**Exhibit 4.3**

 

 

**SERVICE CONTRACT OF PRESIDENT&******CHIEF EXECUTIVE OFFICER**

 

The undersigned parties havethis day made the following agreement: 

 

**1 Parties**

 

UPM-Kymmene Oyj, Helsinki, hereafter referred to as UPM-Kymmene, and Mr. Jussi Pesonenhereafter referred to as the President and & Chief Executive Officer. 

 

**2Place of Work**

 

The President & Chief Executive Officer’s place ofwork is principally Helsinki. 

 

**3 Valid Period**

 

This contract is valid as of 29 January, 2004 until further notice. 

 

**4 Duties**

 

The President & Chief Executive Officer shall be responsible for the administration of the company to the extent specified in theFinnish Companies Act and in the company’s Articles of Association. The President & Chief Executive Officer shall also undertake all other tasks assigned to him by the company’s Board of Directors 

 

The President & Chief Executive Officer shall be responsible to the Board of Directors ofUPM-Kymmene. 

 

**5 Remuneration**

 

The President & Chief Executive Officer’s total remuneration package consists ofbasic salary in money, benefits in kind and possible bonuses as determined by the Board of Directors. 

 

Basic Salary 

 

Basic total salary as of 1 February, 2004 is 45.000 € per month. Salary will be paid monthly into a bank account chosen by the President & Chief ExecutiveOfficer on the normal pay date of the place of work. 

 

The salary will beadjusted according to UPM-Kymmene principles concerning top management salaries. 

**UPM**  **Contract**  2(5)   
Confidential
       
17 February, 2004
    
 

Benefits in Kind

 

Benefits in kind (excluding the car)provided in accordance with the UPM-Kymmene policies, constitute a part of the basic total salary according to the taxable values in force. 

 

The President & Chief Executive Officer is responsible for any personal taxes caused by these benefits. 

 

Company Car

 

The President & Chief Executive Officer is entitled to a company car appropriate to the status of his post. He is responsible for anypersonal taxes caused by this benefit. 

 

Bonuses

 

Bonuses may be paid subject to the terms andconditions determined by the Board of Directors. 

 

Other group payments

 

Unless explicitly determined, thePresident & Chief Executive Officer is not entitled to any other payments from UPM-Kymmene Group of companies. 

 

**6 Retirement Pensions & Associated Benefits**

 

The President & Chief Executive Officer may, on his own initiative or at the suggestion of the UPM-Kymmene, retire on pension at the age of 60 years. No later thantwelve months before the President & Chief Executive Officer reaches the age of sixty years, he and the Chairman of the Board of Directors shall discuss the issue of pensionable retirement at sixty years of age. No additional notice is requiredto terminate this contract at that age. 

 

The President & Chief ExecutiveOfficer will be provided with retirement, disability and survivors’ pension according to the Corporate Benefit Guidelines. 

 

If necessary, UPM-Kymmene will take out a supplementary pension insurance in order to secure the target pension determined in the Corporate Benefit Guidelines.

 

**7 Insurance Benefits**

 

The statutory insurance cover will be supplemented as defined in UPM-Kymmene policies.

**UPM**  **Contract**  3(5)   
Confidential
       
17 February, 2004
    
 

**8 Annual Holidays**

 

The holiday entitlement will be in accordance with national legislation. The President& Chief Executive Officer shall inform the Chairman of the Board of Directors of the actual dates of the holiday in good time before the commencement of the leave. 

 

Local rules applied to the management shall be observed for additional holiday pay. 

 

**9 Illness**

 

Sick pay provided due to illness or injury is paid in accordance with national law and rules applied to the management. The President &Chief Executive Officer is also entitled and obliged to occupational health services as defined in UPM-Kymmene guidelines. 

 

**10 Business travel and entertaining expenses**

 

The President & Chief Executive Officer is entitled to be reimbursed with travel expenses in accordance with UPM-Kymmene travel policy. All expense claims forrepresenting UPM-Kymmene shall be accompanied by appropriate receipts. 

 

**11Training**

 

The President & Chief Executive Officer is entitled tonecessary executive education agreed with the Chairman of the Board of Directors. The expenses will be covered by UPM-Kymmene. 

 

**12 Secondary Employment/Interests**

 

The President & Chief Executive Officer is not allowed without a specific written consent of the Board of Directors to be an active member, owner or partner in anyother professional activity, paid or not paid for, outside the UPM-Kymmene Corporation. 

 

Consent can be given provided that the secondary activity in question can not be regarded as a competing act which violates good business conduct and that it does not hinder the performance of the President & Chief ExecutiveOfficer’s duties. 

 

**13 Non-disclosure**

 

The President & Chief Executive Officer is bound to maintain secrecy concerning anyconfidential information related to the businesses of the UPM-Kymmene Corporation with the exception of matters that by their nature require communication or have turned into common knowledge. This duty to maintain secrecy also applies after thetermination of this contract. 

 

**14 Prohibition of competition**

 

As long as this contract is in force the President & Chief Executive Officer is notentitled without the consent of the Board of Directors to accept employment in an enterprise competing with UPM-Kymmene or to become owner or partner in a competing business. This also applies to the period of notice. 

 
**UPM**  **Contract**  4(5)   
Confidential
       
17 February, 2004
    
 

**15 Termination**

 

This contract is automatically terminated in the event of the President & ChiefExecutive Officers’ retirement. 

 

Both parties can terminate the contractupon 6 months’ notice unless otherwise prescribed by the imperative legislation. 

 

If notice is given by UPM-Kymmene, the President & Chief Executive officer will be paid, in addition to the salary for the notice period, a compensation equivalent of 24 months’ fixed salary. This compensation doesn’tconstitute any extension of the contract. In case of the President & Chief Executive officer retiring within 24 months from the termination of the contract, the number of extra payment months are not to exceed the date of the retirement.

 

In the event of this contract being terminated by the President *&*Chief Executive Officer or for reasons solely related to him no extra compensation will be paid by UPM-Kymmene. 

 

If the President *&*Chief Executive Officer dies during employment a sum equal to the salary of the notice period is paid to his/her beneficiaries. 

 

**16 Change in Control**

 

In case the control of UPM-Kymmene is taken over, the President & Chief Executive Officer can terminate the contract without noticewithin three months from closing the take-over. If the President & Chief Executive Officer exercises this right he will be paid a compensation equivalent of 24 months’ fixed salary. This compensation doesn’t constitute any extension ofthe contract. 

 

It is understood that the Change in Control will take place asfollows: A situation as referred to in Chapter 14 Section 19 of the Finnish Companies Act, in which a shareholder possesses over 90 % of the shares of the Company and therefore has the right to and obligation to redeem the shares of the remainingshareholders, or a situation as referred to in Chapter 6 Section 6 of the Finnish Securities Market Act, or a situation as referred to in Section 12 in the Articles of Association. 

 

The monthly payment will be discontinued if the President and Chief Executive Officer enters the employment of another enterprise ororganisation. 

 

**17 Other terms and conditions**

 

For issues not particularly stated in this contract, national legislation of the country ofresidence, corporate policies and local practices shall be observed. 

 

Thiscontract is in substitution for all previous contracts of service between the parties. 

 
**UPM**  **Contract**  5(5)   
Confidential
       
17 February, 2004
    
 

Any disputes which may arise out of orin connection with this contract and which can’t be solved through negotiations between the parties shall, if either party so demands, be settled in arbitration proceedings pursuant to the Finnish Arbitration Act. 

 

The arbitrator shall be appointed by the Central Chamber of Commerce Arbitration Board.

 

The arbitrator’s decision is not appealable. 

 

This contract is drawn up in two identical copies, one for each party. 

 

Helsinki, 17 February, 2004 

 

Signed on behalf of UPM-Kymmene
 Signed by the President & Chief Executive Officer
/s/ VESA VAINIO
 
/s/ JUSSI PESONEN