Document:

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                                                                    EXHIBIT 10.2
                              LOG SALES CONTRACT
                                 No. 09-01-00

                                                                 AUGUST 31, 2000

  Closed Joint-Stock Company "FOREST-STARMA" hereinafter referred to as the
  Seller, and RAYONIER INC., hereinafter referred to as the Buyer, have entered
  into the present Contract with respect to the following.

  1. SUBJECT OF THE CONTRACT

  The Seller agrees to sell and the Buyer agrees to buy, on terms contained in
  this Contract and individual addenda to this Contract, all of the spruce,
  white fir and larch logs produced by the Seller, as provided in this Contract,
  in the volume of 170,000 +/-10% m3. The approximate value of this Contract is
  $6,700,000.

  The specific quantity, composition, and amount of all log shipments shall be
  set forth in separate addenda to the Contract to be executed by the parties in
  connection with each shipment.

  2.  TIME OF PRODUCTION AND DELIVERY

  2.1 PRODUCTION:  This Contract shall apply to logs produced by the Seller and
      ----------
  made available for shipment from Siziman Bay between January 1, 2000 and
  January 20, 2001.

  2.2 DELIVERY:  Logs produced under this Contract shall be delivered FOB vessel
      --------
  between SEPTEMBER 1, 2000 AND JANUARY 20, 2001.

  3.  PRICES

  The Buyer shall pay the Seller market prices for logs purchased under this
  Contract. All prices under this Contract are FOB vessel, Siziman Bay, Russian
  Federation. The prices for all logs sold under this Contract shall be
  communicated by the Buyer to the Seller and approved by the Seller in advance
  of each applicable shipment, and shall be set forth in individual Addenda to
  this Contract.

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  4. QUALITY OF GOODS

  4.1.  SPECIFICATIONS:   Exportable Spruce, Fir and Larch saw logs according to
        --------------
  GOST standards # 22298-76 for saw logs and # 22296-89 for pulp logs and as
  identified by individual addenda to this Contract.

  4.2.  SCALING / VOLUME MEASUREMENT:  According to GOST standard # 2292-74.
        ----------------------------
  Scaling to be paid for by the Seller. Log scale certificates, summary reports
  and any other production reports will be provided to the Buyer on a monthly
  basis, together with invoices for Advance Payments, in accordance with Section
  6.1 below.

  5.  DELIVERY

  5.1. POINT OF DELIVERY:  The logs shall be delivered to the Buyer FOB vessel,
       -----------------
  Siziman Bay, Russian Federation. Title and risk of loss to all logs purchased
  hereunder shall pass to the Buyer when the logs pass the ship's rail at
  Siziman Bay. The Seller shall notify the Buyer that logs have been delivered
  in case an agent or employee of the Buyer is not present at the delivery site.
  The Seller will maintain casualty loss insurance on the logs up to the point
  of delivery.

  The terms describing obligations of the Seller and the Buyer with respect to
  delivery of goods and establishing transfer of risk of loss or damage from the
  Seller to the Buyer are specified in "INCOTERMS 2000" and shall be binding on
  the parties hereto.

  5.2.  EXPORT DUTIES:  All Russian taxes, export fees or duties which may be
        -------------
  assessed on this transaction shall be paid by the Seller. The Seller certifies
  that it has the right to export the logs and shall obtain all necessary
  customs approvals, export licenses and permits.

  5.3. SHIP LOADING:  The Seller shall be responsible for all sorting, storing,
       ------------
  handling and ship loading activities necessary to deliver the logs on board
  ship at Siziman Bay. Vessels will be loaded with "Customary Quick Despatch" or
  "CQD".

  5.4.  SHIPPING:  The Buyer shall be responsible for arranging for vessels to
        --------
  transport all logs sold under this Contract. The Buyer will provide a shipping
  schedule to the Seller weekly. The Buyer will update the shipping schedule in
  a reasonable manner to advise the Seller of changes in the previously provided
  shipping schedule. The Buyer shall provide all shipping schedules and updates
  to the Seller's Quality Control Manager at Siziman Bay, Russian Federation.

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  5.5.  LIENS AND WARRANTIES:  The Seller warrants that, upon delivery of the
        --------------------
  logs to the Buyer FOB, Buyer's vessel, Siziman Bay, Russian Federation, under
  this Contract, the logs shall be free and clear of any liens or encumbrances,
  prior sales agreements, contracts or other claims which might become a lien
  upon the logs. The Seller further warrants that the logs sold under this
  Contract may be legally exported from the Russian Federation in the form and
  condition in which they are delivered to the Buyer at the port of loading.

  6.  PAYMENT

  PAYMENTS:  All payments under this Contract shall be made by telegraphic wire
  --------
  transfer to the bank account of the Seller as specified in Paragraph 16 of
  this Contract.

  The Buyer shall make final payment to the Seller for each shipment of logs
  delivered under this Contract within ten (10) business days after receipt from
  the Seller of a faxed copy of an invoice, bill of lading, log specification
  and cargo plan; provided that the Seller shall have delivered original copies
  of the invoice (1set), bill of lading (1set) and log specification (1set) by
  mail or via courier to the Buyer's representative office in Japan, as
  indicated by the Buyer, within ten (10) days after the Bill of Lading date.

  In no event shall any payment for logs shipped hereunder be made later than 90
  days after the date the applicable shipment clears Russian customs for export.

  7.  CLAIMS

  The Buyer has the right to make claims after the logs arrive at their export
  destination for failure to meet quality or quantity requirements. The Seller
  will also accept claims based on excessive off-center hearts and compression
  in # 1 and # 2 sawlog sorts.

  The Buyer shall make every reasonable commercial effort to resolve all claims
  with the Buyer's customer. In the event no resolution is reached, the Buyer
  will notify the Seller by fax of any claims within thirty (30) days after the
  vessel has completed discharge in the discharge port. The Seller will have
  fourteen (14) days to respond to the claim presented. If the Seller does not
  agree with the claim, it may request to schedule an inspection of the cargo by
  a representative of the Seller. The Buyer and the Seller will use their best
  efforts to have their representatives meet at the port of discharge as quickly
  as possible to conduct this

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  inspection. Each party will bear its own costs of such inspection. If the
  Seller does not respond and schedule an inspection, within fourteen (14) days
  of receipt of the claim, the claim will be considered accepted.

  The Buyer will use reasonable commercial efforts to make substantially all of
  the logs involved in the claim available for inspection. The inspection will
  be conducted as follows:

  .  If the logs are on land, a sample of 10% of the logs will be rolled out for
     inspection.

  .  If the logs are located in the water the representatives will conduct a
     visual inspection of all sides of every log in the sample.

  .  Grading will be based on GOST standard # 22298-76.

  .  Scaling will be based on GOST standard # 2292-88.

  The result of this inspection will be expanded onto the entire cargo volume to
  calculate the claim settlement. The Buyer will notify the Seller of any
  necessary deviation from the above procedure.

  The amount of any claim settlement will be paid by the Seller to the Buyer by
  wire transfer within thirty (30) days of completion of the inspection.

  8.  NOTICES

  All notices given hereunder shall be in writing, sent to the representatives
  of each party and may be sent by telex or by telecopier with confirmation of
  receipt at the addresses and fax numbers shown in Section 13. Notices shall be
  effective upon receipt.

  9.  DISPUTES

  9.1.  DISPUTE RESOLUTION:  In the event of any dispute arising out of or
        ------------------
  relating to this Contract, the parties shall use their best efforts to settle
  the dispute. Within thirty (30) days of written request of any party, the
  individuals responsible for administering this Contract shall meet to consult
  and negotiate with each other, in good faith, in an attempt to reach an

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  just and equitable solution satisfactory to the parties. If the parties are
  unable to reach a satisfactory solution within sixty (60) days of the written
  request for negotiation, then any party may by written notice require that the
  matter be finally settled by arbitration under the Commercial Arbitration
  Rules of the American Arbitration Association and the Supplemental Procedures
  for Large Complex Disputes. The Arbitration shall be conducted at Seattle,
  Washington, USA. The arbitration shall be conducted by a single arbitrator
  appointed in accordance with the said Rules from the Large Complex Dispute
  Panel of the American Arbitration Association. The arbitration shall be
  conducted in the English language. Any award shall be denominated and paid in
  United States dollars and may, at the discretion of the arbitrator, include
  interest, attorney fees and costs.

  9.2.  LIMITATION ON DAMAGES:  In the event of default or failure to perform
        ---------------------
  any obligation under this Contract, the Liability of either party shall be
  limited to the value of the logs to be produced, delivered, sold and purchased
  hereunder. In no event shall either party be liable for incidental,
  consequential or punitive damages.

  10.  FORCE MAJEURE

  Neither party to this Contract shall be liable for any delay or default in
  performance hereunder which is the result of any cause beyond its control,
  including, but not limited to wars, civil strife, embargoes, acts of
  governments or any government official or agency purporting to act under duly
  constituted authority, earthquakes, floods or fires. Weather conditions which
  are within the range of possible weather conditions to be anticipated shall
  not constitute force majeure conditions. A party whose performance is affected
  by force majeure conditions shall give notice to the other party of such
  condition and the expected duration of the delay or prevention of performance
  within ten (10) days of the occurrence of such condition.

  11.  ASSIGNMENT

  Neither party may assign its rights or obligations under this Contract without
  the prior written consent of the other party, which consent shall not be
  unreasonably withheld. Any assignment of a party's rights or obligations under
  this Contract without the prior written consent of the other party shall
  constitute a default hereunder and shall entitle the other party to
  immediately terminate this Contract by written notice.

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  12. TERMINATION

  In the event of a change in the ownership of the Seller, either party shall
  have the right to terminate this Contract upon 60 days' prior written notice
  to the other party. The termination of this Contract under Sections 11 or 12
  shall not relieve the Buyer of the obligation to pay for logs shipped prior to
  the date such termination and shall not relieve the Seller of the obligation
  to pay for claims, costs or other liabilities arising from logs shipped prior
  to the date of such termination.

  13.  COMPLETE AGREEMENT

  This Contract replaces and supercedes in its entirety, Log Sales Contract No.
  00-01-07, DATED JANUARY 7, 2000.

  14.  OTHER TERMS AND CONDITIONS

  All amendments and additions hereto shall be integral parts of this Contract
  and shall be valid only if made in writing and signed by duly authorized
  representatives of both parties.

  The language of this Contract is Russian and English but in the event of
  ambiguity or inconsistency between the versions, the English version shall be
  controlling.

  Any correspondence pertaining to the execution of this Contract shall be
  carried out in the English language.

  The law of the State of Washington, without giving effect to the conflict of
  law provisions thereof, shall govern this Contract.  In the event the law of
  the Russian Federation, or any other jurisdiction where portions of this
  Contract are to be performed invalidate any of the provisions of this
  Contract, the parties will negotiate amendments to this Contract to comply
  with such law.

  Neither this Contract nor any rights or obligations hereunder may be assigned
  by either party without the prior written consent of the other party.

  15. LEGAL ADDRESSES OF THE PARTIES

              THE BUYER:                                 The Seller:
              Rayonier Inc.                              JSC "Forest-Starma"
              18000 International Blvd.                  1 Chekhov St. Apt 3
              Suite 900                                  Vanino
              Sea Tac, Washington, 98188   Fax #         Khabarovsk Territory
              1(206) 248-4117                            Russia, 682860
                                                         Fax # 7 (42172) 4 41 72
                                                         with a copy to:
                                                         Fax # 1 (617) 422-4286

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  16. PAYMENT REQUISITES

  THE BUYER:

  Chase Manhattan Bank, New York, NY, USA
  Account No.: 003-103-7468 (US Dollars)

  The Seller:

  Bank of New York, NY, USA
  SWIFT: IRVTUS3N
  Account # 890-0260-602 (USD)
  "Regiobank", Khabarovsk, Russian Federation
  SWIFT: REGK RU 8K
  Account # 3030-1840-0080-1001-1001
  Komsomolsk-on-Amur Branch
  Account # 4070-2840-2080-3100-0405
  In favor of JSC "Forest Starma"

  Both original and faxed signatures of the parties on this Contract shall have
  equal legal force with regard to execution of this Contract.

  RAYONIER INC.                         JSC "Forest Starma"
  THE BUYER                             THE SELLER

  /s/ ROBERT J. CARTANO                   /s/ DAVID DAGGETT
  ---------------------                   ------------------
  Robert J. Cartano                       David Daggett
  Director, Operations                    General Director
  International Forest Products

                                          /s/ V. A. LIMARENKO
                                          -------------------
                                          V. A. Limarenko
                                          First Deputy General Director

                                       7<PAGE>

                                                                    EXHIBIT 10.3

August 31, 2000

                                LETTER AGREEMENT

Rayoiner Inc., a North Carolina, USA, company ("Rayonier"), and Closed Joint-
Stock Company "Forest-Starma", a Russian closed joint-stock company ("Starma"),
have entered into Log Sales Contract # 09-01-00 DATED AUGUST 31, 2000 (the
"Contract").  This Letter Agreement is intended to supplement the Contract and
to the extent any provision of this Letter Agreement is inconsistent with the
provisions of the Contract this Letter Agreement shall be controlling and is
intended as an amendment to the Contract.

Capitalized terms used in this Letter Agreement shall have the same meaning set
forth in the Contract unless otherwise modified or amended in this Letter
Agreement.

It is the intent of the parties that under all of these agreements Rayonier is
acting as a sales agent for Starma.

A)  PRICE CALCULATION

The parties agree that the FOB vessel Siziman Bay price, as specified in
Paragraph 3 of the Contract, for every log shipment shall be determined as
follows:

     CFR Japan (Korea or China) market sales price in effect at the time of
shipment shall be reduced:

1.   by actual freight rate to deliver logs from Siziman Bay, Russian
     Federation, to Japanese, Korean or Chinese port;

2.   by Rayonier's commission for marketing, ship chartering, accounting and
     administration determined as follows:

     2.1  (CFR price less actual freight)  x  4.4% until the total cumulative
     commission earned by Rayonier under the Contract and contract # 00-01-07
     reaches $590,000;

     2.2  (CFR price less actual freight)  x  1.0% after the total cumulative
     commission earned by Rayonier under the Contract and contract # 00-01-07
     reaches $590,000.

3.   by a Reconciliation Adjustment as determined in Paragraph E.

B)  INTEREST

Rayonier shall charge Starma interest at a rate of 10% per annum on the daily
actual outstanding out-of-pocket cash costs balance for freight payments and
final payments made to Starma for log sales from the time such payments are made
until Rayonier receives the sales proceeds from the customer.  Starma shall have
the right at any time to request that Rayonier delay making  final payments for
log sales to Starma after the proceeds are collected.  The amount of such
delayed payments being held by Rayonier at any time shall be subtracted from the
daily actual out-of-pocket cash costs balance for the purpose of making the
interest calculation.  No interest shall be payable to Starma for holding the
collected proceeds in excess of the out-of-pocket expenses.

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C)  BANK FEES & INSURANCE

Rayonier shall charge to Starma and Starma shall pay to Rayonier the actual cost
of bank fees to be incurred on letter-of-credit and wire transfer collections;
as well as the actual cost of the charterer's liability insurance to be obtained
by Rayonier for every shipment.

D)  CLAIMS

If the amount of any claim settlement is not paid by Seller as provided in
Section 10 of the Contract, Rayonier shall charge such amount to Starma under
paragraph E below.

E)  RECONCILIATION ADJUSTMENT

Rayonier shall reconcile actual costs referred to in paragraphs B, C and D and
determine a "Reconciliation Adjustment" rate per M3.  The reconciliation shall
take place monthly for shipments made during a preceding month.  The
reconciliation adjustment rate per M3 shall be deducted from the sales price for
a shipment during the month of the reconciliation.  The Reconciliation
Adjustment for the last month or the Contract shall include estimated interest
and charges for that month as well as reconciled amounts for the previous month.

Rayonier shall provide back-up documentation for all reconciliations.

F)  STARMA EXPENSES

Rayonier shall not make any out-of-pocket expenditures on behalf of Starma.

G)  CREDIT RISK

Starma and Rayonier understand that all logs purchased by Rayonier under the
Contract (the "Logs") will be resold by Rayonier to customers in Japan, Korea
and China (the "Customers").  The parties agree that Starma will assume the
credit risk for all such resales of Logs, subject to the following conditions:

     1)  Rayonier is authorized to enter into contracts for the resale of Logs
to the Customers and on the credit terms set forth in Attachment 1 hereto.

     2)  Rayonier shall not be authorized to enter into contracts for the resale
of Logs to any Customer that is not listed in Attachment 1 or on credit terms
other than those described in Attachment 1 without Starma's prior written
approval.  Rayonier shall exercise reasonable commercial efforts to provide
Starma with sufficient notice of any new Customers so as not to delay any
shipment of Logs.

     Notwithstanding any contrary provision in the Contract, Rayonier shall not
be obligated to pay Starma for logs delivered to it until Rayonier receives
payment from Customers  In the event Rayonier resells Logs to Customers on
credit terms set forth in Attachment 1, but such Customer or Customers fail to
pay for the Logs, Rayonier shall have the right to withhold payment for those
Logs.  The parties agree that in the event such withholding of payments creates
issues for Starma under Russian law, Starma shall be responsible for resolving
those issues.  Starma hereby waives and releases any claim it may have against
Rayonier to seek recovery of such withholdings unless and until Rayonier
receives payment from the Customer and agrees not

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to bring any claim for recovery of such withholdings in any Russian court or
arbitration proceeding.

By signing below, the parties agree to the above provisions.

RAYONIER INC.                        JSC "Forest Starma"

  /s/ ROBERT J. CARTANO               /s/ DAVID DAGGETT
--------------------------           ---------------------------------
Robert J. Cartano                    David Daggett
Director, Operations,                General Director
International Forest Products

                                      /s/ V. A. LIMARENKO
                                     ---------------------------------
                                     V. A. Limarenko
                                     First Deputy General Director

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Attachment 1
<TABLE>
<CAPTION>

       Country           Customer                          Terms                      Limit
     -----------   ---------------------    ---------------------------------    -------------------

<S>               <C>                      <C>                              <C>
     Japan         Marubeni                 Net 10 days                          $ 1,000,000
                   Mitsubishi               Net 10 days                          $ 2,000,000
                   Nichimen                 Net 10 days                          $ 2,000,000
                   Nissho Iwai              Net 10 days                          $ 2,000,000
                   Tosa Lumber              at sight L/C                         N/A
                   Yuasa Trading            Net 10 days                          $ 500,000

     Korea         Wood Resources           Cash Advance or at sight L/C         N/A
                   All other customers      at sight L/C                         N/A

     China         All customers            at sight L/C                         N/A

       Country         Approved Banks
     -----------   ---------------------

     Korea         Cho Hung Bank
                   Hanvit Bank (former Commercial Bank of Korea)
                   Kookmin Bank
                   Korea Exchange Bank
                         Shinhan Bank

</TABLE>

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