SVEZA-Les LLC

Due Diligence System (DDS) of compliance with requirements of European Union Timber Regulation N 995/2010 and Lacey Act, USA

at the company SVEZA-Les LLC

Greenwood Office Center, 17, Putilkovo, Krasnogorsk District, 72nd km of MKAD, Moscow Region, Russia, 143441 TABLE OF CONTENTS

1 Purpose of Due Diligence System ...... 3 2 Definitions & Abbreviations ...... 3 3 Scope of DDS SVEZA-Les LLC ...... 4 4 List of documents submitted by SVEZA-Les LLC to Operators ...... 9 5 Declaration SVEZA-Les LLC of compliance with EUTR and Lacey Act ...... 10 6 Declaration SVEZA-Les LLC about the origin of veneer logs ...... 10 7 Features of the forest legislation in the Russian Federation ...... 10 8 The system for collecting and monitoring information about wood origin and supply of veneer logs at Plywood mills ...... 11 9 Declaration of FSC certified supplier of veneer logs with FSC 100% category ...... 12 10 Declaration of FSC certified supplier of veneer logs with FSC Mix Credit and/or FSC Controlled Wood categories ………………………………………………………………………………………………………………13 11 Declaration non-certified supplier of veneer logs ...... 13 12 Registry of contracts for supply and harvesting of veneer logs ...... 13 13 Risk assessment of placing a birch plywood, produced from an inappropriate wood, on the EU and US markets ………………………………………………………………………………………………………………15 14 Mitigation of risk of placing the birch plywood produced from inappropriate wood, on the EU and US markets ………………………………………………………………………………………………………………15 15 Complaints review procedure ...... 16 Annex 1 Declaration of commitment to FSC values ...... 18 Annex 2 Form of Declaration SVEZA-Les LLC of compliance with requirements of European Union Timber Regulation N 995/2010 and Lacey Act, USA ...... 19 Annex 3 Form of Declaration SVEZA-Les LLC of veneer logs origin, used for manufacture of birch plywood ………………………………………………………………………………………………………………20 Annex 4 Forms of Declaration of veneer logs suppliers ...... 21 Annex 4a Form of Declaration of FSC certified supplier of veneer logs with FSC 100% category ...... 21 Annex 4b Form of Declaration of FSC certified supplier of veneer logs with FSC categories FSC Mix Credit and/or FSC Controlled Wood ...... 22 Annex 4c Form of Declaration of non-certified supplier about veneer logs origin and compliance with requirements for Controlled Wood according to FSC standard FSC-STD-40-005 ...... 23 Annex 5 Forms of Registry of contracts for supply and harvesting of veneer logs. Instructions for filling ... 25 Annex 5a Registry of contracts for veneer logs supply by FSC certified suppliers- Form F1 ...... 26 Annex 5b Registry of contracts for supply and harvesting of veneer logs with category FSC 100% - Form F2 ……………………………………………………………………………………………………………………...27 Annex 5c Registry of contracts for supply and harvesting of veneer logs by non-certified suppliers - Form F3 ……………………………………………………………………………………………………………………...28 Annex 6 Form of Act of inspection for Controlled Wood supplies ...... 29

2 1 Purpose of Due Diligence System

1.1 This Due Diligence System (hereinafter – DDS) - developed for Buyers of birch plywood, in the European Union (hereinafter - EU) and in the United States of America (hereinafter - USA), by orders of which, seven large plywood mills - affiliate legal entities of SVEZA-Les LLC, located in the Russian Federation (hereinafter - RF), produce the birch plywood, and - confirms that, during timber harvesting, manufacture and supply of these products to the buyers, ensured compliance with the requirements of: 1 - European Union Timber Regulation N 995/2010 (hereinafter - EUTR), and 2 - Lacey Act, USA. 1.2 This Due Diligence System is voluntary and developed by SVEZA-Les LLC in order to allow the Buyers (Operators): - were able to consider special features of: legislation in Russian Federation, purchases of wood raw materials (veneer logs), structure of supplies, and manufacture of plywood on the plywood mills affiliate with SVEZA-Les LLC, and, - comply with requirements of EUTR and Lacey Act, by integrating of this DDS into own Due Diligence Systems. 1.3 The compliance with EUTR and Lacey Act requirements based on the fulfilment of requirements of forest certification, according to the Forest Stewardship Council (FSC) certification scheme. SVEZA-Les LLC and all affiliate plywood mills have valid FSC certificates. Directors of all plywood mills jointly adopted and enforce compliance with Declaration of commitment to FSC values (see Annex 1). This Declaration is a public obligation not participates in such activities as: Illegal logging or trade of illegal wood or forest products; violation of traditional and human rights in forestry operations; destruction of high conservation values in forestry operations. Specified in this DDS procedures and forms of documents for confirmation legality for veneer logs and plywood, are the procedures and documents, which are applied in the framework of FSC certification. Thus, annual audits of compliance with FSC standards for supplies of veneer logs and plywood by accredited certification bodies are in the same time independent confirmation of compliance with the requirements of this Due Diligence System by third party. 1.4 The requirements of this DDS are observed for all plywood, manufactured on plywood mills affiliate with SVEZA-Les LLC, and sold by SVEZA-Les LLC, independently of requirements in the contract with a Buyer for sale of plywood with specific FSC category or without any FSC claims. DDS is not applied to forest resources that are owned or managed by LLC “SVEZA-Les” and its subsidiaries.

2 Definitions & Abbreviations

In this Due Diligence System used following general terms and definitions, unified with European Union Timber Regulation N 995/2010 and Lacey Act, USA:

2.1 DDS - Due Diligence System of compliance with requirements of EUTR and Lacey Act. 2.2 Exporter - in the framework of this DDS - SVEZA-Les LLC - Seller of plywood under the contract with Operator. 2.3 Operator - one of the plywood buyers under the contract with SVEZA-Les LLC placed it on the EU or US market. 2.4 Plywood mill (Mill) - one of seven plywood mills/plants affiliate with SVEZA-Les LLC, which is manufacture and ship plywood to operator's consignee, by the orders, received from SVEZA-Les LLC. 2.5 Consignee - recipient of plywood party in the EU countries or in the USA, under the contract with the Operator.

3 2.6 Supplier - supplier of veneer logs under the contract with Plywood mill. 2.7 Logging operator - legal entity or person performing: 1) Timber harvesting, in accordance with the contract signed with the Russian forest authorities, 2) Manufacturing of birch veneer logs, and 3) Supply of veneer logs to Plywood mill or Trading company. 2.8 Trading company - legal entity or person which is provides services for supply of veneer logs from Logging operator to Plywood mill. 2.9 Forest management authority- authorities of Russian Federation or local government which are (in accordance with Forest Code of Russian Federation dated 04.12.2006 No 200-FZ on behalf of the State as owner of the forests in the Russian Federation) have rights to conclude the contracts with Logging operators provides timber harvesting.

3 Scope of DDS SVEZA-Les LLC

3.1 The scope of DDS SVEZA-Les LLC includes SVEZA-Les LLC and seven affiliate with SVEZA-Les LLC plywood mills (production sites) that have valid FSC certificates. Their names, addresses and FSC certificates codes are listed in the Table 1., as well as all suppliers and subsuppliers of veneer logs, according to registries of contracts. (annex 5а-в).

Table 1 Names, addresses and FSC certificates codes of SVEZA-Les LLC and affiliate with SVEZA-Les LLC plywood mills

FSC Name and addresses certificate code Limited Liability Company «SVEZA-Les» (SVEZA-Les LLC) GFA-COC-002290 Greenwood Office Center, 17, Putilkovo, Krasnogorsk District, 72nd km of MKAD, Moscow Region, Russia, 143441 GFA-CW-002290 Joint Stock Company «SVEZA Ust-Izhora» (JSC SVEZA Ust-Izhora) GFA-COC-001378 Fanernaya street. 5, p. Pontonniy, St.Petersburg, 196643, Russia GFA-CW-001378 Joint Stock Company «SVEZA Kostroma» (JSC SVEZA Kostroma) GFA-COC-001292 Komsomolskaya street 2, Kostroma, 156961, Russia GFA-CW-001292 Joint Stock Company «SVEZA Novator» (JSC SVEZA Novator ) GFA-COC-002154 p. Novator, Veliky Ustug District, Vologda Region, 162350, Russia GFA-CW-002154 Limited Liability Company «SVEZA Uralskiy» (SVEZA Uralskiy LLC) GFA-COC-002161 Moskovskaya street 1A, p. Uralskiy, Nytvenskiy District, Perm Region, 617005, Russia GFA-CW-002161 Joint Stock Company «SVEZA Manturovo» (JSC SVEZA Manturovo) GFA-COC-002451 Matrosova street 2B, Manturovo, Kostroma Region, 157305, Russia GFA-CW-002451 Joint Stock Company «SVEZA Verkhnyaya Sinyachikha» (JSC SVEZA Verkhnyaya Sinyachikha) FC-COC-643057 Kedrovaya street 1, Verkhnyaya Sinyachikha, Alapaevsky District, FC-CW-643057 Sverdlovsk Region, 624691, Russia Tyumen Plywood Plant Limited (LLC TPP) NC-COC-032438 Kamchatskaya street 196, Tyumen, Russia NC-CW-032438 3.2 The products which is a subject of DDS SVEZA-Les LLC, is birch plywood, manufactured only by plywood mills, affiliate with SVEZA-Les LLC, listed in Table 1. 3.3 SVEZA-Les LLC and all mills have FSC chain of custody certificates with FSC Controlled Wood code. Codes of FSC certificates listed in Table 1. 3.4 For manufacturing of birch plywood used one commercial wood specie - Birch - Bétula.

4 The botanical species of birch, applied by plywood mills, affiliate with SVEZA-Les LLC for production of plywood, are: Bétula péndula and Bétula pubéscens. These two species of birch can grow at one forest area. They differ only by appearance of treetops. Where no differences (by wood properties, appearance of logs and plywood) between these two species of birch. During timber harvesting, supply of veneer logs and manufacturing of plywood separation by this species is not performed. Harvesting of timber, used by Plywood mills, affiliate with SVEZA-Les LLC, for manufacture of plywood held only at the European part of Russian Federation, in the following regions (see table 2): Table 2

Plywood mill name Supply territory

1 JSC SVEZA Ust-Izhora

2 JSC SVEZA Kostroma Arkhangelsk, Vologda, Ivanovo, Kostroma, 3 JSC SVEZA Novator Kirov, Kurgan, Leningrad, Nizhny Novgorod, Novgorod, Pskov, Sverdlovsk, Omsk, Tver, 4 SVEZA Uralskiy LLC Tyumen, Chelyabinsk and Yaroslavl regions; Republic of Bashkortostan, Karelia, Komi, Mari 5 JSC SVEZA Manturovo El, Udmurtia; Permsky Kray; Khanty-Mansi Autonomous Okrug. 6 JSC SVEZA Verkhnyaya Sinyachikha

7 LLC TPP

The information about specific forest sections is provided in correspondent contract registries (annexes 5 а-в) for each mill. Registries are kept within 5 years and are provided to a certification authority by request. : Arkhangelsk, Vologda, Ivanovo, Kostroma, Kirov, Kurgan, Leningrad, Nizhny Novgorod, Novgorod, Pskov, Sverdlovsk, Tver, Tyumen, Chelyabinsk and Yaroslavl regions; Republic of Karelia, Komi, Mari El, Udmurtia; Permsky Kray; Khanty-Mansi Autonomous Okrug. According to information provided in the article "Birch" in the Encyclopaedia of forestry1, the area of these species of birch is not limited to European part of Russia: Bétula péndula - European part of Russia, Western and Eastern Siberia, Far East. Bétula pubéscens - Taiga zone of European part of Russia, Western and Eastern Siberia. In Russian Federation has approved the List of types (species) of trees and bushes, harvesting of which are not allowed (Order of Federal Forestry Agency N 513 dated 05 December 2011). This list includes the following types of birch: Betula pendula Roth var. carelica (Merckl.) Hamet-Ahti. Betula maximowicziana Regel. Betula raddeana Trautv. Betula schmidtii Regel. The species of birch used by plywood mills, affiliate with SVEZA-Les LLC - Bétula péndula and Bétula pubéscens are not listed in this List of types. Birch as tree species as missing in the Red Book of Russian Federation and in the Annexes of CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora, dated 03 March 1973)

1 Encyclopaedia of Forestry. Article "Birch". Ministry of Natural Resources Russian Federation. Federal Forest Agency. In two volumes, Volume 1, p. 46, Moscow, VNIILM, 2006 http://www.woodyman.ru/publ/104-1-0-2940

5 Thus, for Bétula péndula and Bétula pubéscens, where no restrictions for harvesting, provided by Russian law or international treaties. 3.5 Supply of plywood to buyers (Operators) in the EU and the US under the terms of supply contracts, while in a relationship with plywood mills SVEZA-Les LLC acts as a commission agent (see Figure 1). Manufacturing of plywood performed according to orders from Operators, which are sent it to SVEZA-Les LLC. SVEZA-Les LLC distributes the orders between plywood mills and tracks their implementation.

Figure 1 - Supply chain of birch plywood at SVEZA-Les LLC

3.6 The Plywood mills independently conduct the contracts with suppliers of wood raw materials - birch veneer logs. The procedures of conclusion and implementation of contracts and control of timber origin at all plywood mills are standardized, documented in FSC certification Handbooks, comply with requirements of this DDS and FSC certification standards, and confirmed by annual audits, under the FSC certification scheme. Responsibility for compliance with requirements of this DDS assigned: - SVEZA-Les LLC - to manager of customer technical support of SVEZA-Les LLC; - Plywood mills - at heads of departments of wood raw materials supply.

6 The supply chains of birch veneer logs from forest areas of timber harvest to the plywood mills are shown below (see Figure 2).

Figure 2 - Supply chains of birch veneer logs from the forest areas of timber harvest to the plywood mills, affiliate with SVEZA-Les LLC

3.7 Each supply chain of veneer logs at Plywood mill starts from delivery contract between Mill and Supplier and ends with the contract between Logging operator and Forest management authority, which is provided timber harvest on the particular forest area. In case of direct supply of veneer logs by Logging operator this chain includes three members, between which concluded two contracts.

7 These contracts are: contract for veneer logs supply between Mill and supplier - Logging operator, and contract provided timber harvest concluded between Logging operator and Forest management authority. Supply chains may include one or more Trading companies, which are provide services to Logging operator in sales and logistic of veneer logs. Harvesting of birch logs in a large amount at one forest area is not possible, since in the natural forests content of birch (among other species) generally does not exceed 40%, and from harvested birch wood can be obtained only 20-60% of veneer logs. By this reason, to obtain a desired volume of raw materials, Plywood mills conclude contracts with a large numbers of suppliers (30 - 50), and the number of contracts between Forest management authority and Logging operators, providing timber harvesting, for one Plywood mill may amount 50 - 100.

3.8 Plywood mills, according to requirements of FSC certification, purchase veneer logs only with following FSC categories (see Figure 2): 1) Veneer logs with FSC 100% category, supplied by FSC certified suppliers, harvested at forest areas with FSC certified forest management and supply chain. 2) Veneer logs with FSC Mix Credit category (on Figure abbreviated as FSC MC) and / or FSC Controlled Wood category (on Figure abbreviated as FSC CW) supplied by FSC certified suppliers, harvested at forest areas with FSC certified forest management or with controlled forest management. 3) Veneer logs with FSC Controlled Wood category supplied by FSC certified suppliers, harvested at forest areas with controlled forest management. 4) Veneer logs with Controlled Wood (CW) - controlled wood materials, supplied at Plywood mill by non-certified suppliers, which are under control of Plywood mills, observes requirements for controlled wood, stipulated in the FSC standard FSC-STD-40-005. After acceptance at Plywood mill, this veneer logs obtain the FSC Controlled Wood category. On territory of every Plywood mill, do not allowed the presence of veneer logs with unknown and uncontrolled origin, or harvested and supplied with violation of Russian Federation laws. 3.9 There are no licensing requirements in the Russian Federation for: (a) timber harvesting activities, including veneer logs, (b) manufacturing of plywood, (c) transportation of plywood, by land and water types of transport, (g) trading operations with wood products. In the Russian Federation very strictly controlled observance of customs and phytosanitary legislation. The risks of supplies of veneer logs and plywood with violation of this legislation is very low, the information about violation of these laws are missing. Its observance does not require special control measures in the framework of this DDS. Peculiar properties of forest legislation, in part of timber harvesting, are described in Section 7. Tracing of veneer logs transportation, from the forest areas of timber harvest, held by mandatory trade and transport documents, in which FSC certified suppliers includes FSC claims - FSC material category and supplier's FSC certificate code. 3.10 In the Forest Code of Russian Federation dated 04.12.2006 No 200-FZ by special Federal Law N 415-FZ dated 28.12.2013 was added the mandatory requirements for accounting of wood and its transactions. The main purpose of this Law is to ensure the traceability of timber transportation from forest sites of timber harvest and transactions with it before processing or export to foreing countries. As part of entry into force of this Federal Law: 1) From 01 July 2014 (Russian Federation Government Regulation N 571 dated 21 June 2014) required mandatory registration of special accompanying document for transportation of wood, which is contain information about owner, consignor, carrier, consignee, vehicle, point of departure and destination, information about assigning of transported timber, and volume and species of the party. 2) From 01 July 2015 required mandatory declaration of transactions (contracts) for wood supply (including veneer logs) in the Unified State Information System for timber accounting and transactions. 3.11 Plywood mills comply with ecological safety legislation of the Russian Federation and other countries in which plywood is supplied, by requirements for production and use of plywood, which is confirmed

8 by certification, held by accredited certification bodies. Information about certificates published at http://www.sveza.com/cert.

4 List of documents submitted by SVEZA-Les LLC to Operators

4.1 DDS SVEZA-Les LLC provides for all operators the same set of documents, confirming compliance with EUTR and Lacey Act. The list of documents confirming compliance with EUTR and Lacey Act is shown in Figure 3.

DECLARATION SVEZA-Les LLC of compliance with requirements of

European Union Timber Regulation N 995/2010 and Lacey Act, USA (Accompanies each transport party - see Section 5 and Annex 2)

DECLARATION SVEZA-Les LLC about origin of veneer logs, used for manufacture of birch plywood (Declaration and Registry submitted 2 times a year - see Section 6 and Annex 3) Annexes to Declaration: REGISTRY of contracts for supply of veneer logs (Form F1) (See Section 12 and Annex 5a)

REGISTRY REGISTRY of contracts providing harvesting and of contracts for supply of veneer logs supply of veneer logs with with FSC 100% category (Form F2) Controlled Wood category (Form F3) (See Section 12 and Annex 5b (See Section 12 and Annex 5c)

ACTS of field inspections of Controlled Wood supplies (Provided upon the request, once per year - see Section 14 and Annex 6)

Figure 3 - List of documents submitted by SVEZA-Les LLC to Operators

4.2 Requirements for order, content, forms and timing of submitting, for documents, specified in Scheme 3 to the Operators are outlined below in Sections 5-14.

4.3 Due to large number of suppliers and forest areas of timber harvest (see point 3.7), as well as a large number of buyers (Operators), SVEZA-Les LLC is unable to provide information about the origin by forms, which are used individual operators.

This DDS prepared based on generalization of requirements main Operators. The new Operator's requirements can be taken into account by correction of this DDS.

9 5 Declaration SVEZA-Les LLC of compliance with EUTR and Lacey Act

5.1 Each transport party of plywood, delivered under the contract between SVEZA-Les LLC and Operator should be accompanied Declaration (in English) of compliance SVEZA-Les LLC with the European Union Timber Regulation N 995/2010 and Lacey Act, USA. Form of Declaration is given in Annex 2. 5.2 Declaration has a reference to the invoice, also accompanied transport party of plywood, which is contain information about the party and, if necessary, FSC claim. Declaration is an analogue of "Declaration according the Lacey Act", which is written by the importer (Operator) at import the party of plywood in the United States.

6 Declaration SVEZA-Les LLC about the origin of veneer logs

6.1 For compliance with required by Article 6 of European Union Timber Regulation N 995/2010 access to information about contracts for timber harvest ("concession of harvest" - Article 6, point 1, ii) SVEZA-Les LLC provide to the Importer (Operator) "Declaration about origin of veneer logs used for manufacture of birch plywood" in the form given in Annex 2. 6.2 Plywood mills, affiliate with SVEZA-Les LLC, are geographically separated. Each Plywood mill independently performs purchasing of used veneer logs, control of origin and shipment of plywood to the Operator's consignee. For this reason SVEZA-Les LLC prepares the Declaration, confirming the origin of the veneer logs, separately for each Plywood mill. In case when Operator receives plywood which is manufactured at several Plywood mills, SVEZA- Les LLC will prepare separate Declaration for plywood shipped by each Plywood mill. 6.3 Obligatory attachments to the Declaration of origin are the Registries of contracts for wood supply and timber harvest, submitted by Plywood mills (see Annex 5). Registry should contain information about all contracts in the supply chains, about forest areas of timber harvest and copy of permissive documents with volumes by species. Requirements for Registry of contracts listed below in Section 12. 6.4 Declaration should be issued twice per year according to the Registry of contracts on 1-st of March and 1-st of September of current year and submitted to Operator in English within 30 days.

7 Features of the forest legislation in the Russian Federation

7.1 The forests in the Russian Federation are located on the forest lands. Forest areas as a part of forest lands are in the state or municipal ownership. According to Forest Code of Russian Federation dated 04.12.2006 No 200-FZ the rights to conclude a contracts with Logging operators which are stipulate the timber harvesting given to: - state authorities of the Russian Federation - if timber harvesting held in forests owned by the state, or - local authorities - if timber harvesting held in forests with municipal ownership. Note: In the framework of this DDS state authorities of the Russian Federation and local authorities of subject of the Russian Federation referred to as "Forest management authority" 7.2 The main types of contracts, by which performed timber harvesting of veneer logs supplied at the Plywood mills, affiliate with SVEZA-Les LLC, are: 1) Lease agreement (lease), concluded between Logging operator and Forest management authority. 2) Contract of purchase-sale of forest stands (K-P, LN), concluded between Logging operator and Forest management authority.

10 The forms and procedures for conclusion of these agreements were approved at the Government level or at the level of Ministry of Natural Resources and Environment of the Russian Federation. 7.2 Forest lands lease agreement - main type of contract under which timber harvesting performed in the Russian Federation. The Lessor by this agreement is the Forest management authority and the lessee is Logging operator. Lease period is 10-49 years. For use leased forest areas Lessee should develop a forest management plan, which must pass a state expertise. The rights to perform timber harvesting on the specific forest area Logging operator receives based on the Forest Declaration. The Forest Declaration is the document prepared by the Lessee of forest area in accordance with Lease agreement and Forest Management Plan, which contains following information: 1) Location of forest areas (logging sites) on which, in the period not exceeding one year, can be performed timber harvesting - Forestry, quarter, logging site. 2) Species and volumes of wood which can be harvested. Forest declaration comes into force after its submission to the Forest management authority and provides rights to the Logging operator perform timber harvesting on the specified therein forest areas within the specified period. 7.3 Contract of purchase-sale of forest stands - type of contract which provides rights to the buyer - Logging operator perform timber harvesting on specified in the contract forest areas and contains following information: 1) Location of timber harvesting forest areas - Forestry, quarter, logging site. 2) Species and volumes of wood which can be harvested on each forest area. 3) Period (not exceeding one year) during which the Logging operator has the rights to perform timber harvesting. Seller of the forest stands under this Contract (on behalf of the state) is the Forest management authority, and the buyer - Logging operator. 7.4 Timber harvesting should be performed in accordance with technological map of logging site - document designed by Lessee, which contains characteristics of felling area, scheme and order of its development, and main operating indicators. Technological map should include fulfilment of environmental and other requirements under the Rules of Timber Harvesting and Forest Management Plans. 7.5 The actual harvested volume of timber by individual species (including birch) may be exceeded/ understated in comparison with the volume indicated in the Forest Declaration or in the contract of purchase-sale of forest stands, if timber harvesting was performed within the boundaries of forest area (logging site) referred to in this document. 7.6 The control of compliance, for above mentioned normative documents, regulating timber harvesting in the Russian Federation, as well as the requirements of laws of the Russian Federation on payment by Logging operators forest taxes and fees, payments and labour safety for workers and environmental requirements, in the framework of this DDS is combined with independent control in the framework of FSC certification. Sufficient risk mitigation measures of violation these legislation requirements of the Russian Federation provided in Section 14 of this DDS.

8 The system for collecting and monitoring information about wood origin and supply of veneer logs at Plywood mills

8.1 Issued by SVEZA-Les LLC Declaration of compliance with requirements of European Union Timber Regulation N 995/2010 and Lacey Act, USA (See point 5 above) and Declaration about origin of veneer logs, used for manufacture of birch plywood (See point 6) based on the special system for collection and monitoring information about timber origin and supply of veneer logs used at Plywood mills. Responsibility for maintaining of system for collection and monitoring information about the origin and supplies of veneer logs used at Plywood mill, assigned on the head of the Supply Department.

11 8.2 Contract for veneer logs supply the Plywood mills concluded on condition, that the Supplier accepted and timely update the obligations in the form of official Supplier's Declaration and its observance. The content of the supplier's Declaration depends on FSC category of supplied veneer logs. 8.3 Head of Wood Supply Department at Plywood mill should ensure: 1) Control of supplier's Declarations and attached Registry of contracts, submitted by FSC certified suppliers. 2) Control of supplier's Declarations and attached copies of contracts for supply and harvesting of veneer logs submitted by non-certified suppliers. 3) Prepare and update the Supplier's list, which is includes contract number for each supplier and FSC category of supplied veneer logs. Based on the Supplier's list, Wood Acceptance Service at Plywood mill should check information in the supplier's commodity and delivery documents for incoming parties of veneer logs, and hold its acceptance, ensure excluding the supplies of wood with unknown origin at Plywood mill. 4) Compile and update (based on Declarations) the Registry of contracts by forms F1 - F3, which are allow to trace all chain of contracts for veneer logs supply and timber harvesting. 5) Preparation and implementation of verification program for Controlled Wood supplies (by non- certified suppliers of veneer logs) in accordance with requirements of FSC -STD-40-005. 6) The collection of information about factually supplied amounts of forest products from every supplier. 7) The keeping of contract registries, contracts and supplier declarations, shipping documentation, information on purchased materials.

8.4 Delays, incomplete information in the Supplier Declaration or failure to comply with its requirements is a basis for termination of veneer logs acceptance from the supplier, and cancellation of the contract for wood supply.

9 Declaration of FSC certified supplier of veneer logs with FSC 100% category

9.1 The contracts between Plywood mill and FSC certified suppliers of veneer logs with category FSC 100% (chains, which are marked in Figure 2 by number "1") should contain the following obligations for supplier and subsuppliers: 1) Supply veneer logs with "FSC 100%" category and confirm this category by FSC claims in the payment and in the delivery document accompanying party. 2) Accept and submit to Plywood mill (prior start of supplies) the "Declaration of FSC certified supplier of veneer logs with FSC 100% category" in the form given in Annex 4a. Require compliance with the Declaration from its suppliers (subsuppliers). The Declaration shall be accompanied by Registries of contracts for supply and harvesting of timber with FSC 100% category by forms F1 and F2, given in Annexes 5a and 5b. 3) Issue and submit to Plywood mill a new Declaration in a period not exceeding 20 days after the change of contracts with subcontractors and/or contracts according to which timber harvesting is performed. 4) Provide on request to Plywood mill a copies of the contracts, which are specified in the Declaration (confidential information, not related to tracing of wood origin can be hidden). 5) Provides the rights to Plywood mill and to Importer (Operator) hold inspections for validation of information contained in represented by the supplier Declaration of wood origin, with inspection of forest areas of timber harvest and production facilities.

12 10 Declaration of FSC certified supplier of veneer logs with FSC Mix Credit and/or FSC Controlled Wood categories

10.1 The contracts between Plywood mill and FSC certified suppliers of veneer logs with categories FSC Mix Credit and/or FSC Controlled Wood (chains marked in Figure 2 by number "1" and "2") should contain the following obligations for supplier and subsuppliers: 1) Supply veneer logs with FSC Mix Credit and/or FSC Controlled Wood categories and confirm this categories by FSC claims in the payment and in the delivery document accompanying party. 2) Accept and submit to Plywood mill (prior start of supplies) the "Declaration of FSC certified supplier of veneer logs with FSC Mix Credit and/or FSC Controlled Wood categories" in the form given in Annex 4b. Require compliance with the Declaration from its suppliers (subsuppliers). The Declaration shall be accompanied by Registries of contracts by forms F1 - F3, given in Annexes 5a - 5c. 3) Issue and submit to Plywood mill a new Declaration in a period not exceeding 20 days after the change of contracts with subcontractors. 4) Provide on request to Plywood mill a copies of the contracts, which are specified in the Declaration (confidential information, not related to tracing of wood origin can be hidden). 5) Provides the rights to Plywood mill and to Importer (Operator) hold inspections for validation of information contained in represented by the supplier Declaration of wood origin, with inspection of forest areas of timber harvest and production facilities. 6) Annually (before 1 February) submit to Plywood mill copies of "Act of inspections of Controlled Wood supplies" (in the form given in Annex 6) and Certification bodies reports for audit of Controlled Wood supply, confirmed compliance with requirements of standard FSC-STD-40-005 by non-certified subcontractors for the previous calendar year.

11 Declaration non-certified supplier of veneer logs

11.1 The contracts between Plywood mill and non-certified suppliers of veneer logs should contain the following supplier's obligations: 1) Accept (sign) and submit to Plywood mill (prior start of supplies) the "Supplier's Declaration of veneer logs origin and compliance with requirements for Controlled Wood according to requirements of standard FSC-STD-40-005" in the form given in Annex 4c. Require compliance with Declaration from its suppliers (subsuppliers). 2) Issue and submit to Plywood mill a new Declaration in a period not exceeding 20 days after the change of contracts with subcontractors and/or contracts according to which timber harvesting is performed. 3) Jointly with Declaration provide the copies of documents, specified in the Declaration, (contracts with subcontractors, forest lands lease agreements with forest declaration for them, contracts of purchase-sale of forest stands), by which the supplier and subsuppliers (if any) hold supply and harvesting of timber, supplied by this contract. 4) Provides the rights to Plywood mill and to Importer (Operator), certification authority of Assurance Services International (ASI) to hold inspections for validation of compliance information contained in the "Supplier's Declaration", review of original documents and inspection of logging sites, supplier's and subsupplier's warehouses.

12 Registry of contracts for supply and harvesting of veneer logs

12.1 In order to systematize the information about large numbers of contracts for supply and wood harvesting, stipulated maintenance of Registry of contracts, with regular rearrangement. Plywood mills, affiliate with SVEZA-Les LLC, use three unified forms of Registry of contracts: F1, F2 and F3 (see point 12.2 - 12.5). Forms of Registry and instructions for its filling are given in Annex 5. 12.2 Registry of contracts for supply of veneer logs by certified suppliers - Form F1

13 1) Registry by Form F1 contains information about all chains of contracts for supply of veneer logs, concluded between FSC-certified participants. Each chain of contracts in this registry begins with contract with Plywood mill (as a buyer) for the purchase of veneer logs, and ends: a) contract with FSC certified Logging operator, which perform wood harvesting and supplied veneer logs with FSC 100% category, or b) contract with FSC certified supplier, which is purchase veneer logs from non-certified suppliers and ensuring their compliance with the requirements of the standard FSC-STD-40-05 for FSC Controlled Wood 2) To track the changes in condition and movement of veneer logs in the Registry by Form F1 indicate: а) Type of supplier's activities: "Harvesting" and delivery of assortments, "Manufacturing" and supply (products), "Handling" through the warehouse and delivery from it, "Purchase - supply" - without manufacturing operations. Type of vehicles delivered products. b) Name and FSC category of products supplied under the contract, name and FSC category of raw materials purchased or harvested by the supplier. 3) Registry by Form F1 is main Registry of veneer logs supplies by FSC certified suppliers. However, it does not include information about contracts for timber harvest, which are contained in the Registries by forms F2 and F3. 12.3 Registry of contracts, providing harvesting of veneer logs with FSC 100% category - Form F2 1) Registry by Form F2 contains information about all the lease agreement with FSC certified forest management, where lessee - Logging operators performs harvesting of veneer logs with FSC 100% category. 2) The contracts specified in this Registry, are the latest contracts in a chains of contracts by which deliveries of FSC certified veneer logs are held. The other contracts of these chains are shown in the main Registry of contracts by Form F1. For links between contracts in this Registry and in the Registry by form F1 used reference to the number of chains of contracts and the contracts, in different Registers. 3) In Registry by Form F2 for each contract specified: a) Forest area of harvest - Forestry, on which timber harvesting is performed under valid lease agreement. b) Species - names of industrial wood species, used for manufacture of timber products, and total amount by species, allowed for harvesting according the lease agreement. 12.4 Registry of contracts for supply and harvesting of veneer logs by non-certified suppliers - Form F3 1) Registries by Form F3 prepare and present Plywood mills and FSC certified suppliers, which are ensure the compliance of non-certified suppliers of veneer logs and their subsuppliers, with the requirements of the standard FSC-STD-40-05 for FSC Controlled Wood. For their preparation used submitted non-certified supplier's Declarations about veneer logs origin and compliance with requirements for Controlled Wood according to FSC-STD-40-005, and also attached copies of contracts for supply and harvesting of veneer logs. 2) Within framework of FSC certification Registry of contracts by Form F3 is the basic document for inspection program for Controlled Wood supplies in accordance with FSC-STD-40-005. Based on this Registry, FSC certified buyers' schedules their random inspection of Controlled Wood supplies. The results of these inspections formalized in the form of "Act of inspections of Controlled Wood supplies" (see Annex 6). The register contains information about Acts of inspections held and the dates of planned inspections. 3) The contracts specified in this Registry are the continuation (till forest areas of wood harvest) of chains of contracts for supply, listed in the Registry of contracts by Form F1. 4) For each contract stipulated wood harvesting in this Registry indicated: information about the current forest declaration (for lease agreements); about forest harvesting areas (Forestry, quarter), on which timber harvesting is performed; species and volumes by species allowed for harvesting; output coefficients for assortments; yield of assortments. Realized the possibility

14 monitor compliance with possible yield of assortments, and actual volume of it harvest at forest sites, with separation by species.

13 Risk assessment of placing a birch plywood, produced from an inappropriate wood, on the EU and US markets

13.1 Considering that system of FSC certification meets the criteria of Article 4 of Regulation (EU) No 607/2012, applied in the risk assessment and risk mitigation procedures, SVEZA-Les LLC adopted the following decisions about risk assessment: 13.2 FSC-certified supply chains. For supply chains of veneer logs with categories FSC 100%, FSC Mix Credit and FSC Controlled Wood risk of inappropriate wood supplies is recognized as low. In this case, all participants in the supply chains of wood raw material must be FSC certified. 13.3 Supply chains of controlled wood. For supply chains of controlled wood from forest areas of timber harvest to Plywood mill or FSC certified supplier, which controls the observance of its non- certified subsuppliers the requirements of standard FSC-STD-40-005 for FSC Controlled Wood, the National risk assessment FSC-CW-RA-015 V2-0 is used: Risk assessment on a national level:

Controlled wood category Arkhangelsk, Vologda, Ivanovo, Kostroma, Kirov, Kurgan, Leningrad, Nizhny Novgorod, Novgorod, Pskov, Sverdlovsk, Omsk, Tver, Tyumen, Chelyabinsk and Yaroslavl regions; Republic of Bashkortostan, Karelia, Komi, Mari El, Udmurtia; Permsky Kray; Khanty-Mansi Autonomous Okrug.

Illegally harvested wood Undefined risk Wood, harvested with violations of Undefined risk traditional and civil rights Wood, harvested in sections with danger to Undefined risk hign conservation value Wood, harvested in forests, that are Low risk converted into plantations or non-forest grounds Wood, harvested in forests, where Low risk genetically modified trees are grown For categories of wood, that has a status of “undefined risk” LLC “SVEZA-Les” and affiliated plywood mills conduct an evaluation of risks and perform control measures for each supplier. (Annex 14)

14 Mitigation of risk of placing the birch plywood produced from inappropriate wood, on the EU and US markets

14.1 Risk mitigation measures At supplies of FSC certified birch plywood by SVEZA-Les LLC the minimization of risk to place on the market products from inappropriate veneer logs implies the following measures: 1) Checks of FSC Chain of Custody Certification - presence of valid FSC certificates, specified in the Supplier's Declarations and Registry of supplies in the FSC database at: http://info.fsc.org/. 2) Inspections, carried out within the Program of inspections for controlled wood supplies, by Plywood mills and FSC certified suppliers of compliance for non-certified suppliers (and subsuppliers) submitted information in the Supplier's Declaration about contracts for supply and harvesting of veneer logs, and requirements of standard FSC-STD-40-005 for Controlled Wood. According to procedures specified in standard FSC-STD-40-005, Plywood mills implement the Program of inspections for controlled wood supplies. Under this Program should be held

15 random field inspections of controlled wood supplies, independently (by Plywood mill) and with participation of the certification body. The minimum annual quantity of field inspections conducted by the Plywood mill "x" is set by formula: x = 0,8 y , where "у" - number of contracts provided harvesting of veneer logs in the Registry of non-certified suppliers by Form 3 at the time of compilation inspections program. The selection of contracts (forest areas of veneer logs harvest) for inspection performed randomly. At least three inspections of controlled wood supplies performed with participation of FSC certification body. The inspections for controlled wood supplies provide control of compliance Supplier's Declaration (and all contracts, attached to it), field visits of harvesting sites, consultations with stakeholders, including the subjects of legality of timber harvesting by particular Logging operator on the specific forest area. If identified violations, the acceptance of veneer logs from this Supplier is suspended until elimination of all nonconformities. 3) Annual audits of FSC certified buyers of controlled wood by the FSC certification bodies. 4) Provided rights to SVEZA-Les LLC and to Importer (Operator), certification authority of Assurance Services International (ASI) to hold inspections for validation of compliance information contained in the "Supplier's Declaration", review of original documents and inspection of logging sites, supplier's and subsupplier's warehouses.

14.2 The supply of wood is allowed only after the confirmation after performing the control measures of low risk on all categories of controlled wood. After confirmation of the defined risk or revelation of non- correctable incompliances by results of field inspections, the purchase of wood production from such sections is not made until the evidence of risk reduction is obtained. 14.3 SVEZA-Les LLC and Plywood mills should provide opportunity for representatives of Importer (Operator) upon their request: 1) Participate in the audits of supply chains and inspections of controlled wood supplies according to FSC-STD-40-005. 2) Hold special audit of compliance of this DDS with access to documents, related to timber origin, with inspection of forest areas of timber harvest and production facilities of Exporter, its suppliers and subsuppliers. 14.4 Registration of risk mitigation measures results To confirm the implementation of risk mitigation measures, each calendar year, no later than 1 March and upon the request, SVEZA-Les LLC should provide to the Importer (Operator) following documents: 1) Acts of inspections of controlled wood supplies, held by Plywood mills and by FSC certified suppliers, which are confirm the compliance with the Declaration non-certified suppliers, and standards FSC-STD-40-004 and FSC-STD-40-005, in the form of Annex 6. 2) Summaries from the annual FSC audits reports, held by FSC certification body at the Plywood mills and at FSC certified suppliers, related to compliance with legislation of the Russian Federation.

15 Complaints review procedure

All complaints regarding DDS, coming into LLC “SVEZA-Les” and affiliated plywood mills need to be filed on a paper medium and sent via e-mail at [email protected] for reviewal. After a complaint is received, the following actions are taken:  registration;  reviewal (fidelity assessment);  taking a decision on a complaint;  reply to the inquirer.

16 If the complaint after the reviewal is recognized as substantial, the responsible person develops the corrective measures aimed towards the elimination of the incompliances. The answer about decision and measures taken are provided to the inquirer, responsible person of LLC “SVEZA-Les” (as well as certification authority – if the complaint is recognized as substantial) within 14 days after the complaint is received. In case the content of a complaint complies with p. 7.2 c FSC-STD-40-005, the forwarding of complaint is made to certification authority and FSC national office.

The information about date, sender and taken decision is entered into the log book in free form, which is led in electronic format.

Manager of customer technical support SVEZA-Les LLC ______Nasyrov I.R.

17 Annex 1 Declaration of commitment to FSC values

Self-Declaration Декларация о соблюдении ценностей FSC™ Regarding FSC-POL-01-004 and FSC-PRO20-001 согласно FSC-POL-01-004 and FSC-PRO20-001

SVEZA-Les LLC have contractual relations with Forest ООО «СВЕЗА-Лес» связано с Лесным Stewardship Council® A.C., Oaxaca, Mexico (hereinafter попечительским советом - Forest Stewardship referred to FSC) regarding certification of the wood Council A.C., Оахака, Мексика, или одной из его products supply chain. дочерних или аффилированных компаний (далее FSC) договорными отношениями по By signing this Declaration, SVEZA-Les LLC openly сертификации цепочки поставок продукции из declare that they have read and understood the Policy on древесины. associating organizations with FSC, published on the Internet site www.fsc.org. This policy indicates the Подписанием настоящей Декларации ООО position of FSC regarding the unacceptable activities of «СВЕЗА-Лес» открыто заявляет, что organizations and individuals that are or may be ознакомились и понимают «Политику в associated with FSC, as well as the mechanism to avoid отношении ассоциирования организаций с FSC», such association. опубликованную на интернет-сайте www.fsc.org. Эта политика обозначает позицию FSC в In view of the above, SVEZA-Les LLC publicly commit отношении неприемлемой деятельности now and in the future, for the duration of the relationship организаций и физических лиц, которые with FSC, not to participate directly or indirectly in the ассоциируются или могут ассоциироваться с FSC, following unacceptable activities: а также механизма исключения из такого 1. Illegal logging or trade in illegal timber or timber ассоциирования. products; 2. Violation of traditional rights or human rights in С учётом изложенного выше ООО «СВЕЗА-Лес» forestry operations; публично обязуется в настоящее время и в 3. Destruction of high conservation values in будущем в течение срока действия отношений с forestry operations; FSC не участвовать прямо или косвенно в 4. Significant conversion of forests to plantations следующих неприемлемых видах деятельности: or nonforestry usage; 1. Незаконная лесозаготовка или торговля 5. Implementation of genetically modified незаконной древесиной или лесной organisms in forestry operations; продукцией; 6. Violation of any of the fundamental Conventions 2. Нарушение традиционных прав или прав of the International Labour Organization (ILO), человека при ведении лесного хозяйства; defined in the ILO Declaration on fundamental 3. Разрушение высоких природоохранных principles and rights at work ценностей при ведении лесного хозяйства; 4. Значительное преобразование лесов в плантации или нелесные земли; 5. Применение генетически модифицированных организмов при ведении лесного хозяйства; 6. Нарушение любой из основных конвенций Международной Организации Труда (МОТ), определённых в Декларации МОТ об основополагающих принципах и правах в сфере труда

Manager of customer technical support SVEZA-Les LLC / Nasyrov I.R. / Насыров И.Р Менеджер группы по технической поддержке клиентов ООО «СВЕЗА-Лес»

18 Annex 2 Form of Declaration SVEZA-Les LLC of compliance with requirements of European Union Timber Regulation N 995/2010 and Lacey Act, USA

DECLARATION of compliance with requirements of European Union Timber Regulation N 995/2010 and Lacey Act, USA

1. SVEZA-Les OOO, Russia, as a seller of timber products, hereby confirms that the party of products listed in the attached document: Invoice N 12345 06.08.2014 Document title Document number Date of registration complies with requirements of applicable by SVEZA-Les OOO Due Diligence System (DDS) of compliance with requirements of European Union Timber Regulation N 995/2010 and Lacey Act, USA. All wood used for manufacture timber products, were harvested and passed supply chain under 100% compliance with applicable laws of the Russian Federation. Compliance with the requirements has an independent confirmation by FSC Chain of Custody Certification of SVEZA-Les OOO and FSC claims in the aforementioned document. 2. The products manufactured using wood of the following species: Birch: Betula pendula, Betula pubescens Species names - trade and botanical

3. Wood for manufacture of products was harvested in following regions of Russian Federation:

Arkhangelsk, Vologda, Ivanovo, Kostroma, Kirov, Kurgan, Leningrad, Nizhny Novgorod, Novgorod, Pskov, Sverdlovsk, Omsk, Tver, Tyumen, Chelyabinsk and Yaroslavl regions; Republic of Bashkortostan, Karelia, Komi, Mari El, Udmurtia; Permsky Kray; Khanty-Mansi Autonomous

Okrug. name of regions

19 Annex 3 Form of Declaration SVEZA-Les LLC of veneer logs origin, used for manufacture of birch plywood

DECLARATION SVEZA-Les LLC of veneer logs origin, used for manufacture of birch plywood

Date of registration 12.06.2013

SVEZA-Les LLC As a seller of birch plywood, which is manufactured on the Plywood mill, affiliate with SVEZA-Les LLC ______, by this Declaration confirms the origin of wood, used for manufacture of all transport parties of plywood shipped from this Plywood mill at the date of this Declaration. 1. Registry of contracts for supply of veneer logs Veneer logs supplied to the Plywood mill by issued properly, and in accordance with the legislation of the Russian Federation, contracts which are specified in the Registry of contracts for veneer logs supply (Form F1) - Annex 1 to this Declaration. 2. Registry of contracts, providing harvesting of veneer logs with FSC 100% category Harvesting of veneer logs with FSC 100% category held according to issued properly, and in accordance with the legislation of the Russian Federation forest area lease agreements, which are specified in the Registry of contracts for harvesting of wood with FSC 100% category (Form F2), - Annex 2 to this Declaration. 3. Registry of contracts, providing harvesting and supply of veneer logs with Controlled Wood category Harvesting of veneer logs by non-certified suppliers held according to issued properly, and in accordance with the legislation of the Russian Federation contracts, contracts which are specified in the Registry of contracts for veneer logs supply and harvesting of wood with Controlled Wood category (Form F3), - Annex 3 to this Declaration. 4. FSC certification of forest management and supply chain Suppliers of veneer logs specified in the Registry by Annex 1, have a valid FSC chain of custody certificates, which are provides supplies of veneer logs with FSC categories: FSC 100%, FSC Mix Credit or FSC Controlled Wood. Logging operators specified in the Registry by Annex 2 have valid FSC certification of forest management and chain of custody. Plywood mill and FSC certified supplier compiled the Registry of contracts of Annex 3, performs control and ensure compliance (by their non-certified suppliers and forest users) requirements of the standard FSC-STD-40-05 for FSC Controlled Wood. During harvesting and transportation of veneer logs, and manufacturing of shipped plywood, provided low risk of mixing veneer logs, supplied under the contracts specified in Annexes 1-3, with wood of different origins.

On behalf of SVEZA-Les LLC:

Manager of customer technical support SVEZA-Les LLC Ildar Nasyrov Signature / Position Name Stamp (if any)

20 Annex 4 Forms of Declaration of veneer logs suppliers

Annex 4a Form of Declaration of FSC certified supplier of veneer logs with FSC 100% category

DECLARATION of FSC certified supplier of veneer logs with FSC 100% category

Date of registration

On behalf of the supplier:

Position Signature / Stamp (if any) Name

Note: Forms of Annexes to Declaration of veneer logs origin are given in Annex 6 of this DDS.

21 Annex 4b Form of Declaration of FSC certified supplier of veneer logs with FSC categories FSC Mix Credit and/or FSC Controlled Wood

DECLARATION of FSC certified supplier of veneer logs with FSC categories FSC Mix Credit and/or FSC Controlled Wood

Date of registration

______as a supplier of veneer logs under the contract No ______dated ______20___ by the present Declaration confirms the origin of birch veneer logs, supplied under the contract on the date of this declaration. 1. Registry of contracts for veneer logs supplies Veneer logs supplied by properly issued in accordance with the legislation of the Russian Federation contracts, which are specified in the Registry of contracts for veneer logs supply (Form F1) - Annex 1 to this Declaration. 2. Registry of contracts, providing harvesting of veneer logs with FSC 100% category Harvesting of veneer logs held according to properly issued in accordance with the legislation of the Russian Federation lease agreements, which are specified in the Registry of contracts for harvesting of wood with FSC 100% category (Form F2), - Annex 2 to this Declaration. 3. Registry of contracts for supplies and harvesting of veneer logs with Controlled Wood category The supplies and harvesting of veneer logs by non-certified suppliers and Logging operators held according to properly issued in accordance with the legislation of the Russian Federation lease agreements, which are specified in the Registry of contracts for harvesting of wood with Controlled Wood category (by Form F3) - Annex 3 to this Declaration.. 4. FSC certification of forest management and supply chain Buyers and suppliers of veneer logs specified in the Registry by Annex 1, have a valid FSC chain of custody certificates, which are provides supplies of veneer logs with categories: FSC 100%, FSC Mix Credit or FSC Controlled Wood. Logging operators, which are specified in Registry by Annex 2, have a valid FSC certificates for forest management and supply chain. FSC certified supplier which is compiled the Registry of contracts by Annex 3, performs control and ensure compliance (by their non-certified suppliers and forest users) requirements of the standard FSC-STD-40-05 for FSC Controlled Wood. During harvesting, transportation and manufacturing of products supplied under the contract, provided the low risk of mixing veneer logs, supplied under the contracts specified in Annexes 1-3, with wood of different origins.

On behalf of the supplier:

Position Signature / Stamp (if any) Name

22 Annex 4c Form of Declaration of non-certified supplier about veneer logs origin and compliance with requirements for Controlled Wood according to FSC standard FSC-STD-40-005

SUPPLIER DECLARATION about veneer logs origin and compliance with requirements for Controlled Wood according to FSC standard FSC-STD-40-005

Date of registration

1. Timber origin Timber harvested in the following areas and forestry:

Region of the Russian District Forestry Federation

2. Contracts for supply and timber harvesting Timber harvested in accordance with following properly issued documents (delivery contract - in presence of subsuppliers, lease agreements and forest declarations to it or the contract of purchase- sale of forest stands):

Number of supply Type of contract, parties, number and date of registration. chain of Information about actual forest declaration for lease agreements contracts 1

… -

Total numbers of lease agreements, pcs. Total numbers of contract of purchase-sale of forest stands, pcs. Total numbers of contract of purchase-sale of forest stands and lease agreements, pcs.

23 Note: Each chain of contracts should ends with lease agreement or contracts for purchase-sale of forest stands. The contracts with subcontractors can be presented without confidential information about prices. Copies of above mentioned documents are attached. Timber harvesting held in compliance with requirements of these documents. 3. Compliance with Controlled Wood requirements The supplier ensures that supplied timber products complies with the Controlled Wood requirements specified in standard FSC-STD-40-005, it's mean that in the regions and timber harvesting areas, as well as during harvesting process, complies conditions listed below in paragraphs 3.1 - 3.5.

3.1. Supplied wood isn't illegally harvested Supplier ensures that: - timber harvesting carried out in accordance with permissive documents specified in point 2, - all related taxes and fees for timber harvesting paid in time, - where are no supply of wood of unknown origin

3.2. There are no violations of traditional or civil rights during timber harvesting Where are not identified major unsettled claims concerning the rights of long-term ownership or use, involving indigenous people living in a given territory, or in which a large number of interests affected. If any disputes with local population appear, Supplier shall solve it with local authorities.

3.3. Timber harvesting does not performed in forest areas, where high conservation values are threatened during use Forest areas where timber harvesting held are: - not a part of old-growth forest areas and not incorporate it, - does not contain elements of high conservation value which are not protected by national or local legislation. Supplier will refrain from wood harvesting till clarifying of subject, if there is no assurance of the absence of high conservation value in the areas allocated for harvesting.

3.4. During wood harvesting where no not violation of any fundamental conventions of International Labour Organization (ILO) as defined in ILO Declaration on Fundamental Principles and Rights at Work.

4. Compliance with requirements for Controlled Wood by subsuppliers Supplier agrees to impose the requirements for Controlled Wood mentioned above (in points 1-3) to its suppliers.

On behalf of the supplier:

Position Signature / Stamp (if any) Name

24 Annex 5 Forms of Registry of contracts for supply and harvesting of veneer logs. Instructions for filling

Note: The following forms are Annexes to the Declarations of timber origin by Annexes 3 and 4 of this DDS

25 Annex 5a Registry of contracts for veneer logs supply by FSC certified suppliers- Form F1

Sample of filling

Form F1 Annex 1 to Declaration of FSC certified supplier about origin of veneer logs, dated 12.06.2014

Seller SVEZA-Les LLC Sellers's supplier Plywood mill JSC UIFK

REGISTRY OF CONTRACTS FOR VENEER LOGS SUPPLY BY FSC CERTIFIED SUPPLIERS No F1-1

Date of update 10.06.2013 This registry has links to the attached registries No F2-1, F3-1

Information about Type of Supplier type of Raw materials Details of delivery contracts for Products under contract transportation activity purchased or harvested by contract procurement of Buyer Supplier of products (Purchase- supplier FSC certificate code FSC certificate code (Auto, delivery, assortment Railway, Manufacturing, Number FSC FSC Contract Number Date Type Ships, Timber Handling Type of category category number Contract number Contract floating) Harvesting) Registry

1 2 3 4 5 6 7 8 9 10 11 12 13 НАО ОАО ХЛК "Череповецлес" Veneer logs, FSC Veneer logs, 1 СВЕЗА «Усть-Ижора» 324 01.02.14 - Purchase FSC 100% - - GFA-COC-001259 Birch 100% Birch GFA-COC-001378 ОАО ХЛК "Череповецлес" ОАО "Белозерский ЛПХ" Veneer logs, FSC Veneer logs, 2 123 01.02.14 Auto Harvesting FSC 100% F2-1 1-5 GFA-COC-001259 GFA-FM/COC-001346-A Birch 100% Birch ОАО ХЛК "Череповецлес" ОАО "Белозерсклес" GFA- Veneer logs, FSC Veneer logs, 3 124 01.02.14 Auto Harvesting FSC 100% F2-1 6-11 GFA-COC-001259 FM/COC-001346-B Birch 100% Birch ОАО ХЛК "Череповецлес" ОАО "Вашкинский ЛПХ Veneer logs, FSC Veneer logs, 4 125 01.02.14 Auto Harvesting FSC 100% F2-1 12 GFA-COC-001259 GFA-FM/COC-001346-С Birch 100% Birch ОАО ХЛК "Череповецлес" ОАО "Бабаевский ЛПХ Veneer logs, FSC Veneer logs, 5 127 01.02.14 Auto Harvesting FSC 100% F2-1 13-17 GFA-COC-001259 GFA-FM/COC-001346-D Birch 100% Birch …

26 Annex 5b Registry of contracts for supply and harvesting of veneer logs with category FSC 100% - Form F2

Sample of filling

Form F1 Annex 2 to Declaration of FSC certified supplier about origin of veneer logs, dated 12.06.2014

Seller SVEZA-Les LLC Seller's supplier Plywood mill JSC UIFK

REGISTRY OF CONTRACTS FOR VENEER LOGS SUPPLY WITH CATEGORY FSC 100% No F2-1

Date of update 10.06.2014 This registry has links to the attached registries No F1-1

Information about Wood species Details of forest lease contracts for supply total volume permitted for harvesting under the contracts, thous. M3 agreement of assortments Forest (liquidity) Forest User management Forest harvesting (Lessee) authorities areas - Forestry FSC certificate code Softwood Soft-leaved Hardwood (Lessor) Registry Contract Total Number Date

Contract number Contract number number volume Species Volume Species Volume Species Volume

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ОАО "Белозерский ЛПХ" ДЛК Вологодской 02-02-16/239- Pine 51,74 Birch 125,6 1 F1-1 2 27.08.08 Белозерское - - 259,8 GFA-FM/COC-001346-A обл. 2008 Spruce 40,65 Aspen 41.85 ОАО "Белозерский ЛПХ" ДЛК Вологодской 02-02-16/236- 2 F1-1 2 20.08.08 Белозерское Spruce 0,27 Birch 0,77 - - 1,04 GFA-FM/COC-001346-A обл. 2008 ОАО "Белозерский ЛПХ" ДЛК Вологодской 02-02-16/235- Pine 14,48 Birch 28,04 3 F1-1 2 20.08.08 Борисово-Судское - - 78,45 GFA-FM/COC-001346-A обл. 2008 Spruce 13,79 Aspen 22,14

…

27 Annex 5c Registry of contracts for supply and harvesting of veneer logs by non-certified suppliers - Form F3

Sample of filling

Form F3 Annex 3 to Declaration of FSC certified supplier about origin of veneer logs, dated 12.06.2014

Seller SVEZA-Les LLC Seller's supplier Plywood mill JSC UIFK

REGISTRY OF CONTRACTS FOR SUPPLY AND HARVESTING OF VENEER LOGS BY NON-CERTIFIED SUPPLIERS No F1-1

Registry contains information about chain of contracts starting from Supplier under contract No - in Registry No -

The Delivery Total Total Date of update 30.03.2014 Number actual Total Number of Amount, Number Number stock of Average Yield of volume of of volume of available records assortmen of lease of permits yield of assortme removals Assortment Veneer logs contracts supplies Species stock of about t under agreement for assortmen nt, total from the with the of by assortmen inspections contracts, s harvest t m3 shipping Suppliers assortmen permits, t, m3 of supplies Species Birch m3 points, m3 t, total m3 m3 25 430650 364094 97 98 764055 0,57 435511 71417 39488 14

Actual

volume Details of Details of valid Total Volume of of Logging site - Total Inform Supplier, available contract assortment assortme Forest Declaration Exit ratio Yield of Shipping volume of ation Buyer Subsupplier or stock of Contract provided nt for assort point at removal about (FSC certificate Forest assortmen type under the delivered assortme ment, removals from the inspecti code, if any) management t by contract, under nt m3 (Forestry, shipping ons of

Number of Number authority 3 permits 3 contract chain contract Numb m the Numbe 3 quarter) point, m supply Contract number Contract Date Date m er contract r m3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 НАО 1 Supply СВЕЗА «Усть- ООО "ЛЕСТОРГ" БФ-16 01.02.14 46050 40231 Ижора» ООО ООО 2 Supply б/н 01.01.14 "ЛЕСТОРГ" "ЕвроДомСтрой" Акт No ООО Forest ДЛК Вологодской Судиславско 7 от 3 1 "ЕвроДомСтрой 315 25.11.09 б/н 10.11.13 4 612 0,57 2 629 1 673 lease обл. е кв 123 2014- " 05-07 …

28 Annex 6 Form of Act of inspection for Controlled Wood supplies

Plywood mill

Act of inspection for Controlled Wood supplies No dated 1. Verifiable chain of contracts and forest area of timber harvest Reason for inspection (scheduled/non-scheduled – reason/internal DDS inspection):

Supplier, number and date of contract for timber supply, assortment, species, volume of timber provided by contract and the actual volume delivered at the date of inspection:

Subcontractors: Buyer - Supplier, number and date of contract for timber supply between them:

The document for harvest Forest User - Forest management authority, contract type, number, date of actual Forest declaration, available volume of assortment by species:

Forest site chosen for verification - Forestry, quarter, , logging site, available volume by species (for assortment):

Inspected warehouses and production lines:

2. Participants of inspection (organization, position, Name and Surname) From Operator: From Exporter: From Plywood mill From Supplier: From Subcontractor: From Forest user: 3. Participants and results of stakeholders' survey From forestry:

From local administration:

From non-governmental organizations:

From Forest users' employee:

From local population:

29 4. Checklist for certain categories for Controlled Wood supply Indicator Yes/No Category 1: Legality of timber 1.1. Does the supplied volume of timber under the contract with Supplier correlate

with potential yield of assortment according to permissive documents? Comments:

1.2. Does the production facilities of supply chain participants correlate with

volume of supplied assortment? Comments:

1.3. Does the documents for timber harvest and Technological map of logging site

comply with legislation?? Comments:

1.4. Are all of requirements of contract for timber harvest and requirements of

Technological map of logging site are fulfilled? Comments: 1.5. Are commercial and transport documents for transported timber properly

issued? Comments: 1.6. Is risk of mixing Controlled Wood with timber with unknown origin along all

of supply chains (in harvest, transportation and storage) low? Comments: 1.7. Have no arrears on payments under the contract for harvest and taxes from

Forest user? Confirmation: Category 2: Traditional and civil rights of employees 2.1. Does the compensation of employees performed on time and in full? Confirmation: 2.2. Are conflicts of Forest users' employees concerning to uniting in the trade unions, conclusion of employment contracts and collective labour agreements missing? Confirmation: 2.3. Does the salary of forest user' employees corresponds to the average for

industry? Confirmation: 2.4. Are major conflicts with local and the indigenous population in relation to

forest management missing? Comments:

2.5. Have cases of use by forest user forced or child labour been reported? Comments:

2.6. Are violations of rights of local population to pick berries and mushrooms,

hunting and fishing missing? Comments:

Category 3: The high conservation values threatened by forest management activities 3.1. Does timber harvesting forest areas not belong to Protected Areas (PAs) or Intact Forest Landscape (IFL)?

30 Confirmation:

3.2. Are any protection forests or specially protected forest areas allocated on

timber harvesting forest areas? Confirmation:

3.3. Are the requirements of Technological map of logging site to preserve

protection forests and protected forest areas observed? Comments:

3.4. Are there no open disputes between forest user and environmental organizations concerning to high conservation values threatened by forest management activities? Comments:

5. Inspection results - identified discrepancies and needed corrective measures, evaluation of the implementation and the productivity of control measures (while performing internal DDS audit). 1.

6. Signatures

Position Signature Surname and initials Position Signature Surname and initials