EXHIBIT 4.16


 


M-real Corporation


 


and


 


Sappi Limited


 


LOCK-UP DEED


 


Linklaters


 


Linklaters LLP

One Silk Street


London EC2Y 8HQ


 


Telephone (44-20) 7456 2000


Facsimile (44-20) 7456
2222


Ref: L-155244 C. Jacobs/D.
Josselsohn


 

















 


THIS DEED 31 December 2008


 


BETWEEN:


 


(1)                              M-real
Corporation, a public company incorporated in Finland with registered address at
Revontulentie 6, FI-02100 Espoo, Finland (“M-real”);
and


 


(2)                              Sappi Limited, a public company incorporated in
South Africa with registered address at Sappi House, 48 Ameshoff Street
Braamfontein, Johannesburg, South Africa (the “Company”).


 


WHEREAS:


 


(A)                            The Company intends to acquire part
of M-real’s graphic paper business on the terms of the Master Agreement entered
into between the parties on 29 September, 2008 (the “Transaction”).


 


(B)                            In part consideration for the
Transaction, the Company shall allot and issue to M-real the Shares.


 


(C)                            M-real has agreed not to Dispose
of any of the Shares on the terms of this Deed.


 


It is agreed as follows:


 


1                                      Interpretation


 


1.1                           Definitions


 


In
this Deed unless the context otherwise requires:


 


“Board” means the board of directors of the Company from time
to time;


 


“Business Day” means a day when the JSE
is open;


 


“Code” means the Securities Regulation
Code on Take-overs and Mergers and the Rules of the SRP issued pursuant to
the Companies Act, South Africa;


 


“Companies Act, South Africa” means the
Companies Act, 1973 (Act 61 of 1973), as amended;


 


“Competitor” means any entity competing
with the Company;


 


“Confidentiality Agreement” means the
Confidentiality Agreement entered into between the Company and M-real on 15 May 2008
as amended from time to time;


 


“Deed” means this Lock-Up Deed;


 


“Dispose” includes, directly
or indirectly, any offer, issue, sale or contract to sell, issue or grant of any
options in respect of or over, transfer, charge, pledge or other disposal or
agreement to dispose of any Shares and “Disposal”
and “Disposing” shall be construed
accordingly;


 


“Effective Date” means the Completion
Date as defined in the Master Agreement;


 


“FX Hedge” means a foreign exchange hedging arrangement
including, without being limited to any spot, option, forward or swap
currency contract or any interest rate swaps and options;


 


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“Group Company” means, in relation to
any person, its subsidiaries or subsidiary companies (each such term as defined
in the Companies Act, South Africa, whether or not such company is incorporated
in South Africa);


 


an “interest” in Shares
shall have the meaning given to that term in Section 208 of the Companies
Act 1985 (for the avoidance of doubt, ignoring for these purposes the
provisions of Section 209 thereof) and the term “interested” shall be construed accordingly;


 


“JSE” means the JSE Limited, a company
incorporated in South Africa and licensed as an exchange under the Securities
Services Act, 2004 (as amended);


 


“Master  Agreement”
means the Master Business and Share Sale and Purchase Agreement entered into
between the Company and others and M-real and others at the same time as this
Agreement;


 


“Restricted Period” means the
period beginning on the Effective Date and ending on the date falling 9 months
from the Effective Date;


 


“Shares” means the ordinary
shares of ZAR1.00 each in the capital of the Company allotted and issued to M-real
pursuant to the Transaction;


 


“South Africa” means the Republic of
South Africa;


 


“ZAR” means Rand, the lawful currency of
South Africa.


 


1.2                           Recitals, Clauses etc.


 


References in this Deed to Recitals, Clauses, sub-clauses and Schedules
are to the Recitals, Clauses and sub-clauses of and Schedules to this Deed.


 


1.3                           Headings


 


Headings
shall be ignored in construing this Deed.


 


2                                      Restrictions


 


2.1                           Restrictions on Disposals
of Shares


 


Save
for the exceptions set out Clause 3, M-real undertakes to the Company that,
during the Restricted Period, it will not, without the Company’s prior written
consent, Dispose of or, directly or indirectly, announce an offering of, any
Shares (or any interest therein or in respect thereof) or any other securities
exchangeable for or convertible into, or substantially similar to, Shares or
enter into any transaction with the same or a substantially similar economic
effect as, or agree to do, any of the foregoing, including, without being
limited to, entering into or agreeing to enter into any derivative transaction
in respect of the Shares.


 


2.2                           Restrictions on Disposals
to Competitors


 


Save for the exceptions set out
in Clauses 3.1.1, 3.1.2 and 3.1.7, M-real undertakes to the Company that,
during the Restricted Period, it will not, without the Company’s prior written
consent, Dispose of any of the Shares to a Competitor or, directly or
indirectly, announce an offering of, any of the Shares (or any interest therein
or in respect thereof) or any other securities exchangeable for or convertible
into, or substantially similar to, Shares or enter 


 


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into any transaction with the
same economic effect as, or agree to do, any of the foregoing, including,
without being limited to, entering into or agreeing to enter into any
derivative transaction in respect of the Shares to or with a Competitor, as the
case may be.


 


3                                      Exceptions


 


The restrictions set out in Clause 2.1 shall
not prohibit M-real from:


 


3.1.1                 accepting a general offer made to
all holders of issued and allotted shares in the capital of the Company made in
accordance with the Code on terms which treat all such holders alike (whether
by way of takeover, scheme of arrangement or otherwise);


 


3.1.2                 executing and delivering an
irrevocable commitment or undertaking to accept a general offer as is referred
to in sub-paragraph 3.1.1 above as recommended by the Board;


 


3.1.3                 transferring or Disposing of any
Shares pursuant to a compromise or arrangement between the Company and its
creditors or any class of them which is agreed to by the creditors or members
and sanctioned by the court under the Companies Act, South Africa;


 


3.1.4                 selling or otherwise Disposing of
any Shares pursuant to any offer by the Company to purchase its own shares
which is made on identical terms to all holders of shares in the Company;


 


3.1.5                 placing any of the Shares with a
third party (subject to the Company’s prior written consent not to be
unreasonably withheld or delayed) provided that prior to the making of any
Disposal pursuant to this sub-paragraph the transferee shall have agreed to be
bound by the restrictions of this Deed as if it were the transferor, by
execution and delivery to the Company of a Deed of Adherence in (or
substantially in) the form set out in Schedule 1;


 


3.1.6                 Disposing of any of the Shares in
accordance with any order made by a court of competent jurisdiction or as
required by law, regulation or a competent authority to which M-real is
subject;


 


3.1.7                 subject
to the Company’s prior written consent, not to be unreasonably withheld or
delayed,
Disposing of any of the Shares to the extent the sale proceeds (net of costs)
are required by M-real to avoid M-real or a Group Company triggering a default of a financial covenant to which they are subject;


 


3.1.8                 Disposing
of any of the Shares to the extent the sale proceeds (net of costs) are
required by M-real to satisfy a breach of warranty claim or other liability to
the Company (including any adjustment to the net working capital) in respect of
the Transaction; or


 


3.1.9                 entering
into or agreeing to enter into an FX Hedge in respect of the Shares.


 


4                                      General


 


4.1                           Whole Agreement


 


Save for the terms incorporated by reference into this Deed by the
Master Agreement, this Deed contains the whole agreement between the parties
relating to the subject matter of 


 


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this Deed at the date hereof to the exclusion of any terms implied by
law which may be excluded by contract.


 


4.2                           Counterparts


 


This Deed may be entered into in any number of counterparts all of
which taken together shall constitute one and the same instrument. Any party
may enter into this Deed by executing any such counterpart.


 


4.3                           Invalidity


 


If any provision in this Deed shall be held to be illegal, invalid or
unenforceable, in whole or in part, under any enactment or rule of law,
such provision or part shall to that extent be deemed not to form part of this Deed
but the legality, validity and enforceability of the remainder of this Deed
shall not be affected.


 


4.4                           Assignment


 


This Deed is personal to the parties and the rights and obligations of
the parties may not be assigned, held on trust or otherwise transferred.


 


4.5                           Confidentiality


 


The parties have entered into the
Confidentiality Agreement. The terms of the Confidentiality Agreement shall
remain in force, save as varied or amended by the terms of the Master Agreement
or any supplementary confidentiality undertaking. In the event of any inconsistency
between the terms and obligations of this Deed, the Confidentiality Agreement
and the Master Agreement, the terms and obligations of the Master Agreement
shall take precedence.


 


4.6                           Further assurance


 


At any time after the date of
this Deed, M-real shall, and shall use its reasonable endeavours to procure
that any necessary third party shall, execute such documents and do such acts
and things as the Company may reasonably require for the purpose of giving the
Company the full benefit of all the provisions of this Deed in relation to the
obligations of M-real, but not in relation to any obligation of any other
person.


 


4.7                           Variation


 


No variation of this Deed shall be effective unless in writing and
signed by or on behalf of each of the parties.


 


4.8                           Waiver


 


No failure of any party to exercise, and no delay by it in exercising,
any right, power or remedy in connection with this Deed (each a “Right”) will operate as a waiver thereof,
nor will any single or partial exercise of any Right preclude any other or
further exercise of such Right or the exercise of any other Right. The Rights
provided in this Deed are cumulative and not exclusive of any other Rights
(whether provided by law or otherwise). Any express waiver of any breach of
this Deed shall not be deemed to be a waiver of any subsequent breach.


 


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4.9                           Third Party Rights


 


A person who is not a party to this Deed has no right under the
Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Deed.


 


5                                      Notices


 


5.1                           Any notice or other communication
in connection with this Deed (each, a “Notice”)
shall be:


 


5.1.1                 in writing in English;


 


5.1.2                 delivered by hand, fax,
registered post or by courier using an internationally recognised courier company.


 


5.2                           A Notice to the Company shall be
sent to the following address, or such other address as the Company may notify in
writing to M-real from time to time:


 


	
  Address:

  	
  Sappi Limited

  
	
   

  	
  Sappi House

  
	
   

  	
  48 Ameshoff Street

  
	
   

  	
  Braamfontein

  
	
   

  	
  Johannesburg 2001

  
	
   

  	
  South Africa

  
	
   

  	
   

  
	
  Fax:

  	
  +27 11 339 8022

  
	
   

  	
   

  
	
  Attention:

  	
  Robert Hope with a copy to the General Counsel

  
	
   

  	
   

  



5.3                           A Notice to M-real shall be sent
to the following address, or such address as M-real may notify in writing to
the Company from time to time:


 


	
  Address:

  	
  M-real Corporation

  
	
   

  	
  Revontulentie 6

  
	
   

  	
  FI-02100 Espoo

  
	
   

  	
  Finland

  
	
   

  	
   

  
	
  Fax:

  	
  +358104654201

  
	
   

  	
   

  
	
  Attention:

  	
  Esa Kaikkonen

  



 


5.4                           A Notice shall be effective upon
receipt and shall be deemed to have been received:


 


(i)                                  at the time of delivery, if
delivered by hand, registered post or courier;


 


(ii)                               at the time of transmission in
legible form, if delivered by fax.


 


6                                      Appointment of Process Agent


 


6.1                           Appointment


 


6.1.1                 M-real hereby irrevocably
appoints Sappi (U.K) Limited at Blackburn Mill,
Feniscowles,  Blackburn,  Lancashire  BB2 5HX (for the attention of Willy Heckers) as its agent for the service of
process in England in relation to any matter arising 


 


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out of this Deed, service upon
whom shall be deemed completed whether or not forwarded to or received by M-real.


 


6.1.2                 The Company hereby irrevocably
appoints M-real UK Services Limited at Sittingbourne, Kent, ME10 3ET (for the
attention of David Scudder) as its agent for the service of
process in England in relation to any matter arising out of this Deed, service
upon whom shall be deemed completed whether or not forwarded to or received by the
Company.


 


6.2                           Change of Address


 


Each party shall inform the other, in writing, of any change in the
address of its process agent within 28 days.


 


6.3                           Process Agent Ceasing to
Have Address in England


 


If any process agent appointed pursuant to Clauses 6.1.1 and 6.1.2
ceases to have an address in England, M-real or the Company, as the case may
be, irrevocably agrees to appoint a new process agent acceptable to the other and
to deliver to the other within 14 days a copy of a written acceptance of
appointment by such process agent.


 


7                                      Governing Law and Submission to Jurisdiction


 


7.1                           Governing Law


 


This Deed and the documents to be entered into pursuant to it shall be
governed by and construed in accordance with English Law.


 


7.2                           Submission to Jurisdiction


 


All the parties irrevocably agree that the courts of England are to
have exclusive jurisdiction to settle any disputes which may arise out of or in
connection with this Deed and that accordingly any proceedings arising out of
or in connection with this Deed shall be brought in such courts.


 


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In witness whereof this Deed has been executed by the Company and M-real and
delivered on the date first stated above.


 


 


	
  SIGNED and DELIVERED by 

  	
   

  	
   

  	
   

  
	
   

  	
  

  	
   

  	
  /s/ R Sanz and RD Hope

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  on behalf of SAPPI LIMITED and 

  	
   

  	
   

  
	
  thereby executed by it as a DEED

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SIGNED and DELIVERED by 

  	
   

  	
   

  	
   

  
	
   

  	
  

  	
   

  	
  /s/ E Kaikkonen and M Mörsky

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  on behalf of M-REAL
  CORPORATION  

  	
   

  	
   

  
	
  and thereby executed by it as a 

  	
   

  	
   

  
	
  DEED

  	
   

  	
   

  



 


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