except for any Taxes or other liabilities that the Company is contesting in good
faith by appropriate proceedings, PROVIDED that the Company hereby indemnifies
OPIC and holds OPIC harmless from and against any and all liabilities, fees or
additional expense with respect to or resulting from any delay in paying, or
omission to pay, Taxes. Within 30 days after the payment by the Company of any
Taxes, the Company shall furnish OPIC with the original or a certified copy of
the receipt evidencing payment thereof, together with any other information OPIC
may reasonably require to establish to its satisfaction that full and timely
payment of such Taxes has been made.

      (c)   OPIC shall notify the Company of any payment of Taxes required or
requested of it and shall give due consideration to any advice or recommendation
given in response thereto by the Company, and upon notice from OPIC that Taxes
or any liability relating thereto (including penalties and interest) have been
paid, the Company shall pay or reimburse OPIC therefor within 30 days of such
notice.

      (d)   Without prejudice to the survival of any other agreement of the
Company hereunder, the agreements and obligations of the Company contained in
this Section 2.09 shall survive the payment in full of principal and interest
hereunder and under the Notes.

SECTION 2.10. MISCELLANEOUS.

      (a)   PAYMENT OR REIMBURSEMENT OF EXPENSES. The Company shall pay or
reimburse OPIC, promptly upon receipt of OPIC's request, OPIC's reasonable
out-of-pocket costs and expenses incurred in connection with the negotiation,
preparation, execution and delivery, and implementation of this Agreement, the
Notes, and the other Financing Documents, including, without limitation, (i)the
reasonable fees and expenses of outside legal counsel and business consultants
and (ii)the reasonable costs of communications and travel expenses, the
preparation of any documents, the authentication, registration and recordation
of any of the Financing Documents, the preparation of bound volumes of the
Financing Documents for OPIC's use, and the termination of the Liens created
pursuant to the Security Documents. The Company shall also reimburse OPIC,
promptly upon demand, for all reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses and the reasonable cost of
travel) incurred by OPIC in preserving in full force and effect or enforcing its
rights hereunder or under any of the Financing Documents or incurred in
connection with the modification, amendment or waiver of any provision of any
such document, including but not limited to release of the Liens in favor of
OPIC arising under the Security Documents.

      (b)   CURRENCY AND PLACE OF PAYMENT. All payments required hereunder shall
be made in Dollars in immediately available funds without any offset or
deduction for Taxes or otherwise to the Paying Agent as provided for in the
Funding Documents or, as the case may be, to OPIC at the following address:







<PAGE>   18
                                      -14-

      By wire transfer (via a United States domestic bank):

            U.S. Treasury Department
            ABA No. 0210-3000-4 TREASNYC/CTR/BNF=AC71000001
            OBI=OPIC Loan No. 118-94-162-IG

      (c)   COMPUTATION OF INTEREST ON NOTES AND FEES. Except as otherwise
provided herein or in the Funding Documents or in any Note, interest (including
the Interest Index, the Placement Spread, and the OPIC Spread), default
interest, the Commitment Fee and any other fees shall accrue on a daily basis in
the Interest Period and shall be computed on the basis of the Day Count Fraction
for such Interest Period.

      (d)   APPLICATION OF PAYMENTS TO OPIC. Payments received by OPIC under
this Agreement or with respect to any Note shall be applied to amounts due under
this Agreement and under the Notes in such manner as OPIC in its sole discretion
may determine to be appropriate, notwithstanding any instruction to the contrary
from the Company.



                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

      The Company represents, covenants, and warrants to OPIC that:

SECTION 3.01. EXISTENCE AND POWER OF THE COMPANY.

      The Company is a closed joint-stock company, validly existing, and in good
standing under the laws of the Russian Federation. The Company is duly
authorized to do business in each jurisdiction in which its business makes such
authorization necessary, has the requisite power to own and operate its
properties, to carry on its business and the Project, to borrow money and create
a charge on its properties and to execute, deliver, and perform this Agreement,
the Notes, and each of the other Financing Documents to which it is or will be a
party.

SECTION 3.02. AUTHORITY OF THE COMPANY.

      The Company's execution, delivery, and performance of this Agreement, the
Notes, and each of the other Financing Documents to which it is or will be a
party: (i) have been duly authorized by all necessary corporate action; (ii)
will not violate any applicable regulation or ruling of any governmental
authority, violation of which, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect; and (iii) will not breach, or result
in the

        
        



<PAGE>   19
                                      -15-

imposition of any Lien upon any of its assets (except as permitted by Section
6.01) under, any of its Charter Documents or any agreement or other requirement
by which it or any of its properties may be bound or affected. The execution and
delivery by the Company of this Agreement, the Notes, and each of the other
Financing Documents to which it is or will be a party will cause each such
respective instrument to constitute a legal, valid, and binding obligation of
the Company enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
or other similar laws affecting the enforcement of creditors' rights generally
or general principles of equity (regardless of whether such enforcement is
Considered in a proceeding in equity or at law). Except for consents referred to
in Section 3.10, no consent of any other Person, including the Shareholders, is
required in connection with the execution, delivery, performance, validity, or
enforceability of any of the Financing Documents or for the construction and
operation of the Project. The Company's obligations hereunder and under the
Notes will rank not less than pari passu with all of the Company's other
Indebtedness and obligations.

SECTION 3.03. FINANCIAL CONDITION.

      The Company's audited Financial Statements, dated December 31, 1994, which
have been furnished to OPIC, are complete and correct and fairly present, in all
material respects, its financial condition and results of its operations for the
period then ended. It has no contingent obligation, liability for Taxes,
material or long-term commitment, or outstanding Indebtedness of any kind except
as disclosed in such Financial Statements. There has been no change in the
Company's financial condition or prospects from that set forth in such Financial
Statements that is reasonably likely to have a Material Adverse Effect, and
since the date thereof no dividend or other distribution has been declared or
paid to its shareholders.

SECTION 3.04. CAPITALIZATION OF THE COMPANY.

      The authorized capital of the Company consists of 1,500 shares of common
stock, par value 1000 Roubles per share, of which 1,500 shares are issued and
outstanding. All such capital stock of the Company has been duly authorized and
validly issued, and is fully paid and nonassessable. There are no outstanding
subscriptions, options, warrants, calls, agreements, preemptive rights,
acquisition rights, redemption rights or any other rights or claims of any
character that restrict the transfer of, require the issuance of, or otherwise
relate to any class of the capital stock of the Company. The capital stock of
the Company is owned of record as follows:







<PAGE>   20
                                      -16-

<TABLE>
<CAPTION>

                                                SHARES    PERCENTAGE
                                                ------    ----------
<S>                                               <C>          <C>
Pioneer Group, Inc.                               750         55% 
Starma Holding Company                            345         18% 
Sovgavan Complex Timber Industry Enterprise        9O          6%    
Goskomsever                                        90          6%    
Vanino District Foundation                         45          3%    
Other Local Minority Shareholders                 180         12%     
                                                -----        ----      
    Total                                       1,500        100%     
                                                             
</TABLE>


In addition, capital stock of the Company is owned beneficially by PGI through
its thirty-two percent (32%) holding of the capital stock of Starma Holding
Company.

SECTION 3.05. SUBSIDIARIES.

      The Company does not own or otherwise control any voting stock of, or have
any ownership interest in, any other Person, including any other corporation or
partnership.

SECTION 3.06. LIENS.

      The Security Documents are, or upon filing and registration will be,
effective to create in favor of OPIC legal, valid, and enforceable first Liens
on all of the Company's assets intended to be covered thereby, to the extent
permitted under Russian law with respect to the Security Documents governed by
Russian law and English law with respect to the Security Documents governed by
English law. The Company does not have outstanding, nor is it contractually
bound to create, any Lien on or with respect to, any of its properties, rights
or revenues, except as permitted in Section 6.01.

SECTION 3.07. TAXES AND REPORTS.

      All tax returns and reports of the Company required by law to be filed in
the Russian Federation, and each governmental subdivision thereof, have been
duly filed for periods ending prior to the date of this Agreement, and all
Taxes, assessments, fees and other governmental charges due or reasonably
anticipated to become due in respect of the Company, or any assets, income, or
franchises of the Company, that if not paid is reasonably likely to have a
Material Adverse Effect, have been duly paid or have been adequately provided
for on the books of the Company.






<PAGE>   21
                                      -17-

SECTION 3.08. DEFAULTS.

      No Event of Default, and no event or condition that with the passage of
time or the giving of notice, or both, could constitute an Event of Default, has
occurred and is continuing. Neither the Company nor any other party, to the
knowledge of the Company, is in breach of any provision of any contract to which
the Company is a party, which breach is reasonably likely to have a Material
Adverse Effect.

SECTION 3.09. LITIGATION.

      No action, suit, other legal proceeding, arbitral proceeding or
investigation is pending by or before any domestic or foreign court or
governmental authority or in any arbitral or other forum or, to the knowledge of
the Company, is threatened, against the Company or any of its properties or
rights that (i) relates to any of the transactions contemplated by this
Agreement or any other Financing Document, or (ii) has, or if adversely
determined is reasonably likely to have, a Material Adverse Effect.

SECTION 3.10. COMPLIANCE WITH LAW.

      The Company is conducting its business in compliance in all material
respects with all applicable laws, regulations and authorizations of all
relevant governmental authorities, non-compliance with which is reasonably
likely to have a Material Adverse Effect, and in compliance with its Charter
Documents. The Company has duly obtained all material consents, licenses,
approvals and authorizations and has effected all declarations, filings and
registrations necessary for the due execution and delivery of this Agreement and
each of the other Financing Documents to which it is or will be a party and for
the construction and operation of the Project.

SECTION 3.11. EASEMENTS, PROPERTY INTERESTS, UTILITIES, ETC.

      All easements, leasehold and other property interests, and all utility and
other services, means of transportation, facilities, other materials and other
fights that can reasonably be expected to be necessary for the construction,
completion and operation of the Project in accordance with applicable
requirements of law and the Financing Documents (including, without limitation,
gas, electrical, water and sewage services and facilities), have been procured
or axe commercially available to the Project, and, to the extent appropriate,
arrangements have been made on commercially reasonable terms for such easements,
interests, services, means of transportation, facilities, materials and rights.
No material licenses, trademarks, patents or other similar agreements are
necessary for the construction, ownership, operation and maintenance of the
Project.







<PAGE>   22
                                      -18-

SECTION 3.12. ENVIRONMENTAL MATTERS.

      (a)   The Company has duly complied with in all material respects, and its
business, operations, assets, equipment, property, leaseholds, and other
facilities are materially in compliance with, the provisions of all
environmental, health and safety laws, codes and ordinances applicable to the
Project, and all rules and regulations promulgated thereunder. The Company
(x) has been issued and will maintain all required permits, licenses,
certificates and approvals relating to, and (y) has received no complaint,
order, directive, claim, citation or notice by any governmental authority or any
Person with respect to: (i) air emissions, (ii) discharges to surface water or
ground water, (iii) noise emissions, (iv) solid or liquid waste disposal, (v)
the use, generation, storage, transportation or disposal of toxic or hazardous
substances or wastes, or (vi) other environmental, health or safety matters
applicable to the Project.

      (b)   The Company has duly complied with the provisions of Schedule 5.12.

SECTION 3.13. PROJECT COST AND PROJECT COMPLETION.

      The Company's good faith estimate of the total cost of the Project
(including provisions for contingencies) is the equivalent of $28,400,000 based
on the Financial Plan set forth in Schedule 1.03, and the Company's good faith
estimate of the date on which it will achieve Project Completion is March 31,
1996.

SECTION 3.14. DISCLOSURE.

      All documents, reports or other written information pertaining to the
Project (including, without limitation, the Application, this Agreement, and the
other Financing Documents) that have been furnished to OPIC are true and correct
in all material respects and do not contain any material misstatement of fact or
omit to state a material fact or any fact necessary to make the statements
contained herein or therein not materially misleading. There is no fact known to
the Company, that has not been disclosed to OPIC in writing, the existence of
which is reasonably likely to have a Material Adverse Effect. No condition has
arisen since the date of the Application that has or is reasonably likely to
have a Material Adverse Effect.

SECTION 3.15. CHARTER DOCUMENTS.

      The Company's Charter Documents (i) provide that Indebtedness of the
Company (other than the OPIC Loan, the Subordinated Loan and an amount not to
exceed $150,000) shall require approval by a two-thirds majority vote of the
Company's Board of Directors and (ii) prohibit Indebtedness of the Company other
than Indebtedness permitted by this Agreement and Liens on the Company's assets
other than Liens permitted by this Agreement.







<PAGE>   23
                                      -19-

                                   ARTICLE IV.
                      CONDITIONS PRECEDENT TO DISBURSEMENT

      Unless OPIC otherwise agrees in writing, the obligation of OPIC to make
the Disbursement of the Loan is subject to the prior fulfillment, to OPIC's
satisfaction in its sole discretion, of the following conditions precedent and
to their continued fulfillment on the date of the Disbursement:

SECTION 4.01. CORPORATE AUTHORIZATION.

      OPIC shall have received a certificate of an Authorized Officer of the
Company, dated the Closing Date, substantially in the form of Exhibit C:

      (a)   attaching a copy of each of the Charter Documents of the Company, as
amended to date, certifying that the attached copies are true and complete and
in full force and effect as of the Closing Date, together with evidence
satisfactory to OPIC that such documents have been approved by the competent
governmental agencies and authorities in the Russian Federation.

      (b)   attaching a copy of the resolutions of the Board of Directors of the
Company, and of all documents evidencing any other necessary corporate action
(each such resolution and document satisfactory to OPIC in form and substance),
authorizing it to execute, deliver and perform this Agreement, the Notes, and
each of the other Financing Documents to which it is or will be a party and to
engage in the transactions herein contemplated, and certifying that the attached
copies are true and complete and in full force and effect as of the Closing
Date; and

      (c)   certifying the names, titles and specimen signatures of the Persons
who are authorized to execute and deliver on behalf of the Company this
Agreement, the Notes, each of the other Financing Documents to which it is or
will be a party and all other notices or instruments contemplated hereunder.

SECTION 4.02. REPRESENTATIONS AND DEFAULTS.

      The representations and warranties set forth in Article III shall be true
and correct on the date of the Disbursement as if made on such date, and on such
date no Event of Default, and no event or condition that with the passage of
time or the giving of notice, or both, could constitute an Event of Default,
shall have occurred and be continuing.





<PAGE>   24


                                      -20-

SECTION 4.03. CHANGE IN CIRCUMSTANCES.

      At the time of the Disbursement, no circumstance shall exist, and no
change of law or regulation of any governmental authority shall have occurred,
that in OPIC's reasonable judgment is reasonably likely to have a Material
Adverse Effect.

Section 4.04. Certification.

      The Company shall have furnished OPIC with a certificate of an Authorized
Officer of the Company, dated the date of the Disbursement, substantially in the
form of Exhibit D (i) certifying the satisfaction of each of the conditions set
forth in Sections 4.02 and 4.03, and (ii) setting forth the Project costs to
which the Disbursement will be applied and certifying that the proceeds of the
Disbursement are presently needed for these purposes, or that the Company or a
Sponsor has advanced funds in connection with which it requests the
Disbursement.

SECTION 4.05. FUNDING ARRANGEMENTS.

      Suitable arrangements shall have been made for funding the Loan (all
agreements and documents required in connection with such funding arrangements
are collectively referred to herein as the "FUNDING DOCUMENTS," which Funding
Documents shall be satisfactory to OPIC in form and substance), which funding
arrangements shall be satisfactory to OPIC in form and substance, including
without limitation satisfaction by the Company of all conditions precedent to
the obligations of any other party to the Funding Documents and performance by
the Company of all other obligations on its part to be performed prior to the
making of the first Disbursement pursuant to any Financing Document.

SECTION 4.06. FINANCING DOCUMENTS.

      OPIC shall have received the following documents, each of which shall be
satisfactory to OPIC in form and substance, each of which shall have been duly
executed by the parties thereto and each of which shall be in full force and
effect in accordance with its terms without default:

      (a)   OPIC shall have received duly executed originals (or, AT OPIC's sole
discretion, a true and complete copy) of each of the following agreements and
documents (the "LOAN DOCUMENTS").

          (i)        this Agreement;                                      
          (ii)       any Notes issued in connection with the Disbursement;
          (iii)      the Project Completion Agreement;                    
          (iv)       the Security and Accounts Deed;                      
          (v)        and the Subordination Agreement.                     
           












<PAGE>   25

                                      -21-

      (b)   OPIC shall have received duly executed originals (or, at OPIC's sole
discretion, a true and complete copy) of agreements and documents (the
"SECURITY DOCUMENTS"), satisfactory to OPIC in form and substance, whereby the
payment of all amounts due or to become due hereunder and under the Notes
(including but not limited to principal, interest and fees) is secured by valid
and enforceable first Liens on all of the Company's assets set forth below (to
the extent permitted under Russian law with respect to Security Documents
governed by Russian law and English law with respect to Security Documents
governed by English law):

            (i)   all of the Company's real property, fixtures and equipment,
      both now owned and hereafter acquired, and in the proceeds thereof, and
      the Company's leasehold interest in real property, fixtures, and
      equipment, and in the proceeds thereof;

            (ii)  all of the Company's movable assets, including equipment,
      inventory, and accounts receivable, both now owned and hereafter acquired,
      and in the proceeds thereof;

            (iii) all of the Company's intellectual property;

            (iv)  the Designated Accounts and the Russian Bank Accounts and;

            (v)   all such other agreements, documents or actions which in the
      opinion of special legal counsel to OPIC are necessary or advisable to
      secure the payment of all amounts due or to become due hereunder and under
      the Notes with valid and enforceable first Liens on all of the Company's
      assets.

Each of the Security Documents shall be in full force and effect and shall have
been duly filed and registered, notarized or recorded in every jurisdiction in
which such filing, registration, notarization or recording is necessary to make
valid and effective the Liens intended to be created thereby, and the rights of
OPIC thereunder, and OPIC shall have received evidence satisfactory to it that
such filing and registration or recording has been made.

      (c)   OPIC shall have received duly executed originals (or, at OPIC's sole
discretion, a true and complete copy) of a share pledge agreement (the "CONTRACT
OF PLEDGE OF SHARES"), satisfactory to OPIC in form and substance, whereby the
Sponsors' ownership interests in the Company are pledged in favor of OPIC.

      (d)   OPIC shall have received copies of the following agreements, each of
which shall be satisfactory to OPIC in form and substance, shall have been duly
executed by the parties thereto and shall have been certified by an Authorized
Officer of the Company as being true and







<PAGE>   26


                                         -22-

complete and in full force and effect in accordance with its terms without
default (the "PROJECT DOCUMENTS"):

          (i)       the Harvesting Plan;                                      
          (ii)      all contracts for the lease of equipment or facilities for 
                    the Project exceeding  value of $1,000,000; and   
          (iii)     all contracts to provide services to the Project exceeding
                    a value of $1,000,000.                                    
          
      (e)   OPIC shall have received duly executed originals (or, at OPIC's sole
discretion, a true and complete copy) of each of the Funding Documents.

The Loan Documents, the Security Documents, the Project Documents, the Contract
of Pledge of Shares and the Funding Documents, together with any other
agreements or instruments pursuant to which the Loan or any portion thereof is
made to the Company, are collectively referred to herein as the "FINANCING
DOCUMENTS."

SECTION 4.07. SPONSOR INVESTMENT; SUBORDINATED LOAN.

      OPIC shall have received satisfactory evidence, which evidence shall
include certificates of the Company's independent accountants and certified
copies of relevant stock certificates, that (i) the Sponsors, directly or
indirectly, have made an advance of the Subordinated Loan to the Company in the
amount of $5,400,000 in accordance with the Financial Plan and (ii) the
Shareholders hold the legal and beneficial title to the equity of the Company in
the percentages set forth in Section 3.04.

SECTION 4.08. HARVESTING PLAN.

      OPIC shall have received a copy of the Company's 10 year harvesting plan
(1992-2002) approved by the Khabarovsk Kray Forest Natural Resources Authority
(the "Harvesting Plan").

SECTION 4.09. GOVERNMENT APPROVALS.

      OPIC shall have received copies, certified by an Authorized Officer of the
Company as true and complete and in full force and effect, of all material
registrations, declarations, filings, governmental consents, licenses,
approvals, authorizations, or permits required by the Government of Russia or
obtained in compliance with Section 3.10, all of which registrations and
governmental consents are listed in Schedule 4.09 (as may be amended prior to
the Disbursement) and all of which are, in the opinion of special legal counsel
to OPIC, necessary or advisable for (i) the approval of the Project by the
Government of Russia for purposes of OPIC's guaranty under the Funding
Documents, (ii) the registration of the Loan with the Central Bank of Russia and
the





<PAGE>   27

                                      -23-

receipt of all foreign exchange consents necessary for the payment of all 
amounts due under this Agreement, (iii) the receipt of all foreign exchange 
consents necessary in connection with the Security and Accounts Deed, the Loan, 
the Note(s), and the other Financing Documents, and the payment of all amounts 
due or to become due with respect thereto, not to be subject to any Taxes, 
(iv) the construction and operation of the Project, and (v) the performance by 
the Company of this Agreement, the Notes, and each of the other Financing 
Documents to which it is or will be a party.

SECTION 4.10. LAND.

      OPIC shall have received evidence in form and substance satisfactory to it
that the Company, either directly or indirectly, has acquired complete, good and
valid title or complete, good and valid leasehold rights to the land necessary
for the Project, subject only to Liens permitted hereunder.

SECTION 4.11. INSURANCE.

      OPIC shall have received from the insurer a copy of the insurance policy
or policies required by Section 5.05, showing OPIC's endorsement as additional
insured, together with evidence that such policy or policies is in full force
and effect without default.

SECTION 4.12. FINANCIAL INFORMATION AND CONSTRUCTION PROGRESS.

      Not less than 10 Business Days before the Closing Date, OPIC shall have
received: (i) any Financial Statements, reports, and other information that the
Company, pursuant to Section 5.07, would otherwise be required to furnish to
OPIC on or before the Closing Date, and (ii) evidence, satisfactory to OPIC in
form and substance, that sufficient progress has been made in the construction
of the Project to proceed with such Disbursement.

SECTION 4.13. APPOINTMENT OF AGENT.

      OPIC shall have received evidence that: (i) the agent for service of
process referred to in Section 7.03(b) has been duly appointed and holds such
appointment without reservation until six months after the Loan Maturity Date,
together with evidence of the prepayment in full of the fees of such agent; and
(ii) the agent for service of process referred to in the other Loan Documents,
the Funding Documents, the Security Documents and the Contract of Pledge of
Shares has been duly appointed and holds such appointment without reservation
until six months after the Loan Maturity Date, together with evidence of the
prepayment in full of the fees of such agent.







<PAGE>   28
                                      -24-

SECTION 4.14. LEGAL OPINIONS.

      OPIC shall have received written opinions, dated the Closing Date,
satisfactory to OPIC in form and substance, (i) of Freshfields, OPIC's special
legal counsel, (ii) of Hale and Dorr, the Company's and PGI's legal counsel in
the United States, and (iii) of Lex International, the Company's legal counsel
in Russia.

SECTION 4.15. PAYMENT OR REIMBURSEMENT OF EXPENSES.

      All fees and other amounts due to OPIC with respect to the making of the
Loan, and all other amounts payable or reimbursable by the Company in connection
with the making of the Loan, shall have been paid, including, but not limited
to, (i) the Commitment Fee, (ii) the Facility Fee, (iii) any Taxes payable
pursuant to Section 2.09, and (iv) any amounts payable pursuant to Section
2.10(a), including the fees and expenses of OPIC legal counsel and business
consultants and the costs of registration and recordation of any of the
Financing Documents.

SECTION 4.16. OTHER DOCUMENTS.

      OPIC shall have received such other certificates, opinions, agreements and
documents, each satisfactory to OPIC in form and substance, as it may reasonably
request.

                                   ARTICLE V.
                              AFFIRMATIVE COVENANTS

      Unless OPIC otherwise agrees in writing, so long as the Commitment shall
remain outstanding and until all amounts due and to become due hereunder and
under the Notes shall have been paid in full, the Company covenants and agrees
as follows:

SECTION 5.01. PROJECT COMPLETION.

      The Company shall construct and implement the Project promptly, shall
apply the proceeds of the Loan and the Subordinated Loan exclusively to the
Project and shall use its diligent, good faith efforts to cause Project
Completion to be achieved on or prior to March 31, 1996. If the Company becomes
unable to achieve the completion undertakings set out in the preceding sentence,
or becomes unable to meet its other obligations prior to Project Completion, the
Company shall promptly so notify OPIC.






<PAGE>   29
                                      -25-

SECTION 5.02. COMPANY OPERATIONS.

      The Company shall duly and punctually perform its obligations under this
Agreement, the Notes, and each of the other Financing Documents to which it is a
party. The Company shall conduct its operations on the basis of customary
commercial practice and arm's-length arrangements, with due diligence and
efficiency and under the supervision of qualified and experienced management.
The Company shall repair, replace and protect each of its assets so that its
business can be conducted properly at all times.

SECTION 5.03. MAINTENANCE OF RIGHTS AND COMPLIANCE WITH LAWS.

      The Company shall (i) whenever in its power to do so, acquire, maintain
and renew all rights, contracts, powers, privileges, leases, lands, sanctions
and franchises necessary for the conduct of its business and the performance of
its Obligations hereunder and under the other Financing Documents; (ii) conduct
its business in compliance in all material respects with all applicable laws and
directives of governmental authorities having force of law, including applicable
environmental standards; and (iii) duly pay before they become overdue all 
Taxes, assessments and other government charges levied or imposed in any 
jurisdiction upon its property, earnings or business, that if not paid is 
reasonably likely to have a Material Adverse Effect, except amounts being 
contested in good faith by appropriate proceedings diligently pursued for which
adequate reserves shall have been established.

SECTION 5.04. GOVERNMENT APPROVALS; FOREIGN EXCHANGE CONSENTS.

      (a)   The Company shall obtain, and shall at all times maintain in full
force and effect, all material registrations, declarations, filings,
governmental consents, licenses, approvals, authorizations, and permits
(including, but not limited to, those listed in Schedule 4.09) necessary for the
performance by the Company of this Agreement, the Notes, and each of the other
Financing Documents to which it is or will be a party.

      (b)   Following the Disbursement of the Loan, the Company shall promptly
cause such disbursed portion of the Loan to be duly registered or recorded with
the Central Bank of Russia and shall take all other steps necessary to secure
the foreign exchange consents required for the payment of all amounts due
hereunder and under the Notes. The Company shall furnish OPIC with a copy of
each such registration, recording and consent.

SECTION 5.05. MAINTENANCE OF INSURANCE.

      (a)   The Company (or the U.S. Sponsor on behalf of the Company) shall
maintain or cause to be maintained in effect insurance with respect to the
Project, against such hazards (including, without limitation, fire, lightning,
collapse, wind and hail, explosion, smoke, aircraft





<PAGE>   30


                                         -26-

and vehicles, riot, civil commotion, vandalism, other extended coverage risks,
flood and earthquake, environmental impairment liability and environmental
remediation (to the extent insurance for environmental impairment liability and
environmental remediation is available on commercially reasonable terms), and
any other hazards to the extent that properties of a nature similar to those
included in the Project and in the same or similar localities are usually
insured), in such form (including the form of the loss payable clauses) and with
such insurers as shall be selected by the Company (or the U.S. Sponsor on behalf
of the Company) and approved by OPIC (such approval not to be withheld
unreasonably), such insurance to be in such amount as the Company would, in the
prudent management of its property, maintain, or would be maintained by others
similarly situated in respect of property similar to the Project, PROVIDED that
(i) the amount of such insurance with respect to the Project shall not at any
time be less than the greater of the total cost of the construction and
acquisition of the Project (other than the cost of the land underlying the
Project) or the amount of all obligations of the Company from time to time owing
to OPIC under this Agreement or any other Loan Document, whether for principal,
interest, fees, expenses or otherwise and (ii) such insurance shall be on a "no
co-insurance/agreed-amount" basis.

      The Company (or the U.S. Sponsor on behalf of the Company) shall also
carry workmen's compensation insurance, disability benefits insurance, and such
other form of insurance which the Company is required by law to provide,
coveting loss resulting from injury, sickness, disability, or death of the
employees of the Company, except, subject to OPIC's approval, to the extent the
Company can become a qualified self-insurer under relevant statutes.

      The Company (or the U.S. Sponsor on behalf of the Company) shall also
carry business interruption insurance covering risk of loss as a result of the
cessation or material interruption of the business of the Company for a period
of 9 months or any part thereof and providing for payments during a period of 9
months of not less than $5,000,000.

      All insurance policies required hereby covering loss or damage to the
Project shall name the Company and OPIC as additional insureds as their
interests may appear and, shall provide that any payment thereunder for any loss
or damage shall be made to OPIC (unless otherwise approved by OPIC), except that
such policies may provide that any payment of less than $500,000 made in respect
of any single casualty or other occurrence may be paid solely to the Company.
OPIC shall apply all such proceeds as a prepayment of the Loans pursuant to
Section 2.07, PROVIDED that OPIC shall forthwith remit to the Company any
proceeds paid to OPIC, (i) upon certification by the Company that the property
damaged or lost has been fully repaired or replaced, or (ii) if, within 60 days
of the event giving rise to such payment of proceeds, OPIC shall have approved a
plan submitted by the Company whereby the property damaged or destroyed by such
event is to be fully repaired or replaced, and PROVIDED further that if an Event
of Default shall have occurred and be continuing, OPIC shall apply such amount
in accordance with Section 7.02. Any other permitted payee of such insurance
proceeds shall also apply all such proceeds as a prepayment of the Loan pursuant
to Section 2.07, PROVIDED that, if within 60 days of







<PAGE>   31


                                         -27-

the event giving rise to such payment of proceeds, OPIC shall have approved a
plan submitted by the Company whereby the property damaged or destroyed by such
event is to be fully repaired or replaced, then such application of such
proceeds shall not be required.

      To the extent available on commercially reasonable terms, all policies
shall insure the interests of OPIC regardless of any breach or violation by the
Company (or the U.S. Sponsor) of warranties, declarations or conditions
contained in such policies or any action or inaction of the Company (or the U.S.
Sponsor) or others; each such policy shall expressly provide that all provisions
thereof, except the limits of liability, shall operate in the same manner as if
there were a separate policy coveting each such insured. Each such policy shall
waive any right of subrogation of the insurers to any rights of the Company (or
the U.S. Sponsor) or OPIC in respect of any liability of the Company (or the
U.S. Sponsor) or OPIC; and shall waive any right of the insurers to any setoff
or counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of the Company (or the U.S. Sponsor) or OPIC; each such
policy shall provide that, if such insurance is canceled, terminated or
materially changed for any reason whatsoever (other than non-payment of
premium), the insurers will promptly notify the Company (and the U.S. Sponsor)
and OPIC and any such cancellation, termination or change shall not be effective
as to the Company (or the U.S. Sponsor) or OPIC for 30 days after receipt of
such notice, and appropriate certification shall be made to the Company (or the
U.S. Sponsor) by each insurer with respect thereto; and each such policy shall
provide, or each insurer shall agree with OPIC, that the insurer shall give OPIC
35 days' prior notice of the expiration of insurance under such policy in
accordance with its terms if the Company (or the U.S. Sponsor) has failed by
such time to pay any premium due in respect of the renewal of insurance under
such policy.

      (b)   The Company (or the U.S. Sponsor on behalf of the Company) shall,
without cost to OPIC, maintain or cause to be maintained in effect insurance
policies with respect to the Project insuring against liability for death of, or
loss, injury or damage to, the person or property of others from such risks, in
such form and with such insurers as shall (in the case of such risks, form and
insurers) be selected by the Company (or the U.S. Sponsor) and approved by OPIC
(which approval shall not be unreasonably withheld) and in such amounts as the
Company would in the prudent management of its property maintain, or would be
maintained by others similarly situated in respect of property similar to the
Project. Each of the insurance policies maintained in accordance with this
Section 5.05(b) shall name the Company and OPIC as additional insureds
thereunder with respect to the Project and, to the extent possible on
commercially reasonable terms, shall insure the interests of OPIC regardless of
any breach of or violation by the Company (or the U.S. Sponsor) of, any
declarations or conditions contained in such policies. Each such insurance
policy shall, to the extent possible on commercially reasonable terms, expressly
provide that all of the provisions thereof, except the limits of liability
(which shall be applicable to all insureds as a group) and liability for
premiums (which shall be solely a liability of the Company) shall operate in the
same manner as if there were a separate policy covering each insured, and shall
provide that such insurance, as to the interest of OPIC therein, shall not be
invalidated by the use or operation of the Project for purposes which are not
permitted by such policy.





<PAGE>   32
                                      -28-

      (c)   On or before the date of the Disbursement hereunder and thereafter
at intervals of not more than twelve calendar months (or less at the request of
OPIC) until all obligations of the Company under the Loan Documents shall have
been paid in full, the Company (or the U.S. Sponsor on behalf of the Company)
shall furnish to OPIC a certificate signed by a duly authorized representative
of each insurer, showing the insurance then maintained by the Company (or the
U.S. Sponsor on behalf of the Company) pursuant to this Section 5.05 and stating
that such insurance complies with the terms hereof. The Company (or the U.S.
Sponsor) shall cause the insurers with whom it maintains such insurance to agree
to advise the Company (and the U.S. Sponsor) and OPIC in writing promptly of any
default in the payment of any premiums or any other act or omission on the part
of the Company (or the U.S. Sponsor) of which they have knowledge and which
might invalidate or render unenforceable, in whole or in part, any such
insurance.

      (d)   In the event the Company (or the U.S. Sponsor on behalf of the
Company) fails to take out or maintain the full insurance coverage required by
this Agreement or fails to keep the Project in good order and repair and in as
reasonably safe condition as its operations permit, OPIC, upon thirty days'
written notice (unless ,the aforementioned insurance would lapse within such
period or such other event as would lessen the security for the Loans would
occur, in which event notice should be given as soon as reasonably possible) to
the Company (and the U.S. Sponsor) of any such failure on its part, may (but
shall not be obligated to) take out the required policies of insurance and pay
the premiums on the same, pay such taxes or other charges or complete the
Project or make such repairs, renewals and replacements as may be necessary to
maintain the Project in good order and repair and in as reasonably safe
conditions as the Company's operations permit. All amounts so advanced therefor
by OPIC shall become an additional obligation of the Company to OPIC, and the
Company will forthwith pay such amounts to OPIC, together with interest thereon
at the default rate specified in Section 2.04(b) from the date so advanced.

SECTION 5.06. ACCOUNTING AND FINANCIAL MANAGEMENT.

      (a)   The Company shall (i) maintain adequate management information and
cost control systems, (ii) maintain a system of accounting, (iii) prepare its
annual Financial Statements in accordance with U.S. GAAP, (iv) engage Arthur
Andersen & Co., or other independent internationally-recognized accountants
satisfactory to OPIC, (vi) notify OPIC of any change in such accountants and the
reason therefor, and (vii) upon OPIC's reasonable request to the Company, shall
instruct such accountants to communicate directly with OPIC regarding the
Company's accounts and operations.

      (b)   The Company shall make arrangements satisfactory to OPIC for
overseeing the financial operations of the Company, including its cash
management, accounting and financial reporting, and for overseeing the Company's
relationship with its lenders and independent







<PAGE>   33
                                      -29-

accountants; such arrangements may include, but shall not be limited to,
employing a chief financial officer to oversee the financial operations of the
Company.

SECTION 5.07. FINANCIAL STATEMENTS AND OTHER INFORMATION.

      At its cost the Company shall furnish to OPIC each of the following
documents:

      (a)   Within 45 days after the end of each fiscal quarter of each Fiscal
Year, its unaudited Financial Statements, and a comparison between such
Financial Statements and the projections for such fiscal quarter furnished
pursuant to Section 5.07(e) below, all certified by the chief financial officer
of the Company as being complete and correct in all material respects, together
with such officer's certificate that his or her review has not disclosed the
existence of an Event of Default, or an event or condition that with the passage
of time or the giving of notice, or both, could constitute an Event of Default,
or, if any such event or condition then exists, specifying the nature and period
of existence thereof and what action the Company has taken or proposes to take
with respect thereto;

      (b)   Within 100 days after the end of each Fiscal Year, its audited
Financial Statements, together with a certificate by the independent accountants
reporting thereon describing briefly the scope of their examination (which shall
include a review of the relevant terms of this Agreement) and certifying whether
their examination has disclosed the existence of an Event of Default, or an
event or condition that with the passage of time or the giving of notice, or
both, could constitute an Event of Default, and if so, specifying the nature and
period of existence thereof;

      (c)   Until the Company shall have achieved Project Completion, a report
within 45 days after the end of each fiscal quarter certified by an Authorized
Officer setting forth in reasonable detail the progress of the Project,
including (i) expenditures of funds, (ii) estimated future costs, (iii)
unexpended funds available to the Company, (iv) the progress and percentage of
completion of the major phases of Project construction and the total
construction work of the Project, (v) the acquisition of fixtures and equipment,
and (vi) any material variation order, amendment or waiver relating to the
Construction Contract;

      (d)   Within 45 days after the end of each Fiscal Year, a report certified
by an Authorized Officer setting forth in reasonable detail all transactions
between (x) the Company and (y) a Sponsor, a Shareholder or an Affiliate of any
of the foregoing;

      (e)   Not later than 30 days prior to the beginning of each Fiscal Year,
an annual operating forecast for the Company, including its projected quarterly
Financial Statements for such Fiscal Year, together with a statement of the
assumptions on which such forecast is based;

      (f)   Within 90 days after the end of each Fiscal Year, the 
Self-Monitoring Questionnaire, certified by an Authorized Officer of the 
Company as true and complete; and







<PAGE>   34
                                      -30-

      (g)   Copies of all other annual or interim audit reports submitted to the
Company by its independent accountants and such other information and data with
respect to its operations (including supporting information as to compliance
with this Agreement) as OPIC may reasonably request from time to time.

SECTION 5.08. ACCESS TO RECORDS; INSPECTION; MEETINGS.

      The Company shall give and/or the Shareholders shall cause the Company to
give, upon request of OPIC, to any representatives of OPIC, access during normal
business hours to, and permit them to examine, copy and make extracts from, any
and all records and documents in the possession or subject to the control of the
Company relating to its operations and financial affairs, and to inspect any of
its facilities or properties. If OPIC so requests, the Company shall give OPIC
not less than 15 days' notice of, and shall permit an Authorized Officer of OPIC
to attend, each meeting of its shareholders and of its directors. Subject to all
applicable law, OPIC shall treat the information contained in such records and
documents and received in such meetings, or otherwise received from the Company,
as confidential information not to be disclosed to other Persons.

SECTION 5.09. NOTICE OF DEFAULT AND OTHER MATTERS.

      The Company shall immediately notify OPIC of (i) the occurrence of each
Event of Default and of each event or condition known to any of its officers
that with the passage of time or the giving of notice, or both, could constitute
an Event of Default, (ii) any actions, suits, other legal proceedings or
arbitral proceedings against the Company that involve claims aggregating more
than the equivalent of $250,000, and (iii) the occurrence of any other condition
or event (including government action) that is reasonably likely to have a
Material Adverse Effect.

SECTION 5.10. SECURITY DOCUMENTS.

      (a)   The Company at its cost shall take all actions necessary to
establish and maintain each of the Security Documents in full force and effect
and enforceable in accordance with its terms, to the extent permitted under
Russian law with respect to Security Documents governed by Russian law and
English law with respect to Security Documents governed by English law,
including all (i) filings and recordations, (ii) payment of costs and expenses 
and other charges relating to notarization, registration or other procedures,
(iii) issuance of supplemental documentation, including continuation statements,
(iv) discharge of all claims or other Liens adversely affecting the rights of
OPIC in the property subject to any Security Document, (v) publication or other
delivery of notice to third parties, (vi) deposit of title documents, and (vii)
taking all actions necessary to ensure that all after-acquired property of the
Company is







<PAGE>   35
                                      -31-

subject to a valid and enforceable first-ranking Lien in favor of OPIC, to the
extent permitted under Russian law or English law, as applicable.

      (b)   The Company shall use its best efforts to obtain a letter of
acknowledgment from Tumminsky Leskhoz on the license granted to the Company
substantially in the form of Exhibit J.

      (c)   Without limiting the Company's obligations under Section 5.10(a),
the Company and OPIC shall consult annually and determine what actions, if any,
the Company shall take in accordance with Section 5.10(a).

SECTION 5.11. FINANCIAL RATIOS.

      The Company shall maintain the following financial ratios:

      (a)   WORKING CAPITAL: After Project Completion, the Company shall not
            permit the ratio of Current Assets to Current Liabilities to be less
            than 1.4 to 1.

      (b)   OTHER FINANCIAL COVENANTS: The Company shall:

            (i)   maintain a ratio of Indebtedness (excluding the Subordinated
                  Loan) to Adjusted Net Worth of 1.857 to 1; and

            (ii)  after Project Completion, maintain a Debt Service Ratio of at
                  least 1.2 to 1.

For the purposes of the financial covenants set forth in this Section 5.11, the
Subordinated Loan shall be calculated as equity of the Company.

SECTION 5.12. ENVIRONMENTAL COMPLIANCE.

      (a)   The Company shall comply with in all material respects, and shall
conduct its business, operations, assets, equipment, property, leaseholds, and
other facilities materially in compliance with, the provisions of all applicable
environmental, health and safety laws, codes and ordinances, and all rules and
regulations promulgated thereunder. The Company shall maintain all material
required permits, licenses, certificates and approvals relating to: (i) air
emissions, (ii) discharges to surface water or ground water, (iii) noise
emissions, (iv) solid or liquid waste disposal, (v) the use, generation,
storage, transportation or disposal of toxic or hazardous substances or wastes,
or (vi) other environmental, health or safety matters applicable to the Project.

      (b)   The Company shall annually obtain a logging ticket from the
Khabarovsk Kray Forest Natural Resources Authority and duly comply with the
provisions of Schedule 5.12. The







<PAGE>   36
                                      -32-

Company shall appoint an independent environmental advisory committee (the
"OVERSIGHT GROUP"), to be composed of three members chosen by the Company, with
OPIC's prior approval (such approval not to be unreasonably withheld) and one
representative of the Company. The Oversight Group shall annually monitor the
Company's compliance with the Harvesting Plan and Schedule 5.12 and provide a
report to OPIC.

SECTION 5.13. DESIGNATED ACCOUNTS AND RUSSIAN BANK ACCOUNTS.

      (a)   The Company shall open and maintain the Designated Accounts pursuant
to the Security and Accounts Deed. The Company shall (i) receive the
Disbursement in the Funding Account, (ii) deposit the Proceeds into the Timber
Proceeds Account and (iii) maintain, in U.S. Dollars, the Cash Collateral Amount
in the Cash Collateral Account, so long as any amount remains outstanding under
the Loan or any fees are due to OPIC and operate the Designated Accounts as
provided in the Security and Accounts Deed and the license issued by the Russian
Central Bank. The Cash Collateral Amount may be used by OPIC to cure a payment
default, with full replenishment obligations by the Company within 10 days of
such use.

      (b)   The Company shall open and maintain one or more Russian Bank
Accounts.



                                   ARTICLE VI.
                               NEGATIVE COVENANTS

      Unless OPIC otherwise agrees in writing, so long as the Commitment shall
remain outstanding and until all amounts due and to become due hereunder and
under the Notes shall have been paid in full, the Company covenants and agrees
as follows:

SECTION 6.01. LIENS.

      The Company shall not create, assume or otherwise permit to exist any Lien
on any of its properties or assets, whether now owned or hereafter acquired, or
in any proceeds or income therefrom, except for:

      (a)   the Liens created under the Security Documents or pursuant to the
            Subordination Agreement;



      (b)   Liens for Taxes or other statutory Liens that are being contested or
litigated in good faith and for which adequate reserves have been established;
and






<PAGE>   37
                                      -33-

      (c)   any mechanic's, worker's or other like Liens arising by mandatory
provision of law securing obligations incurred in the ordinary course of
business that are not yet overdue or that are being contested or litigated in
good faith; and

      (d)   subject to OPIC's prior written consent, vendor Liens.

SECTION 6.02. INDEBTEDNESS.

      The Company shall not incur, assume, guarantee, or permit to exist or
otherwise become liable for Indebtedness except:

      (a)   the Loan;

      (b)   Indebtedness arising under the Subordinated Loan, subordinated to
the Loan pursuant to the terms of the Subordination Agreement;

      (c)   Indebtedness fully subordinated to the Loan arising under the
Project Completion Agreement;

      (d)   Indebtedness consisting of unsecured trade credit from suppliers of
goods and services incurred in the ordinary course of business and on terms
requiring payment in full in not more than 90 days; and

      (e)   Indebtedness which, when incurred, will not cause the Company's
ratio of Indebtedness (excluding the Subordinated Loan) to Adjusted Net Worth to
exceed 1.857 to 1, and (y) its Adjusted Net Worth to be less than $3,200,000,
and provided, that no Event of Default under the Finance Agreement then exists
or would exist after such Indebtedness is incurred.

SECTION 6.03. NO ALTERATION OF AGREEMENTS.

      (a)   The Company shall not terminate, amend or grant any waiver of, or
assign any of the respective duties or obligations under, any of its Charter
Documents or any provision of any of the Financing Documents to which it is a
party (other than amendments or waivers, either to correct manifest error or
which are of a formal, minor, or technical nature and do not change materially
any Person's fights or obligations, provided that the Company promptly gives
OPIC notice of such amendment or waiver).

      (b)   The Company shall not approve any variation or change order under,
or amend or grant any waiver of, any provision of, the Construction Contract,
the effect of which, individually or in aggregate, could be to increase the cost
of the Project ten percent (10%) above the cost set forth in the Financial Plan
and referred to in Section 3.13.





<PAGE>   38
                                      -34-

SECTION 6.04. DIVIDENDS AND SHARE REDEMPTIONS AND SUBORDINATED LOAN PAYMENTS.

      The Company shall not and the Shareholders shall cause the Company to not
declare or pay any dividends or make any other distributions on any shares of
any class of its capital stock, or purchase, acquire, redeem or retire (directly
or indirectly through any subsidiary of the Company) any of such shares, or make
payments of principal or interest on the Subordinated Loan, until all amounts
due or to become due hereunder or under the Notes shall have been paid in full;
PROVIDED, HOWEVER, that after the Company shall have (x) achieved Project
Completion and (y) begun to repay the Loan in accordance with Section 2.05, the
Company may (subject to the mandatory prepayment provisions set forth in Section
2.07(b)) pay such dividends or redemptions or make Subordinated Loan payments,
but only if, after giving effect to each such dividend or redemption or payment:
(i) no Event of Default, and no event or condition that with the passage of time
or the giving of notice, or both, could constitute an Event of Default, shall
have occurred and be continuing; (ii) the Company shall be in compliance with
the financial ratios set forth in Section 5.11; (iii) its Adjusted Net Worth
would not be less than $3,200,000 and (iv) the aggregate amount of all such
dividends or redemptions or Subordinated Loan payments paid in any Fiscal Year
does not exceed fifty percent (50%) of the Company's Net Income for the prior
Fiscal Year, unless the Company shall have made a mandatory prepayment of the
Loan in an amount equal to one-half of such excess pursuant to Section 2.07.

SECTION 6.05. CONDUCT OF BUSINESS WITH SPONSORS AND SHAREHOLDERS.

      (a)   The Company shall not conduct any business with, or enter into any
business transaction involving, a Sponsor, Shareholder or an Affiliate of any of
the foregoing, except on an arm's length basis and subject to the reporting
requirement set forth in Section 5.07(d).

      (b)   Except for mounts permitted under Section 6.04, the Company shall
not pay, or incur or assume any obligation to pay, any amount to a Sponsor,
Shareholder or an Affiliate of any of the foregoing, including without
limitation salaries, bonuses, commissions, management fees, consulting fees,
technical assistance fees and debt service; PROVIDED, HOWEVER, that after the
Company shall have (x) achieved Project Completion and (y) begun to repay the
Loan in accordance with Section 2.05, the Company may (subject to the mandatory
prepayment provisions set forth in Section 2.07(b)) make such payments, but only
if, after giving effect to each such payment: (i) no Event of Default, and no
event or condition that with the passage of time or the giving of notice, or
both, could constitute an Event of Default, shall have occurred and be
continuing; (ii) the Company shall be in compliance with the financial ratios
set forth in Section 5.11; (iii) its Adjusted Net Worth would not be less than
$3,200,000 and (iv) the aggregate amount of all such payments or obligations in
any Fiscal Year does not exceed fifty percent (50%) of the Company's Net Income
for the prior Fiscal Year, unless the Company shall have made a mandatory
prepayment of the Loan in an amount equal to one-half of such excess.






<PAGE>   39
                                      -35-

      (c)   The Company shall not, without OPIC's prior approval, pay any
salary, bonus, management fee, commission or other compensation to any officer,
director, or partners of a Sponsor, Shareholder or an Affiliate, or any employee
of the Company, in any Fiscal Year, in excess of $150,000 per person.

SECTION 6.06. SALE OF ASSETS; MERGERS.

      The Company shall not:

      (a)   sell, assign, convey, lease or otherwise dispose of all or a
substantial part of its assets or properties, whether now owned or hereafter
acquired, except for the replacement of a capital asset with an asset of equal
or greater value;

      (b)   dissolve, liquidate or otherwise cease to do business;

      (C)   create any subsidiaries;

      (d)   acquire by purchase or otherwise any of the shares of capital stock
or assets of another Person; or

      (e)   merge or consolidate with any Person.

SECTION 6.07. LEASE OBLIGATIONS.

      The Company shall not enter into any agreement or arrangement to acquire
by lease the use of any property or equipment of any kind, if the annual rental
payable under such lease, when aggregated with the annual rentals payable under
all other leases already entered into by the Company, would exceed $100,000 or
its equivalent in any Fiscal Year.

SECTION 6.08. HEDGING ARRANGEMENTS.

      The Company shall not, without the prior written consent of 0PIC, enter
into any Hedging Arrangement, if as a result of such Hedging Arrangement the
Company might incur or otherwise become liable for any Indebtedness, whether in
respect of any cost of modifying the terms of such Hedging Arrangement or in
respect of any cost of terminating such Hedging Arrangement.

SECTION 6.09 ORDINARY CONDUCT OF BUSINESS.

      The Company shall not and the Shareholders shall not allow the Company to:






<PAGE>   40
                                         -36-

      (a)   engage in any business other than its present business activities,
those related to the Project and other activities similar thereto;

      (b)   materially change the nature or scope of the Project;

      (c)   change its Charter Documents in a manner that would be inconsistent
with the provisions of any of the Financing Documents;

      (d)   change its name or take any other action that might adversely affect
the Liens created by the Security Documents;

      (e)   enter into any partnership, profit-sharing or royalty agreement or
other similar arrangement whereby the Company's income or profits are, or might
be, shared with any other Person;

      (f)   purchase any equity securities off make or permit to exist any loans
or advances to, invest or acquire any interest whatsoever in, or assume,
guarantee, endorse or otherwise become directly or contingently liable for any
obligation or Indebtedness of, any Person, other than the endorsement of
negotiable instruments for collection in the ordinary course of business and the
prudent investment of idle surplus funds in readily marketable
Dollar-denominated debt securities; or

      (g)   fail to maintain its corporate existence and its right to carry on
its operations.

SECTION 6.10. WORKER RIGHTS.

      The Company shall not take any action to prevent its employees from
lawfully exercising their right of free association and their right to organize
and bargain collectively. The Company further agrees to observe applicable laws
relating to a minimum age for employment of children, acceptable conditions of
work with respect to minimum wages, hours of work and occupational health and
safety, and not to use forced labor. The Company is not responsible under this
Section 6.10 for the actions of a government.


                                  ARTICLE VII.
                              DEFAULTS AND REMEDIES

SECTION 7.01. EVENTS OF DEFAULT.

    The occurrence and continuation of any of the following events or
circumstances shall constitute an "EVENT OF DEFAULT" hereunder:






<PAGE>   41

                                      -37-

      (a)   The Company fails to pay when due any principal or interest payable
pursuant to any Note or any other amount payable pursuant to this Agreement;

      (b)   The Company fails to pay when due any principal of or interest on
any of its Indebtedness other than the Loan, and such failure continues beyond
the grace period, if any, applicable thereto; or a default occurs under any
agreement or instrument evidencing, or under which the Company has outstanding
at the time, any such Indebtedness and such default continues beyond the grace
period, if any, applicable thereto, if the effect of such default is to
accelerate, or to permit the acceleration of, the maturity of such Indebtedness;

      (c)   Any representation or warranty made by or on behalf of the Company
in this Agreement, or in any notice or other certificate, document, Financial
Statement or other statement delivered pursuant hereto, proves to have been
incorrect in when made;

      (d)   The Company fails to comply with any covenant or provision set forth
in Section 5.09, 5.13 or Article VI, or the Sponsors fail to perform their
obligations under the Project Completion Agreement;

      (e)   The Company fails to comply with or perform any agreement or
covenant contained herein other than those referred to in Sections 7.01(a), (b),
(c) and (d) above, and such failure continues for 30 days after the occurrence
thereof;

      (f)   Any authorization, consent or approval of any governmental agency or
public authority necessary for the execution, delivery or performance of this
Agreement, the Notes, or any of the other Financing Documents or for the
validity or enforceability of any of the Company's obligations under this
Agreement, the Notes or any of the other Financing Documents, is not effected or
given or is withdrawn or ceases to remain in full force and effect;

      (g)   This Agreement, the Notes, or any of the other Financing Documents
at any time for any reason ceases to be in full force and effect, or is declared
to be void or is repudiated, or the validity or enforceability hereof or thereof
is at any tune contested by the Company, or, in the case of the Security
Documents, ceases to give or provide the respective Liens, fights, titles,
remedies, powers, or privileges intended to be created thereby;

      (h)   Any governmental authority condemns, nationalizes, seizes or
otherwise expropriates any substantial portion of the assets or the capital
stock of the Company, revokes any foreign exchange license of the Company
necessary for the payment of amounts due hereunder and under the Notes or the
Cutting License of the Company or takes any action that would prevent the
Company from carrying on any material part of its business or operations;







<PAGE>   42
                                      -38-

      (i)   The Company or any other party fails to comply with or perform any
of its material obligations or undertakings set forth in any Financing Document
(other than this Agreement and the ProJect Completion Agreement) and such
failure continues for 30 days after the occurrence thereof;

      (j)   The Company or, prior to Project Completion, the U.S. Sponsor (or
any successor in interest thereto), (i) applies for, or consents to the
appointment of, a receiver, trustee, custodian, intervenor or liquidator of
itself or of all or a substantial part of its assets, (ii) files a voluntary
petition in bankruptcy, admits in writing that it is unable to pay its debts as
they become due or generally fails to pay its debts as they become due, (iii)
makes a general assignment for the benefit of creditors, (iv) files a petition
or answer seeking reorganization or arrangement with creditors or to take
advantage of any bankruptcy or insolvency laws, (v) files an answer admitting
the material allegations of, or consents to, or defaults in answering, a
petition filed against it in any bankruptcy, reorganization or insolvency
proceeding where such action or failure to act will result in a determination of
bankruptcy or insolvency against it;

      (k)   Without its application, approval or consent, a proceeding is
instituted in any court of competent jurisdiction or by or before any government
or governmental agency of competent jurisdiction, seeking in respect of the
Company or, prior to Project Completion, the U.S. Sponsor (or any successor in
interest thereto): adjudication in bankruptcy, reorganization, dissolution,
winding up, liquidation, a composition or arrangement with creditors, a
readjustment of Indebtedness, the appointment of a trustee, receiver, liquidator
or the like of it or of all or any substantial part of its property or assets,
or other like relief in respect of it under any bankruptcy, reorganization or
insolvency law; and, if such proceeding is being contested by it in good faith,
the same continues undismissed for a period of 60 days;

      (l)   Any final judgment or judgments for the payment of money in an
aggregate amount in excess of $250,000 or its equivalent in another currency is
rendered against the Company, and such judgment or judgments is not satisfied or
discharged within 60 days of entry;

      (m)   The U.S. Sponsor ceases to hold the legal and beneficial title to
the equity of the Company in the percentages set forth in the Financial Plan or
the U.S. Sponsor ceases to retain management control of the Company; or

      (n)   Any environmental claim shall have been asserted against the Company
or any other party to the Financing Documents, and such claim is reasonably
likely to have a Material Adverse Effect; or

      (o)   Any event shall have occurred that, in the reasonable judgment of
OPIC, is reasonably likely to have a Material Adverse Effect; or





<PAGE>   43
                                      -39-

      (p)   The Company falls to comply with the Harvesting Plan and Schedule
5.12 for the applicable Fiscal Year.

SECTION 7.02. REMEDIES UPON EVENT OF DEFAULT.

      (a)   Except as otherwise provided in Section 7.02(b), if any Event of
Default has occurred and is continuing, OPIC may at any time in its sole
discretion do any one or more of the following: (i) suspend or terminate the
Commitment, (ii) declare, by written demand for payment to the Company, any
portion or all of the Loan to be due and payable, whereupon such portion of the
Loan, together with interest accrued thereon and all other amounts due under
this Agreement, the Notes, and the other Financing Documents, shall immediately
mature and become due and payable, without any other presentment, demand,
diligence, protest, notice of acceleration, or other notice of any kind, all of
which the Company hereby expressly waives, or (iii) without notice of default or
demand, proceed to protect and enforce its fights and remedies by appropriate
proceedings, whether for damages or the specific performance of any provision of
this Agreement, any Note, or any other Financing Document, or in aid of the
exercise of any power granted in this Agreement, any Note, any other Financing
Document, or by law, or may proceed to enforce the payment of any Note. '

      (b)   Upon the occurrence of an Event of Default referred to in Sections
7.01(j) or (k), (i) the Commitment shall automatically be terminated, and
(ii) the Loan, together with interest accrued thereon and all other amounts due
under this Agreement, the Notes, and the other Financing Documents, shall
immediately mature and become due and payable, without any other presentment,
demand, diligence, protest, notice of acceleration, or other notice of any kind,
all of which the Company hereby expressly waives.

SECTION 7.03. JURISDICTION AND CONSENT TO SUIT.

      (a)   Without prejudice to OPIC's right to bring suit in any appropriate
domestic or foreign jurisdiction, any proceeding to enforce this Agreement, any
Note, or any other Financing Document to which the Company is a party (unless
otherwise specified) may be brought by OPIC in any state or federal court of
competent jurisdiction in the District of Columbia of the United States of
America or in any other jurisdiction where the Company or any of its property
may be found. The Company hereby irrevocably waives any present or future
objection to any such venue, and irrevocably consents and submits
unconditionally to the non-exclusive jurisdiction for itself and in respect of
any of its property of any such court. The Company further agrees that final
judgment against it in any such action or proceeding arising out of or relating
to this Agreement shall be conclusive and may be enforced in any other
jurisdiction within or outside the United States of America by suit on the
judgment, a certified or exemplified copy of which shall be conclusive evidence
of the fact and. of the amount of its obligation.







<PAGE>   44
                                      -40-

      (b)   Prior to the first Closing Date, the Company shall irrevocably
designate and appoint an agent satisfactory to OPIC for service of process in
the District of Columbia as its authorized agent to receive, accept, and
acknowledge on its behalf service of process in any such proceeding, and shall
provide OPIC with evidence of the prepayment in full of the fees of such agent.
The Company agrees that service of process, writ, judgment, or other notice of
legal process upon said agent shall be deemed and held in every respect to be
effective personal service upon it. The Company shall maintain such appointment
(or that of a successor satisfactory to OPIC) continuously in effect at all
times while the Company is obligated under the Finance Agreement or any Note.
Nothing hereto shall affect OPIC's right to serve process in any other manner
permitted by applicable law.

Section 7.04. Arbitration.

      (a)   ARBITRATION; RULES; VENUE; LANGUAGE. Any dispute, controversy, or
claim arising out of, or relating to, or in connection with, this Agreement, any
Note, or any other Financing Document to which the Company and OPIC are parties,
(including the breach, termination or validity hereof or thereof), and any
dispute concerning the scope of this arbitration clause, may, at the option of
OPIC and upon written notice to the Company, be referred to for final settlement
by arbitration. Such arbitration proceedings shall be conducted in accordance
with the International Arbitration Rules of the International Chamber of
Commerce ("ICC") in effect on the date on which the arbitration commences (the
"RULES"). The seat of the arbitration shall be the City of New York, New York,
unless OPIC directs that the place of arbitration shall instead be Washington,
D.C. The arbitration shall be conducted in the English language. Upon the
Company's receipt of a notice from OPIC of its election to settle by arbitration
any dispute, controversy or claim pursuant to this Section 7.04, the Company
shall be obligated to settle such dispute, controversy or claim as provided in
this Section 7.04. If any dispute, controversy or claim is referred to
arbitration by OPIC, the Company hereby agrees to the jurisdiction of the
arbitral panel with respect to such dispute, controversy or claim to the
exclusion of the courts of the Russian Federation or any other jurisdiction.

      (b)   ARBITRATORS; SELECTION; QUALIFICATIONS. The arbitration shall be
conducted by three arbitrators. OPIC and the Company shall appoint one
arbitrator, and each shall notify the other of the name of its appointee within
60 days of the date of OPIC's notice to the Company. The two arbitrators
appointed by OPIC and the Company shall together, within 60 days after the date
on which the first two arbitrators were required to be appointed, appoint the
third, presiding arbitrator. If OPIC and the Company fail to appoint any
arbitrator within the time limits provided hereunder, such arbitrators shall
upon the written request of OPIC or the Company, be appointed by the President
of the ICC. Each arbitrator shall be fluent in the English language, shall be a
disinterested person, and shall be an attorney qualified to practice law in the
State of New York or the District of Columbia for a minimum of 5 years, with
experience in representing lenders and borrowers in international project
finance lending to private sector borrowers. OPIC or the Company may, within 10
days of notice of an appointment, challenge the appointment of an






<PAGE>   45
                                      -41-

arbitrator as lacking the qualifications set forth in the preceding sentence
pursuant to the procedures prescribed by the Rules. Any determination by the ICC
as to qualifications shall be final and binding and not subject to judicial
review. If an arbitrator must be replaced for any reason, the appointing party
shall endeavour to appoint a substitute arbitrator within a reasonable time.

      (c)   LAW. Each arbitral panel established hereunder shall make its
decisions entirely on the basis of this Agreement, the relevant Note or the
relevant Financing Document, as applicable, the governing law provisions
provided herein or therein, and the Rules.

      (d)   STATEMENTS OF CLAIM AND DEFENSE: Representation: Proceedings. OPIC
shall communicate its statement of claim in writing to the Company and the
arbitral panel within a period of time to be determined by the panel. The
Company shall file a statement of defense in writing following receipt of OPIC's
statement of claim within a period of time to be determined by the panel. The
parties may be represented or assisted by legal counsel of their choice. The
arbitral panel shall determine a date on which it shall commence taking
evidence, which date shall not be less than 60 days after the Company's
submission of its statement of defense, unless OPIC directs otherwise. Where the
Rules do not provide for a particular situation, the arbitral panel shall by a
majority, in its absolute discretion, determine the course of action to be
followed and its decision shall be final.

      (e)   AWARDS. The arbitral panel shall issue a written decision and award
within 60 days after the conclusion of the relevant proceedings. Any award of
the arbitral panel shall be final and binding, and judgment upon any arbitral
award may be entered and enforced by any court or judicial authority of
competent jurisdiction. Any money award shall be made and shall be payable in
Dollars. The award shall be limited to the scope of the submission and in no
circumstance shall the arbitral panel render an award EX AEQUO ET BONO or as
AMIABLE COMPOSITEUR. If either party wishes to submit a request that the
arbitral panel interpret the award or correct any clerical, typographical or
computation errors, or make an additional award as to claims presented but
omitted from the award, such request shall be submitted to the arbitral panel
and the other party within 10 days after the award. If the panel considers such
request justified, after considering the contention of the parties, the panel
shall promptly comply with such request. The arbitral panel, OPIC or the Company
shall not be entitled to seek from any judicial authority or take any interim
measures or provide any preaward relief against OPIC or the Company,
notwithstanding any contrary provisions in the Rules.

      (f)   COSTS. Fees and Expenses. Each party shall pay its own costs, fees
and expenses.

      (g)   NO WAIVER. In invoking any arbitration pursuant to this Section
7.04, OPIC shall not be deemed to have waived any fights, immunities or
privileges to which it or any of its directors, officers or employees are
entitled. By submitting to arbitration, OPIC shall not be






<PAGE>   46
                                      -42-

deemed to have submitted to the jurisdiction of any court other than the United
States Court of Claims in Washington, D.C.

SECTION 7.05. JUDGMENT CURRENCY.

      This is an international loan transaction in which the specification of
Dollars is of the essence, and such currency shall be the currency of account in
all events. The payment obligation of the Company hereunder and under the Notes
shall not be discharged by an amount paid in another currency, whether pursuant
to a judgment or otherwise, to the extent that the amount so paid on prompt
conversion to Dollars in the United States of America under normal banking
procedures does not yield the amount of Dollars then due. In the event that any
payment by the Company, whether pursuant to a judgment or otherwise, upon
conversion and transfer, does not result in the payment of such amount of
Dollars at the place such amount is due, OPIC shall be entitled to demand
immediate payment of, and shall have a separate cause of action against the
Company for, the additional amount necessary to yield the amount of Dollars then
due. In the event OPIC, upon the conversion of such judgment into Dollars, shall
receive (as a result of currency exchange rate fluctuations) an amount greater
than that to which it was entitled, the Company shall be entitled to immediate
reimbursement of the excess amount.

SECTION 7.06. Immunity.

      The Company represents and warrants that it is subject to civil and
commercial law with respect to its obligations under this Agreement, the Notes,
and each of the other Financing Documents to which it is a party, that the
making and performance of this Agreement, the Notes, and such other Financing
Documents and the borrowings by the Company pursuant hereto constitute private
and commercial acts rather than governmental or public acts and that neither the
Company nor any of its properties or revenues has any fight of immunity from
suit, court jurisdiction, attachment prior to judgment, attachment in aid of
execution of a judgment, set-off, execution of a judgment or from any other
legal process with respect to its obligations under this Agreement, the Notes,
and such other Financing Documents. To the extent that the Company may hereafter
be entitled, in any jurisdiction in which judicial proceedings may at any time
be commenced with respect to this Agreement, any Note or any other Financing
Document to which it is a party, to claim for itself or its revenues or assets
any such immunity, and to the extent that in any such jurisdiction there may be
attributed to the Company such an immunity (whether or not claimed), the Company
hereby irrevocably agrees not to claim and hereby irrevocably waives such
immunity. The foregoing waiver of immunity shall have effect under the United
States Foreign Sovereign Immunities Act of 1976.







<PAGE>   47
                                      -43-


                                  ARTICLE VIII.
                                  MISCELLANEOUS

SECTION 8.01. NOTICES.

      Each notice, demand, report, or other communication relating to this
Agreement shall be in writing, shall be hand-delivered or sent by mail (postage
prepaid), telegram or facsimile transmission (with a copy by mail to follow,
receipt of which copy shall not be required to effect notice), and shall be
deemed duly given when sent to the following addresses, or to such other address
or number as each party shall have last specified by notice to the other
parties:

      To the Company:

            UL. KOPROVAYA, 4
            KOMSOMOLSK - NA - AMURE
            681005
            RUSSIAN FEDERATION
                  (Attn: the President)

            (Facsimile: 0117-4217246855)

      with a copy to:

            David Sylvester, Esq.
            Hale and Dorr
            Suite 1000
            1455 Pennsylvania Avenue, N.W.
            Washington D.C. 20004

            (Facsimile: 1-202-942-8484)







<PAGE>   48
                                      -44-

      To OPIC:

            Overseas Private Investment Corporation
            1100 New York Avenue, N.W.
            Washington, D.C. 20527
            United States of America

                  (Attn: Vice President, Finance
                         with a copy to Treasurer)

            (Facsimile: 1-202-408-9859)

Either party may, by written notice to the other, change the address to which
such communications should be sent to it.

SECTION 8.02. ENGLISH LANGUAGE.

      All documents to be furnished or communications to be given or made under
this Agreement, the Notes, and each of the other Financing Documents to which
the Company is a party shall be in the English language or, if in another
language, shall be accompanied by a translation into English certified by an
Authorized Officer of the Company, which translation shall be the governing
version between the Company and OPIC.

SECTION 8.03. GOVERNING LAW.

      THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE DISTRICT OF COLUMBIA, UNITED STATES OF AMERICA,
WITHOUT REGARD TO ITS CONFLICT OF LAWS PROVISIONS.

SECTION 8.04. SUCCESSION.

      This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the parties hereto, provided that the Company shall
not, without the prior written consent of OPIC, assign or delegate all or any
part of its interest herein or obligations hereunder.

SECTION 8.05. SURVIVAL OF AGREEMENTS.

      Each agreement, representation, warranty and covenant contained or
referred to in this Agreement shall survive any investigation at any time made
by OPIC and shall survive the Disbursement of the Loan, except for changes
permitted hereby, and, save as otherwise provided







<PAGE>   49
                                      -45-

in Section 2.09, shall terminate only when all amounts due or to become due
under this Agreement and the Notes are paid in full.

SECTION 8.06. INTEGRATION; AMENDMENTS.

      This Agreement embodies the entire understanding of the parties hereto,
and supersedes all prior negotiations, understandings and agreements between
them with respect to the subject matter hereof. The provisions of this Agreement
may be waived, supplemented or amended only by an instrument in writing signed
by Authorized Officers of the Company and OPIC.

SECTION 8.07. SEVERABILITY.

      If any provision of this Agreement is prohibited or held to be invalid,
illegal or unenforceable in any jurisdiction, the parties hereto agree to the
fullest extent permitted by law that (i) the validity, legality and
enforceability of the other provisions in such jurisdiction shall not be
affected or impaired thereby, and (ii) any such prohibition, invalidity,
illegality or unenforceability shall not render such provision prohibited,
invalid, illegal, or unenforceable in any other jurisdiction.

SECTION 8.08. NO WAIVER.

      (a)   No failure or delay by OPIC in exercising any right, power or remedy
shall operate as a waiver thereof or otherwise impair any of its rights, powers
or remedies. No single or partial exercise of any such right shall preclude any
other or further exercise thereof or the exercise of any other legal right. No
waiver of any such right shall be effective unless given in writing.

      (b)   The rights or remedies provided for herein are cumulative and are
not exclusive of any other rights, powers or remedies provided by law. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion of any other appropriate right or remedy.

SECTION 8.09. WAIVER OF JURY TRIAL.

      The Company and OPIC each hereby irrevocably waives, to the fullest extent
permitted by law, any right to have a jury participate in resolving any dispute
arising out of, in connection with, related to, or incidental to the
relationship between them established by this Agreement, the Notes, any other
Financing Document and any other instrument, document or agreement entered into
in connection with this Agreement or the transactions contemplated hereby.






<PAGE>   50
                                      -46-

SECTION 8.10. WAIVER OF LITIGATION PAYMENTS.

      In the event that any action or lawsuit is initiated by or on behalf of
OPIC in Russia or elsewhere against the Company or any other party to any
Financing Document, the Company, to the fullest extent permissible under
applicable law, irrevocably waives its right to, and agrees not to request,
plead, or claim that OPIC and its successors, transfers, and assigns (any such
Person, an "OPIC PLAINTIFF") post, pay, or offer, any cautio judicaturm solvi
bond, litigation bond, or any other bond, fee, payment, or security measure
provided for by any provision of law applicable to such action or lawsuit (any
such bond, fee, payment, or measure, a "LITIGATION PAYMENT"), and the Company
further waives any objection that it may now or hereafter have to an OPIC
Plaintiffs claim that such OPIC Plaintiff should be exempt or immune from
posting, paying, making or offering any such Litigation Payment.

SECTION 8.11. INDEMNITY.

      To the extent permitted by law, the Company hereby indemnifies and holds
harmless OPIC and its directors, officers, employees, agents, counsel,
subsidiaries and Affiliates (the "INDEMNIFIED PERSONS") from and against any
arid all losses, liabilities, obligations, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by or asserted against any
Indemnified Person in any way relating to or arising out of this Agreement, the
Financing Documents or any of them or any of the transactions contemplated
hereby or thereby; PROVIDED, HOWEVER, that the Company shall not be liable to
any Indemnified Person for any losses, liabilities, obligations, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements that
resulted from the gross negligence or willful misconduct of such Indemnified
Person.

SECTION 8.12. FURTHER ASSURANCES.

      From time to time, the Company shall execute and deliver to OPIC such
additional documents as OPIC may require to carry out the purposes of this
Agreement or the Financing Documents or to preserve and protect OPIC's rights as
contemplated herein or therein.

SECTION 8.13. COUNTERPARTS.

      This Agreement may be executed in counterparts, each of which when so
executed and delivered shall be deemed an original and all of which together
shall constitute one and the same instrument.







<PAGE>   51

      IN WITNESS WHEREOF, each of the parties has has this Agreement to be
executed and delivered on its behalf by its Authorized Officer as of the date
first above written.

      CLOSED JOINT STOCK COMPANY
      FOREST STARMA

      By:         /s/                                  /s/     
          ------------------------------        --------------------------------
                                         [SEAL]
      Its:
          ------------------------------        --------------------------------


      OVERSEAS PRIVATE INVESTMENT CORPORATION


      By: /s/ John P. Harper                      
          ------------------------------ 
                                         
      Its:  Manager, Project Finance
          ------------------------------ 




                       [Exhibits Intentionally Omitted]