Document:

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;

 

1

 

“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 

 

2

 

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 

 

3

 

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.

 

4

 

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 

 

5

 

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.

 

6

 

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

  	
   

  	
   

  

 

7EXHIBIT 4.17

 

Dated 31 December 2008

 

INSTRUMENT

 

-constituting-

 

GUARANTEED UNSECURED LOAN NOTES 2008

 

BRINGING THIS DOCUMENT OR ANY CERTIFIED COPY
OF THIS DOCUMENT INTO THE REPUBLIC OF AUSTRIA AS WELL AS ANY WRITTEN
CONFIRMATION (INCLUDING E-MAIL AND FAX) OR WRITTEN REFERENCE (INCLUDING E-MAIL
AND FAX) TO THIS DOCUMENT MAY CAUSE THE IMPOSITION OF AUSTRIAN STAMP DUTY
TAX. PLEASE READ CLAUSES 12 (FEES, DUTIES AND TAXES AND STAMP TAXES), 14
(NOTICES) AND 17 (PLACE OF PERFORMANCE AND PAYMENTS) OF THIS INSTRUMENT IN
CONNECTION WITH THE FOREGOING.

 

Linklaters

 

One
Silk Street

London
EC2Y 8HQ

 

Telephone
(44-20) 7456 2000

Facsimile
(44-20) 7456 2222

 

Ref
L-155244/C Jacobs

 

 

GUARANTEED UNSECURED LOAN NOTES

 

This Instrument is
entered into as a deed this 31st day
of December 2008        by

 

(1)                              SAPPI PAPIER HOLDING GMBH a limited liability
company incorporated under the laws of Austria registered in the commercial
registry of the regional court of Graz under FN 167931h having its registered
office at A-8101 Gratkorn, Brucker Strasse 21, Austria (the “Company”);

 

(2)                              SAPPI
LIMITED a company incorporated in the Republic of South
Africa whose registered office is at Sappi House, 48 Ameshoff Street,
Braamfontein, Johannesburg, South Africa ( “Sappi”);

 

(3)                              SAPPI INTERNATIONAL S.A. a company incorporated in
Belgium having its registered office at Chaussee de la
Hulpe 154, 1170 Watermael-Boitsfort, Belgium (“Sappi International”); and

 

(4)                              SAPPI
TRADING PULP AG a company incorporated in Switzerland whose
registered office is at Gotthardstrasse 23, 8800 Thalwil, Switzerland  (“Sappi Trading Pulp”),

 

(Sappi, Sappi
International and Sappi Trading Pulp together being the “Guarantors”).

 

Whereas:

 

(A)                            Sappi, the Company and M-real,
among others, entered into a Master Business and Share Sale Agreement on 29 September 2008
(the “Master Agreement”).

 

(B)                            The Company has in accordance
with its Memorandum and Articles of Association and by a resolution of its
Board of Directors passed on 12 December 2008, resolved to create the
Guaranteed Unsecured Loan Notes 2008 having a value of €250,000,000 to be
issued to M-real pursuant to Sappi and the Company’s obligations under the
Master Agreement (the “Notes”).

 

(C)                            The Guarantors have agreed to
guarantee payment of principal and interest in respect of the Notes on the
terms and subject to the Conditions set out in the Second Schedule to this
Instrument.

 

(D)                            This Instrument is entered into
and the Notes are to be issued to M-real, on the Completion Date in accordance
with the terms of the Master Agreement.

 

Now this Instrument
witnesses and declares as follows:

 

1                                      Definitions

 

1.1                           In this Instrument and the
Schedules the following expressions shall where the context permits have the
following meanings:

 

“Business
Day” means any day (which is not a Saturday, Sunday or a bank or
public holiday) on which banks are open for business in Helsinki, Johannesburg,
Zurich, Vienna and London;

 

“Certificate”
means a certificate duly executed by the Company relating to the Notes
represented by it;

 

“Competitor”
means any person that directly or indirectly competes with the Sappi;

 

“Completion Date”
shall have the meaning given in the Master Agreement;

 

1

 

“Conditions”
means the conditions set out in the Second Schedule as modified from time to
time in accordance with the provisions of this Instrument;

 

“Consideration Shares”
shall have the meaning given in the Master Agreement;

 

“Default” means
an Early Repayment Event or any event or circumstance specified in Condition 2
of the Second Schedule which would (with the expiry of a grace period, the
giving of notice, the making of any determination under the Note Documents or
any combination of any of the foregoing) be an Early Repayment Event;

 

“Directors”
means the Board of Directors for the time being of the Company or a duly
authorised committee thereof;

 

“Early Repayment Event”
means any event or circumstance specified in Condition 2 of the Second
Schedule;

 

“Extraordinary
Resolution” has the meaning given to it in paragraph 17 of the Third
Schedule;

 

“Financial
Indebtedness” means (without double counting) any indebtedness for
or in respect of:

 

	
   

  	
  (a)

  	
  moneys borrowed;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  any amount raised by acceptance under any acceptance credit facility
  or dematerialised equivalent;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  any amount raised pursuant to any note purchase facility or the issue
  of bonds, notes, debentures, loan stock or any similar instrument;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  the amount of any liability in respect of any hire purchase agreement,
  conditional sale agreement or lease which would, in accordance with generally
  accepted accounting standards in the relevant jurisdiction be treated as a
  finance or capital lease;

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  any guarantee, bond, stand-by letter of credit or other similar
  instrument issued in connection with the performance of contracts;

  
	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  any interest rate or currency swap agreement or any other hedging or
  derivatives instrument or agreement;

  
	
   

  	
   

  	
   

  
	
   

  	
  (g)

  	
  any arrangement entered into primarily as a method of raising finance
  pursuant to which any asset sold or otherwise disposed of by that person is
  or may be leased to or re-acquired by a Group Company (whether following the
  exercise of an option or otherwise); or

  
	
   

  	
   

  	
   

  
	
   

  	
  (h)

  	
  any guarantee or indemnity for any of the items referred to in paragraphs
  (a) to (g) above,

  

 

except
that indebtedness owing by one Group Company to another Group Company shall not
be taken into account as Financial Indebtedness;

 

“Guarantee”
means the guarantee and indemnity of the Guarantors referred to in Clause 9, subject
to and in accordance with the conditions and the terms of the Fourth Schedule;

 

“Guaranteed
Unsecured Loan Notes 2008” shall have the meaning given in
Clause 4;

 

2

 

“Instrument”
means this instrument and the Schedules (inclusive) hereto as from time to time
modified in accordance with the provisions herein contained;

 

“Interest
Payment Date” has the meaning given to it in Condition 6;

 

“Interest
Period” has the meaning given to it in Condition 6;

 

“Lock-up Agreement”
means the
agreement dated [the same day as this Agreement] entered into by M-real and
Sappi which sets out certain restrictions on the disposal of the Consideration
Shares;

 

“Material Adverse Effect”
means a material adverse effect on the ability of the Obligors (taken together)
to perform their payment obligations under the Note Documents or the
ability of the Company to comply with the financial covenants contained in
Condition 16 by reference to clause 21 (Financial
Covenants) of the RCF;

 

“M-real” means M-real Corporation, a company incorporated in Finland whose
registered office is at Revontulentie 6, 02100 Espoo, Finland/P.O. Box 20,
FIN-02020 Metsä, Finland (registered in Finland with No. 0635366-7);

 

“Note
Document”  means:

 

	
  (a)

  	
   

  	
  this Instrument; or

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  a Note;

  

 

“Notes”
means the Guaranteed Unsecured Loan Notes 2008 constituted by this Instrument
or, as the case may be, the principal amount thereof for the time being issued
and outstanding;

 

“Noteholder”
means a person for the time being entered on the Register as the holder of a
Note;

 

“Obligor” means
the Company or a Guarantor;

 

“Paper Business”
means, any one or more of the following businesses:

 

	
   

  	
  (a)

  	
  the production, manufacture, distribution, supply, sale, purchase and
  trading in respect of paper (including but not limited to fine paper, coated
  and uncoated woodfree paper, packaging paper, publication paper and
  newsprint);

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  pulp (including all chemical or other manufacturing processes relating
  to pulp); and

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  wood products (including all initial processes, manufacturing or
  otherwise relating to paper, pulp and paper pulp), the growing of timber
  supplies,

  

 

and any other businesses related or ancillary
to any of the foregoing;

 

“Proceedings”  means any proceeding, suit or
action arising out of or in connection with this Instrument or the Notes;

 

“Qualifying Noteholder”
means a Noteholder which is (on the date a payment falls due) entitled
(subject to the completion of any necessary procedural formalities) to payment
of interest under the Notes from the Company without a Tax Deduction for or on
account of Austrian tax;

 

3

 

“RCF” means the
EUR 600,000,000 revolving credit facility agreement dated 29 June 2005
arranged for Sappi Limited by BNP Paribas, J.P. Morgan Plc and SG Corporate &
Investment Banking as amended on 11 September 2006 and as further amended,
restated or novated from time to time;

 

“Register”
means the register of Noteholders to be maintained by the Registrar on behalf
of the Company in accordance with Clause 8;

 

“Registrar”
means the person appointed by the Company from time to time to maintain the
Register;

 

“Relevant Purchasers”
shall have the meaning given in the Master Agreement;

 

“Relevant Sellers”
shall have the meaning given in the Master Agreement;

 

“Security” means
a mortgage, charge, pledge, lien or any other security interest securing any
obligation of any person or any other agreement or arrangement having the
effect of giving security or preferential ranking to a creditor;

 

“Service Document”
means a claim form, summons, order, judgement or other document issued in
connection with any Proceedings;

 

“Stamp Duty Sensitive
Document” means (i) any original of: this Instrument (including
the Schedules hereto); the Certificates relating to the Notes; the Guarantee;
the Vendor Loans (as defined in the Master Agreement), any transfer document
transferring the Vendor Loans (as defined in the Master Agreement) to Sappi as
contemplated by clause 7.5 of the Master Agreement; or the Master Agreement
(but excluding the Hallein Coater Asset Sale and Transfer Agreement (as defined
in the Master Agreement) and any document relating to the transfer of Austrian
IP as contemplated in the Master Agreement) and (ii) any notarised copy or
any certified copy of the documents above;

 

“Tax Credit”
means a credit against, relief or remission for, or repayment of, any Tax;

 

“Tax
Deduction” means a deduction or withholding for or on account of Tax
from a payment under a Note Document;

 

“Tax
Payment” means an increased payment made by an Obligor to
a Noteholder under Clause 13.2 (Tax
gross-up).

 

“Working Hours” means 9.00 a.m. to 5.00 p.m. on a
Business Day.

 

1.2                           References herein to “this
Instrument” include, where the context so admits, the Schedules hereto.

 

1.3                           Save as expressly defined any
words and expressions defined in the Companies Act 2006 shall have the same
meanings when used in this Instrument.

 

1.4                           References herein to any
provision of any statute shall be deemed also to refer to any statutory
modification or re-enactment thereof from time to time in force.

 

1.5                           Words used herein denoting
persons shall include corporations, the masculine gender shall include the
feminine and the singular shall include the plural and vice versa.

 

1.6                           The headings herein are for
convenience only and shall not affect the interpretation hereof.

 

4

 

1.7                           References herein to Clauses,
Conditions, paragraphs, sub-paragraphs or Schedules are to clauses, conditions,
paragraphs and sub-paragraphs hereof or to the schedules hereto.

 

1.8                              Unless
otherwise defined or construed in this Instrument, terms defined and references
construed in the RCF have the same meaning and construction in this Instrument.

 

1.9                              An Early Repayment Event is “continuing” if it has not been remedied or waived.

 

2                                      Amount of the Notes

 

2.1                           The principal amount of the Notes
constituted by this Instrument shall not exceed €250,000,000 in aggregate
nominal amount. The Notes shall be issued fully paid in amounts and integral
multiples of €10,000,000 and shall only be transferable as provided in the
Second Schedule.

 

2.2                           The principal amount of the Notes
constituted by this Instrument will be a maximum of €250,000,000 in aggregate
nominal amount but shall be finally determined in accordance with Clause 7.2 of
the Master Agreement.

 

3                                      Repayment

 

Unless previously repaid, redeemed or
purchased, the Notes shall be repaid in full at par on the date which is 48
months from the Completion Date, together with any accrued interest up to but
excluding that date.

 

4                                      Status of the Notes

 

The Notes shall be known as the “Guaranteed Unsecured Loan Notes 2008” and
when issued each Obligor shall ensure that they rank at least pari passu with the claims of all its
other unsecured and unsubordinated creditors, except for obligations
mandatorily preferred by law applying to companies generally.

 

5                                      Conditions of Issue

 

The Conditions, the Guarantee and the
provisions contained in the Schedules shall have effect in the same manner as
if such Conditions, Guarantee and provisions were set out herein. The Notes
shall be held subject to and with the benefit of the Conditions, the Guarantee
and of the provisions in the Schedules, all of which shall be binding on the
Company, the Guarantors and the Noteholders and all persons claiming through
them respectively.

 

6                                      Covenants by the Obligors

 

The Company and the Guarantors covenant with
the Noteholders and each of them duly to perform and observe the obligations on
its part contained in this Instrument (including, without limitation, the
Second and Third Schedules in the case of the Company and the Fourth Schedule
in the case of the Guarantors) to the intent that this Instrument shall ensure
for the benefit of all Noteholders each of whom may sue for the performance or
observance of the provisions of this Instrument so far as his holding of Notes
is concerned.

 

5

 

7                                      Certificates for Notes

 

7.1                           Each Noteholder will be entitled
without charge to one Certificate for the aggregate amount of Notes registered
in his name in the Register. Each Certificate shall bear a denoting number and
shall be executed by the Company. Every Certificate shall be in the form or
substantially in the form set out in the First Schedule and shall have the
Conditions endorsed thereon.

 

7.2                           When a Noteholder transfers or
has redeemed part only of his Notes, the old Certificate shall be cancelled and
a new Certificate for the balance of such Notes shall be issued without charge.

 

8                                      Register of Notes

 

8.1                           The Company shall appoint a
Registrar (initially to be Willy Heckers of Sappi (UK) Limited,
Blackburn Mill, Feniscowles, Blackburn, Lancashire BB2 5HX) who shall at all times keep at
an address in the United Kingdom a Register showing:

 

8.1.1                the names and addresses of the
holders for the time being of the Notes;

 

8.1.2                the amount of the Notes held by
each registered holder;

 

8.1.3                the date on which the name of
each individual registered holder is entered in the Register in respect of the
Notes standing in its name; and

 

8.1.4                the denoting number of each
Certificate for the Notes issued and the date of issue thereof.

 

8.2                           Any change of name or address on
the part of any Noteholder shall forthwith be notified to the Registrar and the
Register shall be altered accordingly.

 

8.3                           Any change of the name or address
of the Registrar shall be notified to the Noteholders in accordance with Clause
14 of this Instrument and Condition 13 of the Second Schedule.

 

9                                      Guarantee

 

The
Guarantors give the guarantee and indemnity set out in the provisions of the
Fourth Schedule.

 

10                               Compliance with laws

 

So
long as any Note is outstanding, the Company undertakes that it will comply
with all applicable laws to which it may be subject, to the extent that failure
to comply does not have, or is not reasonably likely to have, a Material
Adverse Effect.

 

11                                Representations and warranties

 

                                             Each Obligor represents and
warrants and undertakes to the Noteholders that:

 

11.1                     it is a limited liability
company, duly incorporated and validly existing under the laws of its
jurisdiction of incorporation;

 

11.2                     the obligations expressed to be
assumed by it in this Instrument and the Notes are, subject to any general
principles of law limiting its obligations, legal, valid, binding and
enforceable obligations;

 

6

 

11.3                     the entry into and performance by
it of this Instrument and the Notes do not and will not conflict with:

 

11.3.1          any applicable law or regulation;

 

11.3.2          its constitutional documents; or

 

11.3.3          to the extent which could reasonably be
expected to have a Material Adverse Effect, any agreement or instrument binding
upon it or any of its assets or constitute a default or termination event
(however described) under any such agreement or instrument;

 

11.4                     it has the power to enter into,
perform and deliver, and has taken all necessary actions to authorise entry
into, performance and delivery of this Instrument and the Notes; and

 

11.5                     all authorisations required to
enable it lawfully to enter into, exercise its rights and comply with their
obligations in this Instrument and the Notes have been obtained or effected and
are and will continue to be in full force and effect.

 

12                               Fees, duties and taxes and Stamp Taxes

 

12.1                    Fees, duties and taxes

 

The
Company will pay any stamp, issue, registration, documentary and other fees,
duties and taxes, including interest and penalties, payable on or in connection
with (i) the execution and delivery of this Instrument and (ii) the
constitution and original issue and registration of the Notes.

 

12.2                    Stamp Taxes

 

12.2.1         The Company shall pay and, within five
Business Days of demand, indemnify each Guarantor or Noteholder against any
cost, loss or liability that that Guarantor or Noteholder incurs in relation to
all stamp duty, registration and other similar Taxes payable in respect of this
Instrument, the Guarantee and any other documents in connection herewith
provided, however, that the Company shall not be so liable to pay and indemnify
the Guarantors or the Noteholders against any cost, loss or liability that the
Guarantor or the Noteholder so incurs to the extent that such cost, loss or
liability results from the Guarantor or the Noteholder breaching its obligations
under paragraph 12.2.2 below.

 

12.2.2         No Guarantor or Noteholder shall
bring, send to or otherwise produce in Austria a Stamp Duty Sensitive Document
other than in the event that:

 

(i)                            this does not cause a liability of the Company to pay stamp duty or
other Tax in Austria;

 

(ii)                         the Guarantors or the Noteholders
wish to enforce or preserve (e.g. by interim injunction) any of their rights,
powers and remedies under or in connection with the Stamp Duty Sensitive Documents in Austria and required and/or
desirable (including, without limitation, for reason of any objection or
defence raised by the Guarantors or the Noteholders in any form of proceedings in Austria) to
bring, send to or otherwise produce in Austria a Stamp Duty Sensitive Document
for the purpose

 

7

 

          of enforcement or preservation of any of their rights under or in
connection with a Stamp Duty Sensitive Document or
either the judge, arbitrator or other person responsible for the determination
of such proceedings has ruled that a Stamp Duty Sensitive Document or any
document relating to it must be brought into Austria, or has indicated that a
Stamp Duty Sensitive Document must be brought into Austria in order to avoid
adverse effects for the Guarantors or the Noteholders enforcing or preserving
their rights under or in connection with a Stamp Duty Sensitive Document, or
the rules governing the conduct of such proceedings provided that a Stamp
Duty Sensitive Document or any document relating to it, or any other form of
evidence of the matters which are the subject of such proceedings, cannot be
produced as adequate evidence of the purposes of such proceedings and it would not be sufficient for that Guarantor or Noteholder to bring, send to or otherwise produce in Austria a simple copy (a
copy which is not an original copy, notarised copy or certified copy) of the
Stamp Duty Sensitive Document for the purposes of such enforcement; in
furtherance of the foregoing, but without prejudice to it, no Guarantors
and no Noteholders shall (1) object to the introduction
into evidence of an uncertified copy of any Stamp Duty Sensitive Document or
raise a defence to any action or to the exercise of any remedy on the basis of
an original or certified copy of any Stamp Duty Sensitive Document not having
been introduced into evidence, unless such uncertified copy actually introduced
into evidence does not accurately reflect the content of the original document
and (2) if such Guarantor or Noteholder is a party to the
proceedings before such Austrian court or authority, contest the authenticity (Echtheit) of an uncertified copy of any
such Stamp Duty Sensitive Document, unless such uncertified copy actually
introduced into evidence does not accurately reflect the content of the
original document; or

 

(iii)       the Guarantors or the Noteholders are required by law, governmental body, court, authority or agency
pursuant to any law or legal requirement (whether for the purposes of
initiating, prosecuting, enforcing or executing any claim or remedy or
enforcing any judgment or otherwise), to bring a Stamp Duty Sensitive Document
into Austria.

 

12.2.3         The exclusive place of performance
(Erfüllungsort) for all rights and obligations under any Stamp
Duty Sensitive Document shall be in any case a place outside of Austria, which especially means
that the payment of any amounts shall be made to a bank account and,
respectively, from a bank account outside of Austria. It is expressly agreed
between the parties hereto that any such performance within Austria will not
establish Austria as the place of performance and shall be deemed not effective
with respect to any Party hereto; in particular such performance shall not
discharge a Party from its obligations under any Transaction Document.

 

12.2.4         To the extent that a breach by the
Guarantors or the Noteholders of their obligations under paragraphs 12.2.2 or
12.2.3 of this Clause 12.2

 

8

 

result
in any cost, loss or liability being incurred by the Company in relation to any
stamp duty, registration and other similar Taxes payable in respect of this
Instrument, the Guarantee and any other documents in connection herewith, the
Guarantors or the Noteholders responsible for such breach shall indemnify the
Company for any such cost, loss or liability incurred.

 

13                               Withholdings or Deductions

 

13.1                    Each Noteholder shall at the time
it becomes a Noteholder and at the request of the Company or the Registrar
confirm that as at such time it is beneficially entitled to interest payable to
it under the Notes and that it does not have its corporate seat or place of
effective management in Austria and that it does not have a permanent
establishment in Austria with which that Noteholder’s participation in the
Notes is effectively connected.

 

13.2                    Tax gross-up

 

13.2.1         Each Obligor shall make all payments to be
made by it without any Tax Deduction, unless a Tax Deduction is required by
law.

 

13.2.2         If a Tax Deduction
is required by law to be made by an Obligor (subject to Clause 13.2.3 below),
the amount of the payment due from that Obligor shall be increased to an amount
which (after making any Tax Deduction) leaves an amount equal to the payment
which would have been due if no Tax Deduction had been required.

 

13.2.3         An Obligor is not required to make an
increased payment under Clause 13.2.2 above if, on the date the payment falls
due:

 

(i)           the payment could have been made to the
Noteholder without a Tax Deduction if it was a Qualifying Noteholder, but on
that date the Noteholder is not or has ceased to be a Qualifying Noteholder
other than as a result of any change after the date of this Instrument in (or
in the interpretation, administration, or application of) any law or double
taxation treaty, or any published practice or published concession of any
relevant taxing authority; or

 

(ii)          the Obligor making the payment is able to
demonstrate that the payment could have been made to the Noteholder without a
Tax Deduction had that Noteholder complied with its obligations under Clause
13.3 below.

 

13.2.4         If an Obligor is
required to make a Tax Deduction, that Obligor shall make that Tax Deduction
and any payment required in connection with that Tax Deduction within the time
allowed and in the minimum amount required by law.

 

13.3                    Filings

 

In circumstances where an Obligor is required (or
would in the absence of any such filing be required) to make a deduction or
withholding for or on account of Taxes from a payment due to a Noteholder or
any other deduction contemplated by this Clause 13.3, such Obligor and
each relevant Noteholder shall cooperate in good faith following a
reasonable request by the relevant Obligor to file such forms and

 

9

 

documents as the appropriate taxation authority may
reasonably require in order to enable such Obligor to make relevant payments
under the Note Documents without having to make such deduction or
withholding.

 

13.4                    Tax
Credit

 

If an Obligor makes a Tax Payment and the relevant
Noteholder determines that:

 

13.4.1         a
Tax Credit is attributable to that Tax Payment; and

 

13.4.2         that Noteholder
has obtained, utilised and retained that Tax Credit, on a
consolidated group basis,

 

the Noteholder shall pay an amount to the Obligor which
that Noteholder determines will leave it (after that payment) in the same
after-Tax position as it would have been in had the Tax Payment not been made
by the Obligor.

 

13.5                    The
obligation of any of the Obligors to make an increased payment under
clause 13.2 shall be no greater in respect of any assignee or transferee of any
rights or obligations of any Noteholder than it would have been in respect of
the original Noteholder.

 

14                               Notices

 

14.1                    Any
notice or other communication given or made in connection with this Instrument
or the Notes shall be in writing and not be made to or from a place located in Austria.  Telexes and faxes are not permitted.

 

14.2                    Any
such notice or other communication shall be addressed to the Registrar if made
to the Company addressed as provided in Clause 14.3 or in Condition 13 and, if
so addressed, shall be deemed to have been duly given or made as follows:

 

14.2.1         if sent by personal
delivery, upon delivery at the address of the relevant party; or

 

14.2.2         if sent by courier, two
Business Days after the date of posting,

 

PROVIDED THAT where any
such notice or other communication is deemed to be given or made outside
Working Hours, such notice or other communication shall be deemed to be given
or made at the start of Working Hours on the next Business Day.

 

14.3                    The relevant addressee
and address of each of the Registrar, the Guarantors and M-real (as the first
of the Noteholders), subject to Clause 14.4, are:

 

	
   

  	
   

  	
  Address

  
	
   

  	
   

  	
   

  
	
  M-real (as the first Noteholder)

  	
   

  	
  Revontulentie
  6

  
	
   

  	
   

  	
  02100 Espoo,

  
	
  For the attention of: Esa
  Kaikkonen

  	
   

  	
  Finland

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  P.O. Box
  20,

  
	
   

  	
   

  	
  FIN-02020 Metsä,

  
	
   

  	
   

  	
  Finland

  

 

10

 

	
  The Registrar

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  For the attention of: The
  Registrar,

  	
   

  	
  Sappi (UK) Limited

  
	
  Willy Heckers

  	
   

  	
  Blackburn Mill

  
	
   

  	
   

  	
  Feniscowles

  
	
   

  	
   

  	
  Blackburn

  
	
   

  	
   

  	
  Lancashire BB2 5HX Sappi
  House

  
	
   

  	
   

  	
  48 Ameshoff Street

  
	
   

  	
   

  	
  Braamfontein

  
	
  With a copy to: Each of
  Mark

  	
   

  	
  Johannesburg

  
	
  Thompson and Ria Sanz

  	
   

  	
  South Africa

  
	
   

  	
   

  	
   

  
	
  The Guarantors

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  For the attention of:
  Jörg Passler

  	
   

  	
  Chaussee
  de la Hulpe 154

  
	
   

  	
   

  	
  1170 Watermael-Boitsfort

  
	
   

  	
   

  	
  Belgium

  
	
   

  	
   

  	
   

  
	
  With a copy to: Each of
  Mark

  	
   

  	
  Sappi House

  
	
  Thompson and Ria Sanz

  	
   

  	
  48 Ameshoff Street

  
	
   

  	
   

  	
  Braamfontein

  
	
   

  	
   

  	
  Johannesburg

  
	
   

  	
   

  	
  South Africa

  

 

14.4                    Any
of the Registrar, the Guarantors or the Noteholders may notify each other of a
change to its name, relevant addressee or address for the purposes of Clause
14.3 (or, in the case of Noteholders other than M-real, for the purposes of
Condition 13) PROVIDED THAT such notification is not made to or from a place
that is in Austria and
shall only be effective on:

 

14.4.1         the date specified in the
notification as the date on which the change is to take place; or

 

14.4.2         if no date is specified
or the date specified is less than five Business Days after the date on which
notice is given, the date falling five Business Days after notice of any such
change has been given.

 

14.5                    The
provisions of this Clause 14 shall not apply in relation to the service of any
notice or document relating to or in connection with any Proceedings.

 

15                               AGENT FOR SERVICE

 

15.1                    Each
of the Guarantors and the Company irrevocably undertakes that any notice or
document may be sufficiently and effectively served on it in connection with
any Proceedings in England and Wales by service on Sappi (UK) Limited,
Blackburn Mill, Feniscowles, Blackburn, Lancashire BB2 5HX (the “Process Agent”), if no replacement agent has been appointed
and notified to the Noteholders pursuant to clause 15.2 below, or on the
replacement agent if one has been so appointed and notified to the Noteholders.
Any notice or document served pursuant to this clause 15.1 shall be marked for
the attention of Willy
Heckers
or such other person as is appointed as agent for service pursuant to clause 15.2
below at the address notified pursuant to clause 15.2 below.

 

11

 

15.2                    If the agent referred to
in clause 15.1 above (or any replacement agent appointed pursuant to this
clause) at any time ceases for any reason to act as such, the Company and the
Guarantors shall appoint a replacement agent to accept service having an
address for service in England or Wales and shall
notify the Noteholders of the name and address of the replacement agent;
failing such appointment and notification, the Noteholders shall be entitled by
notice to the Registrar and the Guarantors to appoint such a replacement agent
to act on the Company’s and the Guarantors’ behalf PROVIDED THAT in cases where
service is effected upon a replacement agent appointed by the Noteholders in
accordance with this clause 15.2 a copy of the relevant notice or document
shall at the same time be forwarded to the last known business address of the
Company and the Guarantors.

 

15.3                    Any
Service Document shall be deemed to have been duly served on the Company and
the Guarantors if marked for the attention of the Process Agent at the
addresses specified in clause 15.1 or in accordance with clause 15.2 and:

 

15.3.1         left at the specified or
last known business address (as the case may be); or

 

15.3.2         sent to the specified or
last known business address (as the case may be) by first class post or air
mail.

 

15.4                    In
the case of clause 15.3.1, the Service Document shall be deemed to have been
duly served when it is left. In the case of clause 15.3.2, the Service Document
shall be deemed to have been served two clear Business Days after the date of
posting.

 

16                               Governing Law

 

This Instrument and the Notes constituted by
it shall be governed by and construed in accordance with English law. The
Company and the Guarantors irrevocably agree that the courts of England are to
have exclusive jurisdiction to settle any dispute which may arise out of or in
connection with this Instrument and the Notes and that accordingly any proceedings
arising out of or in connection with this Agreement shall be brought in such
courts.

 

17                               Place of performance and Payments

 

17.1                    Performance

 

The Obligors shall perform their liabilities
and obligations under or in connection with this Instrument, the Guarantee and
any other documents connected herewith exclusively at the Place of Performance
(as defined below), but in no event at a place in Austria and the performance
of any obligation or liability under or in connection with this Instrument, the
Guarantee and any other documents connected herewith within the Republic of
Austria shall not constitute discharge or performance of such obligation or
liability. For the purposes of the above, “Place of Performance”
means:

 

17.1.1         in relation to
any payment by an Obligor under or in connection with this Instrument, the
Guarantee and any other documents connected herewith, the place at which such
payment is to be made pursuant to Clause 17.2; and

 

17.1.2         in relation to the
delivery of any document under or in connection with this Instrument, the
Guarantee and any other documents connected

 

12

 

herewith the premises of the Registrar or any other place outside of
Austria as the Registrar specifies from time to time.

 

17.2                    Payments

 

17.2.1         Payments under
this Instrument, the Guarantee and any other documents connected herewith shall
in no event be made in Austria.

 

17.2.2         Any payment made
by or to any Obligor under or in connection with this Instrument, the Guarantee
and any other document in connection herewith shall be made from and to an
account outside of Austria.

 

13

 

	
   

  	
  In witness whereof this
  Instrument has been duly executed and delivered as a deed the day and year
  first above written.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SIGNED and DELIVERED by [name

  	
   

  	
   

  	
  /s/ B Wiersum

  
	
   

  	
  of attorney or other signatory] on

  	
  

  	
   

  	
  [place outside of Austria]  

  
	
   

  	
  behalf of SAPPI
  PAPIER HOLDING

  	
   

  	
   

  
	
   

  	
  GMBH and
  thereby executed by it as

  	
   

  	
   

  
	
   

  	
  a DEED

  	
   

  	
  /s/ R.D Hope

  
	
   

  	
   

  	
   

  	
  [place outside of Austria]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SIGNED and
  DELIVERED by [name

  	
   

  	
   

  	
   

  
	
   

  	
  of attorney or
  other signatory] on

  	
  

  	
   

  	
  /s/ R Sanz

  
	
   

  	
  behalf of SAPPI LIMITED
  and

  	
   

  	
  [place outside of Austria]

  
	
   

  	
  thereby executed by
  it as a DEED

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/ R.D Hope

  
	
   

  	
   

  	
   

  	
   

  	
  [place outside of Austria]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SIGNED and
  DELIVERED by [name

  	
   

  	
   

  	
  /s/ B Wiersum

  
	
   

  	
  of attorney or
  other signatory] on

  	
  

  	
   

  	
  [place outside of Austria]

  
	
   

  	
  behalf of SAPPI INTERNATIONAL

  	
   

  	
   

  
	
   

  	
  S.A and
  thereby executed by it as a

  	
   

  	
   

  
	
   

  	
  DEED

  	
   

  	
  /s/ R.D Hope

  
	
   

  	
   

  	
   

  	
  [place outside of Austria]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SIGNED and
  DELIVERED by [name

  	
   

  	
   

  	
   

  
	
   

  	
  of attorney or
  other signatory] on

  	
  

  	
   

  	
  /s/ B Wiersum

  
	
   

  	
  behalf of SAPPI TRADING PULP AG

  	
   

  	
  [place outside of Austria]

  
	
   

  	
  and thereby
  executed by it as a

  	
   

  	
   

  
	
   

  	
  DEED

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/ R.D Hope

  
	
   

  	
   

  	
   

  	
  [place outside of Austria]

  

 

14

 

THE FIRST SCHEDULE

Form of Certificate [to be embossed]

 

	
  Certificate No.

  	
   

  	
  Issue Date

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

SAPPI PAPIER HOLDING GMBH

 

a limited liability company incorporated under the
laws of Austria registered in the companies register of the district court of
Graz under FN 167931h having its registered office at A8101 Gratkorn, Bruckner
Strasse 21, Austria  (the “Company”)

 

GUARANTEED UNSECURED
LOAN NOTES 2008

 

THIS IS TO CERTIFY THAT the undermentioned is
the registered holder of the amount set out below of the Guaranteed Unsecured
Loan Notes 2008 (the “Notes”)
constituted by an instrument entered into by the Company, Sappi Limited, Sappi
International S.A. and Sappi Trading Pulp AG on 31 December 2008 (the “Instrument”) and issued with the benefit of
and subject to the provisions contained in, the Instrument. Where the context
so admits, words and expressions defined in the Instrument shall bear the same
meanings in the Conditions endorsed on, or attached to, this Certificate.

 

Capitalised terms used in this Certificate
but not otherwise defined herein shall have the meaning given to them in the
Instrument.

 

	
  Name of Noteholder

  	
   

  	
  Amount of Notes

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

SAPPI PAPIER HOLDING GMBH BY:

 

Authorised Signatory

 

	
   

  	
   

  	
  /s/ R D Hope

  	
   

  
	
  DATED

  	
  31 December 2008

  	
   

  	
  [to
  be signed outside of Austria]

  	
   

  
					

 

NOTES:

 

1                                      The Notes are repayable
in accordance with the Conditions endorsed.

 

2                                      The Notes are
transferable only in accordance with the Conditions, which include restrictions
on the transferability of the Notes. 
This Certificate must be lodged together with the instrument of transfer
(which must be signed by the transferor or by a person authorised to sign on
behalf of the transferor) at the office of the Registrar at [the address stated
in Clause 14 of the Instrument].

 

3                                      This Certificate must be
surrendered to the Registrar before any transfer can be registered or any new
Certificate issued in exchange.

 

4                                      A copy of the Instrument
is available for inspection at the office of the Registrar referred to above.

 

5                                      This security (or its
predecessor) was originally issued in a transaction exempt from registration
under the United States Securities Act of 1933, as amended (the 

 

15

 

“Securities Act”),
and this security may not be offered, sold or otherwise transferred in the
absence of such registration or an applicable exemption therefrom.

 

6                                      The Place of Performance
and Payments shall be determined according to Clause 17 (Place of performance and Payments), but
shall, in any case, be outside of Austria.

 

BRINGING THIS DOCUMENT OR ANY CERTIFIED COPY OF THIS
DOCUMENT INTO THE REPUBLIC OF AUSTRIA AS WELL AS ANY WRITTEN CONFIRMATION
(INCLUDING E-MAIL AND FAX) OR WRITTEN REFERENCE (INCLUDING E-MAIL AND FAX) TO
THIS DOCUMENT MAY CAUSE THE IMPOSITION OF AUSTRIAN STAMP DUTY TAX. PLEASE
READ CLAUSES 12 (FEES, DUTIES AND TAXES AND STAMP TAXES), 14 (NOTICES) AND 17
(PLACE OF PERFORMANCE AND PAYMENTS) OF THIS INSTRUMENT IN CONNECTION WITH THE
FOREGOING.

 

16

 

THE SECOND SCHEDULE

The Conditions

 

1                                      Repayment,
Prepayment, Purchase and Redemption

 

1.1                           Subject as provided
below, the Company shall repay the whole of the principal amount of each
Noteholder’s holding of Notes at par, together with accrued interest thereon up
to but excluding the date of repayment, on the date which falls 48 months after
the date of issue of the relevant Notes.

 

1.2                           Subject to Condition 18 (Acceleration under the RCF), if an Early
Repayment Event is continuing the Noteholders shall be entitled with the
sanction of an Extraordinary Resolution or by written resolution of the holders
of at least 75 per cent in nominal amount of the Notes then in issue, to
require the Company to immediately repay the whole of the outstanding principal
amount of the Notes at par, together with accrued interest thereon up to but
excluding the date of repayment, which shall be no earlier than the date of the
passing of such Extraordinary Resolution or the date of such written
resolution. A notice of demand given under this Condition shall be irrevocable
and shall bind all of the Noteholders.

 

1.3                           The Company may at any
time on or after the date of issue purchase any Notes (in integral multiples of
€10,000,000) then in issue at par, together with accrued interest up to but
excluding the date of purchase.

 

1.4                           Change of Control

 

1.4.1                 For the purposes of this
Condition 1.4, “associated person”
means, in relation to any person, a person who is acting in concert (as defined
in The City Code on Takeover and Mergers) with that person or is a connected
person (as defined in section 839 of the Income and Corporation Taxes Act 1988)
of that person.

 

1.4.2                 If, on any date (an “Obligor Change of Control Date”) the whole of the issued share
capital of any Obligor ceases to be wholly owned, directly or indirectly, by
Sappi, then the Noteholders shall be entitled with the sanction of an
Extraordinary Resolution or by written resolution of the holders of at least 75
per cent. in nominal amount of the Notes then in issue, by written notice to
the Company, to demand on or following the date falling 30 days after the
Obligor Change of Control Date that the Company shall prepay the whole of the
principal amount of each of the Noteholders’ holding of the Notes at par,
together with accrued interest thereon up to but excluding the date of
prepayment.

 

1.4.3                 If, on any date (a “Change
of Control Date”) a person (whether alone or together with any
associated person or persons acting in concert) becomes the beneficial owner of
shares in the issued share capital of Sappi carrying the right to exercise, or
control the exercise of, more than 35 per cent. of the maximum number of votes
exercisable at a general meeting of Sappi then, the Noteholders shall be
entitled with the sanction of an Extraordinary Resolution or by written
resolution of the holders of at least 75 per cent. in nominal amount of the
Notes then in issue, by written notice to the Company to demand on or following
the date falling 30 days after the Change of Control Date that the Company
shall prepay the whole

 

17

 

of the principal amount
of each of the Noteholders’ holding of the Notes at par, together with accrued
interest thereon up to but excluding the date of prepayment.

 

2                                      Early
Repayment Events

 

Each of the events or circumstances set out
in Conditions 2.1 to 2.13 inclusive is an Early Repayment Event.

 

2.1                           Non-payment

 

An Obligor does not pay on the due date any
amount payable pursuant to a Note Document at the place at and in the currency
in which it is expressed to be payable unless:

 

2.1.1                 its failure to pay is
caused by administrative or technical error; and

 

2.1.2                 payment is made within
five Business Days of its due date.

 

2.2                           Financial covenants

 

Any requirement of the financial covenants
contained in Condition 16 by reference to clause 21 (Financial Covenants) of the RCF is not satisfied.

 

2.3                           Other obligations

 

An Obligor does not comply with any provision
of a Note Document (other than those referred to in Condition 2.1 (Non-payment) or Condition 2.2. (Financial covenants)) and, if the failure to comply is capable
of remedy, it is not remedied within 30 days of a Noteholder giving notice to
the Registrar or an Obligor becoming aware of the failure to comply.

 

2.4                           Misrepresentation

 

2.4.1                 Any representation or
statement made or deemed to be made by an Obligor in the Note Documents or any
other document delivered by or on behalf of any Obligor under or in connection
with the Note Documents is or proves to have been incorrect in any respect when
made and where the circumstances making such representation or statement
incorrect are capable of being altered so that such representation or statement
is correct, such circumstances are not so altered within 30 days of a
Noteholder notifying the Registrar or a Guarantor of such representation or
statement being incorrect.

 

2.4.2                 Any representation or
statement made, deemed to be made or repeated by an Obligor in the RCF or any
other document delivered by or on behalf of any Obligor under or in connection
with the RCF is or proves to have been incorrect in any respect when made,
deemed to be made or repeated and where the circumstances making such
representation or statement incorrect are capable of being altered so that such
representation or statement is correct, such circumstances are not so altered
or the breach is not waived under the RCF within 30 days of a Noteholder
notifying the Registrar or a Guarantor of such representation or statement
being incorrect.

 

2.5                           Cross default

 

2.5.1                 Any Financial
Indebtedness of any Group Company is not paid when due and payable nor within
any applicable grace period.

 

18

 

2.5.2                 Any Financial
Indebtedness of any Group Company is declared to be or otherwise becomes due
and payable prior to its specified maturity as a result of a default or an
event of default (however described).

 

2.5.3                 Any creditor of any Group
Company becomes entitled to declare any Financial Indebtedness of any Group
Company due and payable prior to its specified maturity as a result of a
default or an event of default (however described).

 

2.5.4                 No Early Repayment Event
will occur under this Condition 2.5 if the aggregate amount of Financial
Indebtedness or commitment for Financial Indebtedness falling within
sub-paragraphs 2.5.1 to 2.5.3 above is less than €10,000,000.

 

2.6                           Creditors’ process

 

Expropriation, attachment, sequestration,
distress or execution affects any asset or assets of Group Companies having an
aggregate value of at least €10,000,000 and is not discharged within 30 days.

 

2.7                           Insolvency

 

2.7.1                 An Obligor or any
Material Subsidiary is unable or admits inability to pay its debts as they fall
due, suspends making payments on any of its debts or commences negotiations
with one or more of its creditors with a view to rescheduling any class of its
indebtedness.

 

2.7.2                 A moratorium is declared
in respect of any class of indebtedness of an Obligor or any Material
Subsidiary.

 

2.7.3                 The Company is declared
(or declares itself) bankrupt, is in a situation of illiquidity (Zahlungsunfähigkeit), within the meaning
of § 66 of the KO, as interpreted by Austrian courts, or over indebtedness (Überschuldung), within the meaning of § 67
of the KO, as interpreted by Austrian courts, is unlikely to be able to pay its
debts as they fall due (drohende
Zahlungsunfähigkeit), within the meaning of § 1 (1) of the AO,
as interpreted by Austrian courts or the preconditions for the opening of re-organisation
proceedings (Reorganisationsbedarf)
under the URG, as set out in the URG and interpreted by Austrian courts, have
been satisfied in respect of the Company (save for any solvent re-organisation
previously approved by the Noteholders in writing, such approval not to be
unreasonably withheld).

 

2.7.4                 Without limitation to
sub-paragraphs 2.7.1 and 2.7.2 above, in relation to Sappi Trading Pulp AG, the
following events occur:

 

(i)           it becomes unable to pay its debts
(Zahlungsunfähigkeit);

 

(ii)          it suspends making payments
(Zahlungseinstellung); or

 

(iii)         half of its share capital and the legal
reserves are not covered or it becomes over-indebted (hälftiger Kapitalverlust
oder Überschuldung) within the meaning of article 725 of the CO;

 

(iv)          its balance sheet is filed with a judge
due to over-indebtedness or insolvency pursuant to article 725a of the CO;

 

(v)           a moratorium is declared (Stundung and
Nachlassstundung); or

 

(vi)          any maturity of its indebtedness is
postponed (Fälligkeitsaufschub).

 

19

 

2.8                           Insolvency
proceedings

 

Any
legal proceeding or other formal procedure is taken or a meeting is convened
for the purpose of considering a resolution in relation to:

 

2.8.1                 the
bankruptcy, the suspension of payments, winding-up, dissolution, liquidation,
annulment as a legal entity, administration or re-organisation (by way of
voluntary arrangement, scheme of arrangement or otherwise) of an Obligor or any
Material Subsidiary other than a solvent liquidation or re-organisation of any
Material Subsidiary;

 

2.8.2                 a
general composition, assignment or arrangement with all of the creditors of an
Obligor or any Material Subsidiary relating to a general rescheduling of its
financial indebtedness;

 

2.8.3                 the
appointment of a liquidator (other than (i) a winding up petition which is
frivolous or vexatious and which is, in any event, discharged within 30 days of
its presentation and (ii) in respect of a solvent liquidation of any
Material Subsidiary), receiver, administrator, administrative receiver,
compulsory manager, an administrateur
judiciaire/gerechtelijk bestuurder, a speciaal commissaris/commissaire spécial, a séquestre/sekwester or other similar
officer in respect of an Obligor or any Material Subsidiary or all or any part
(having an aggregate value of at least €10,000,000) of its assets; or

 

2.8.4                 enforcement
of any Security over all or substantially all of the assets of an Obligor or
any Material Subsidiary which is not discharged within 30 days of the relevant
legal proceeding or formal procedure being taken, or any analogous procedure or
step is taken in any jurisdiction including, without limitation, if the Company
is subject to:

 

(i)           any
bankruptcy proceedings (Konkursverfahren)
commenced pursuant to the KO, unless the application for such proceedings is
dismissed within thirty days from (but excluding) the day it is filed (unless
dismissed on the ground that the costs of the bankruptcy proceedings were
likely to exceed the assets of such person (Abweisung
mangels kostendeckenden Vermögens)); or

 

(ii)          any
composition proceedings (Ausgleichsverfahren)
commenced pursuant to the AO; or

 

(iii)         any
re-organisation proceedings (Reorganisationsverfahren)
under the URG (save for any solvent re-organisation previously approved by the
Noteholders in writing, such approval not to be unreasonably withheld),

 

unless, in relation to sub-paragraphs 2.8.4(ii) and
2.8.4(iii), the opening of the relevant proceedings is the only action that has
occurred,

 

or,
without limitation, if Sappi Trading Pulp AG is subject to:

 

(iv)          bankruptcy proceedings (Betreibung
auf Konkurs);

 

(v)           composition
with creditors (Nachlassverfahren)
including in particular moratorium (Nachlassstundung),
proceedings regarding composition agreements (Nachlassvertrag)
and emergency moratorium (Notstundung);

 

20

 

(vi)          proceedings
regarding postponement of maturity (Fälligkeitsaufschub);

 

(vii)         postponement
of the opening of bankruptcy or moratorium proceedings pursuant to article 725a
or article 817 of the CO respectively (Konkursaufschub/Gesellschaftsrechtliches
Moratorium); or

 

(viii)        a
notification to a judge of a capital loss or over-indebtedness under these
provisions.

 

2.9                           Unlawfulness

 

It
is or becomes unlawful for an Obligor to perform any of its obligations under
the Note Documents.

 

2.10                    Repudiation

 

An
Obligor repudiates a Note Document or evidences an intention to repudiate a
Note Document.

 

2.11                     Cessation
of business

 

An
Obligor or any Material Subsidiary ceases to carry on all or a substantial part
of its business (other than as a result of a solvent liquidation or
reorganisation of any Material Subsidary or disposal permitted hereunder) and
such cessation would result in the Group, as a whole, ceasing to carry on the
Paper Business.

 

2.12                    Litigation
adversely determined

 

Any
litigation is determined against any Group Company which has, or is reasonably
likely to have, a Material Adverse Effect.

 

2.13                    South
Africa

 

Any
Authorisation provided by the Exchange Control Department of the South African
Reserve Bank in connection with the Note Documents, the guarantee given by
Sappi under the Note Documents or the fulfilment by Sappi of its obligations
under the Note Documents is amended adversely, repealed, revoked or terminated
or expires.

 

2.14                    The
Company shall give the Noteholders notice in writing from a place outside of
Austria of the happening of any of the Early Repayment Events promptly after
becoming aware of the same.

 

3                                      Payment

 

Subject
to Clause 17 of the Instrument (Place of Performance and
Payments), payment of the principal or interest for the time being
due and owing on the Notes, or any part thereof, will be made in immediately
available funds to an account located outside of Austria nominated by the
relevant Noteholder 3 or more Business Days before such payment is due.

 

4                                      Surrender of Certificate and Prescription

 

4.1                           Without
prejudice to any other provisions of this Instrument, every Noteholder any part
of whose Notes is due to be repaid or redeemed under any of the provisions of
these Conditions shall, not later than five Business Days before the due date
for such repayment or redemption, deliver up to the Registrar, at the office
for the time being of

 

21

 

the
Registrar, the Certificate for its Notes which are due to be repaid (or such
indemnity and other documentation as the Directors may require under Condition
14 in the case of a lost, defaced or destroyed certificate) in order that it
may be cancelled. Unless payment of the amount due to be repaid has already
been made in accordance with Condition 3, upon such delivery and against a duly
signed or authenticated receipt for the principal moneys payable in respect of
the Notes to be repaid, the Company shall, subject to Clause 17 of the Instrument
(Place of Performance and Payments) on
the due date for repayment, pay to the Noteholder the amount payable to him in
respect of such repayment or redemption. If any Certificate so delivered to the
Registrar includes any Notes not then repayable or redeemed, a new Certificate
for the balance of the Notes not then repayable or redeemed shall be issued
free of charge to the Noteholder delivering such Certificate to the Registrar.

 

4.2                           If
any Noteholder any part of whose Notes is liable to be repaid or redeemed under
these Conditions fails or refuses to deliver up the Certificate for such Notes
(or such indemnity and other documentation as the Directors may require under
Condition 14 in the case of a lost, defaced or destroyed certificate) at the
time and place fixed for repayment thereof, or fails or refuses to accept
payment of the moneys payable in respect thereof, the moneys payable to such
Noteholder shall be paid subject to Clause 17 of the Instrument (Place of Performance and Payments) into a separate
interest-bearing bank account in the name of the Company. The payment of such
moneys into a bank account shall not constitute the Company a trustee of such
moneys but shall discharge the Company from all obligations in respect of the
Note. The Company shall not be responsible for the safe custody of such moneys
or for interest thereon except such interest (if any) as the said moneys may
earn whilst on deposit, less any expenses incurred by the Company in connection
therewith. Any such amount so paid or deposited which remains unclaimed after a
period of [12] years from the making of the payment or deposit shall revert and
belong to the Company, notwithstanding that in the intervening period the
obligation to pay the same may have been provided for in the books, accounts
and other records of the Company. Subject as aforesaid, any amount so paid or
deposited will forthwith be paid directly to the Noteholder or his successors
upon delivery of the relevant Certificate.

 

5                                      Cancellation

 

All
Notes repaid, redeemed or purchased by the Company shall be cancelled and the
Company shall not be at liberty to re-issue them.

 

6                                      Interest

 

6.1                           Until
such time as the Notes are repaid, redeemed or purchased by the Company in
accordance with the provisions of the Instrument or these Conditions, the
Company shall pay subject to Clause 17 of the Instrument (Place of
Performance and Payments) to the Noteholder interest on the
outstanding principal amount of the Notes at the rate specified in
sub-paragraph 6.3 semi-annually in arrear on 15 June and 15 December in
each year or, if such a day is not a Business Day, on the immediately preceding
Business Day (the “Interest Payment Dates”)
in respect of the Interest Periods (as defined below) ending on but excluding
those dates. Except where Notes have previously been repaid, redeemed or
purchased, the final interest payment will be made on the date which is 48
months after the Completion Date.

 

22

 

6.2                           In
these Conditions the period from and including the Completion Date up to but
excluding the first Interest Payment Date and the period from and including
that or any subsequent Interest Payment Date up to but excluding the next
following Interest Payment Date is called an “Interest
Period”. On or as soon as practicable following each Interest
Payment Date, the Company shall deliver to each Noteholder a certificate as to
the gross amount of the relevant interest payment and the amount of tax
deducted.

 

6.3                           The
rate of interest on the Notes will be:

 

6.1.1                 for
the first Interest Period – 9 per cent per annum;

 

6.1.2                 for
the second Interest Period – 12 per cent per annum;

 

6.1.3                 for
the third Interest Period – 14 per cent per annum; and

 

6.1.4                 for
each Interest Period following the third Interest Payment Date – 15 per cent
per annum.

 

6.4                           Each
instalment of interest shall be calculated by applying the rate of interest
specified in paragraph 6.3 above to the aggregate principal amount of Notes
held by each Noteholder, multiplying such product by the actual number of days
in the relevant Interest Period divided by 360 and rounding the resulting
figure to the nearest cent (half a cent being rounded upwards).

 

6.5                           Each
interest payment shall be made to the Noteholder registered on the Register at
the close of business on the seventh day preceding the due date for payment of
such interest and every such Noteholder shall be deemed for the purposes of
these Conditions to be the holder on such Interest Payment Date of the Notes
held by him on such preceding date, notwithstanding any intermediate transfer
or transmission of any such Notes.

 

6.6                           Interest
on any Notes becoming liable to repayment shall cease to accrue as from the due
date for repayment of such Notes unless (and subject to compliance by the Noteholder
with the provisions of Condition 4) payment of the moneys is not made by the
Company (in which case interest will continue to accrue until, but excluding,
the date of actual payment).

 

7                                      Transfer of Notes

 

7.1                           The
Notes will be transferable only as set out in this Condition 7, but shall not
under any circumstances be transferable to a Competitor or to a person or
entity resident in the Republic of Austria.

 

7.2                           The
Notes are transferable only by instrument in writing in the usual or common
form (or in such other form as the Directors may approve) in nominal amounts or
integral multiples of €10,000,000, upon and subject to the Conditions. There
shall not be included in any instrument of transfer any securities other than
the Notes constituted by the Instrument.

 

7.3                           Every
instrument of transfer must be signed by the transferor (or by a person
authorised to sign on behalf of the transferor) at a place outside of Austria
and the transferor shall be deemed to remain the owner of the Notes to be
transferred until the name of the transferee is entered in the Register in
respect thereof.

 

23

 

7.4                           Every
instrument of transfer must be sent for registration to the Registrar
accompanied by the Certificate(s) for the Notes to be transferred together
with such other evidence as the Company may require to prove the title of the
transferor or his right to transfer the Notes and, if the instrument of
transfer is executed by some other person or entity on his or its behalf, the
authority of that person to do so. All instruments of transfer which are
registered may be retained by the Company. No transfer of Notes shall be
registered in respect of which a notice requiring repayment has been given. No
transfer will be registered during the seven days immediately preceding an
Interest Payment Date or at any time when the Register is closed.

 

7.5                           No
fee shall be charged for the registration of any transfer or for the
registration of any probate, letters of administration, certificate of
confirmation, certificate of marriage or death, power of attorney or other
document relating to or affecting the title to any Notes.

 

7.6                           This
security (or its predecessor) was originally issued in a transaction exempt
from registration under the United States Securities Act of 1933, as amended
(the “Securities Act”), and this security may
not be offered, sold or otherwise transferred in the absence of such
registration or an applicable exemption therefrom.

 

7.7                           Each Noteholder shall not offer to sell
or otherwise dispose of any Notes acquired by it in violation of:

 

7.7.1                 the
securities laws of South Africa, Australia, Canada, Japan or any other
jurisdiction; or

 

7.7.2                 any
provisions of the Instrument, the Master Agreement or the Lock-up Agreement.

 

7.8                           Any
original of the instrument of transfer (including PDF, TIF and other comparable formats),
any certified copy thereof or any signed document (including PDF, TIF and other
comparable formats) that constitutes a deed (Urkunde)
in the meaning of § 15 of the Austrian Stamp Duty Act (as interpreted by
the Austrian tax authorities), whether documenting the entering into the
relevant transaction (rechtserzeugende Urkunde)
or documenting or confirming that the relevant transaction has been entered
into (rechtsbezeugende Urkunde), or a
substitute deed (Ersatzurkunde) in the meaning of
§ 15 of the Austrian Stamp Duty Act (as interpreted by the Austrian tax
authorities), including, without limitation, any notarised copy, any certified
copy and any written minutes recording the instrument of transfer may not be
sent to or produced in Austria and shall remain at a place outside of Austria
at all times. The transferor and the transferee shall perform their liabilities
and obligations under or in connection with this instrument of transfer in no
event at a place in Austria and the performance of any obligations or
liabilities under in connection with this instrument of transfer within the
Republic of Austria shall not constitute discharge or performance of such obligation
or liability. The transferor and the transferee shall not make any payments under this instrument of
transfer in Austria and any such payments shall be made from and to an account
outside of Austria.

 

8                                      Modification

 

8.1                           The
provisions of the Instrument or of the Notes and the rights of the Noteholders
may from time to time be modified, abrogated or compromised or any arrangement
or amendment agreed in any respect with the sanction of an Extraordinary
Resolution or

 

24

 

by
written resolution of the holders of at least 75 per cent in nominal amount of
the Notes then in issue subject, in either case, to the prior consent of the
Company and the Guarantors.

 

8.2                           Any
such modification abrogation, compromise or arrangement effected pursuant to
paragraph 8.1 shall be binding on all Noteholders.

 

9                                      Dealings

 

The
Notes shall not be capable of being dealt in on any stock exchange in South
Africa or elsewhere and no application has been or is intended to be made to any
stock exchange for the Notes to be listed or otherwise traded.

 

10                               Substitution and Exchange and Right of
Substitution of Guarantor

 

10.1                    The
Company shall be entitled, without the consent of Noteholders, to substitute
one or more subsidiaries or one or more holding companies of the Company or one
or more subsidiaries of any such holding company (as such terms are defined in
the Companies Act 1985) (each a “Substituted
Company”) as the principal debtor or debtors each in respect of some
or all of the Notes under the Instrument and Notes [or to require all or any of
the Noteholders to exchange their Notes for loan notes issued on the same terms
(save for any provisions as to exchange which do not impose any obligation on
the Noteholders of a financial or other nature other than an obligation to
surrender the Notes in exchange for such other loan notes) mutatis mutandis by
any such company] provided that:

 

10.1.1          the
Guarantors guarantee such Substituted Company’s obligations thereunder to at
least the same extent as under the Guarantee;

 

10.1.2          an
instrument is executed by the Substituted Company agreeing to be bound by the
terms of the Instrument as fully as if the Substituted Company had been party
to the Instrument and named in and on the Notes as the principal debtor in
place of the Company (or of any previous substitute under this Condition); and

 

10.1.3          no
Noteholder shall have any lesser rights under this Instrument or any Note
(including the right to any increased payment under Clause 13) than it would
have had but for such substitution or exchange.

 

10.2                    References
to the Company shall, if substitution occurs under Condition 10.1 and where the
context so permits, be deemed to be references to such Substituted Company.

 

10.3                    Without
prejudice to Condition 10.1.1, any substitution under Condition 10.1 shall
operate to release the Company or any previous Substituted Company as principal
debtor from any or all of its obligations under the Instrument and the Notes.

 

10.4                    The
Guarantors shall be entitled, without the consent of the Noteholders, to
substitute as the Guarantors (i) a bank with a credit rating at least
equivalent to the Guarantors at the date of the Instrument, or (ii) its
successor pursuant to a merger, consolidation, statutory share exchange, conversion,
business combination or other transaction whereby such person succeeds to a
majority of the business of the Guarantors, or such person is the transferee of
all or substantially all of the assets of the Guarantors (the “Substituted Guarantor”) under the
Instrument and the Notes on the same

 

25

 

terms,
mutatis mutandis, as the terms of
the Guarantee, provided that an instrument is executed by the Substituted
Guarantor agreeing to be bound by the terms of the Instrument as fully as if
the Substituted Guarantor had been party to the Instrument as the Guarantors
and provided that no Noteholder shall have any lesser rights under this
Instrument or any Note (including the right to any increased payment under
Clause 13) than it would have had but for such substitution or exchange.

 

10.5                    References
to the Guarantors shall, if such substitution occurs under Condition [10.4] and
where the context so permits, be deemed to be references to the Substituted
Guarantor.

 

10.6                    Any
substitution under Condition 10.4 shall operate to release the Guarantors as
guarantors under the Instrument and the Notes.

 

10.7                    Not
later than 14 days after the execution of any instrument for the substitution
of the Company or the Guarantors, the Company shall give notice of such
substitution to Noteholders in accordance with Condition 13.

 

11                                Replacement of Certificates

 

If
the Certificate for any Notes is lost, defaced or destroyed, it may, upon
payment by the Noteholder of any out-of-pocket expenses of the Company, be
replaced, on such terms (if any) as to evidence and indemnity as the Directors
may require, but so that, in the case of defacement, the defaced Certificate
shall be surrendered before the new Certificate is issued.

 

12                               Risk to Noteholders

 

All
Certificates, other documents and remittances sent through the post shall be
sent by first class post but otherwise at the risk of the Noteholder(s) entitled
thereto.

 

13                               Notices

 

13.1                    Any
notice or other document (including Certificates) may be given or sent to any
Noteholder by sending it by post in a pre-paid envelope addressed to such
Noteholder at its or his registered address in the United Kingdom or (if it or
he has no registered address within the United Kingdom) to the address (if any)
within the United Kingdom supplied by it or him to the Registrar for the giving
of notice to it or him. Save as otherwise provided in this paragraph, only
Noteholders with a registered address in the United Kingdom shall be entitled
to receive any notice, demand or other document.

 

13.2                    Any
notice, demand or other document (including Certificates and transfers of
Notes) may be served on the Company either personally or by sending the same by
post in a pre-paid envelope addressed to the Registrar at [the address given in
clause 14 of the Instrument] (marked for the attention of the Registrar) or to
such other address in England as the Company or the Registrar may from time to
time notify to Noteholders in accordance with Clause 14 of the Instrument.

 

13.3                    Any
notice given or document sent by first class post shall be deemed to be served
or received at the expiry of 24 hours (or, where second class post is employed,
48 hours) after the time when it is posted. In proving such service or receipt,
it shall be

 

26

 

sufficient
to prove that the envelope containing the notice or document was properly
addressed, stamped and posted.

 

14                               General

 

14.1                    A
certification of the Directors, the Registrar or the Company’s financial
adviser as to any matter relating to the Notes shall, in the absence of
manifest error, be conclusive evidence as against the Noteholders. None of the
Directors, the Registrar or the Company’s financial adviser shall, in the
absence of negligence or wilful default, have any liability of any nature
whatsoever in connection with any exercise of, or omission to exercise, any
function assigned to them or it as described in the Instrument.

 

14.2                    Each
Noteholder shall be recognised by the Company as entitled to his Notes free
from any equity, set-off or counterclaim on the part of the Company against the
original or any intermediate holder of the Notes.

 

14.3                    The
Instrument and the Notes and any non-contractual obligations arising out of or
in connection with them are governed by, and will be construed in accordance
with, English law.

 

15                               Meetings of Noteholders

 

Meetings
of Noteholders may be convened and held in accordance with the provisions of
the Third Schedule.

 

16                               Incorporation of Certain Provisions of the
RCF

 

16.1                    Undertakings

 

The provisions of
clauses 20.1 (Financial Statements), 20.2 (Compliance  Certificate),
20.3 (Requirements as to financial statements), 20.4 (Information:
miscellaneous), 20.5 (Notification of default),
20.6 (Change in Material Subsidiaries), 21 (Financial covenants) and 22 (General
Undertakings) (other than clauses 22.7(b) (Financial
Indebtedness) and 22.11 (Undertakings relating to
Guarantee by Austrian Guarantor)) are incorporated by reference into
these Conditions as if:

 

16.1.1          references
to this “Agreement” or the “Finance Documents” were to the “Note Documents”;

 

16.1.2          references
to “any Commitment is in force” were deleted;

 

16.1.3          references
to the “Agent”, the “Finance Parties” or the “Lenders” were to the “Noteholders”;

 

16.1.4          references
to the “Majority Lenders” were to the “holders of at least 75% per cent in
nominal amount of the Notes then in issue”;

 

16.1.5          [references
in the definition of “Material Subsidiary” were to “in each case as set out,
until the first Compliance Certificate is delivered, in the list provided to
the Agent pursuant to Schedule 2 (Conditions precedent)
paragraph (3)(e) and thereafter” were deleted; NB — a list
of material subsidiaries will be provided on Completion]

 

27

 

16.1.6          references
to Financial Indebtedness “referred to in Schedule 10 (Existing
Subsidiary Indebtedness)” were to
Financial Indebtedness “incurred prior to the date of this Instrument”;

 

16.1.7          references
to the “Obligors” or to “Guarantors” are references to the Obligors or
Guarantors under the RCF;

 

16.1.8          references
to the “Company” were to “Sappi”;

 

16.1.9          references
to “Schedule 8 (Form of Compliance Certificate)”
were to “schedule 8 (Form of Compliance
Certificate) of the RCF”;

 

16.1.10   references
to “Security listed in Schedule 9 (Existing Security)”
were to “Security in place at the date of this Instrument”; and

 

16.1.11    all
cross-references were up-dated appropriately.

 

16.2                    Amendments and Waivers Under the
RCF

 

If any amendment or
waiver is made or given under the RCF in respect of any of clauses 20.1 (Financial Statements), 20.2 (Compliance
Certificate), 20.3 (Requirements as to
financial statements), 20.4 (Information: miscellaneous),
20.5 (Notification of default), 20.6 (Change in Material Subsidiaries), 21 (Financial
covenants) or 22 (General Undertakings)
(other than clauses 22.7(b) (Financial Indebtedness)
and 22.11 (Undertakings relating to Guarantee by Austrian
Guarantor)) of the RCF, or to definitions or terms used in those
clauses, an equivalent amendment or waiver is deemed to be made or given to the
equivalent provision incorporated in these Conditions under Condition 16.1
above. Sappi shall promptly notify the Registrar of any request made by a Group
Company to amend or waive the RCF and of any waivers or amendments actually
given or made in respect of the RCF.

 

17                               Acceleration under the RCF

 

No demand for early
repayment of the Notes may be made in respect of any Early Repayment Event
caused by a breach of any Condition incorporated by reference pursuant to
Condition 16 above or under Condition 2.4.2 above unless the Agent has served a
notice to Sappi pursuant to paragraph (a) or (b) of clause 23.14 (Acceleration) of the RCF on the basis of an Event of Default
under clause 23.2 (Financial covenants)
or clause 23.3 (Other obligations) of the RCF
caused by a breach of the equivalent provision in the RCF.  Sappi shall promptly notify the Registrar if
it receives any such notice under the RCF.

 

18                               Replacement of RCF

 

To the extent that
the RCF is prepaid and cancelled in full and replaced with a new revolving
credit facility agreement available to the Company and/or its subsidiaries (a “Replacement Facility”), each Obligor shall enter into
negotiations in good faith with the Noteholders to agree such amendments to the
Note Documents to reflect the equivalent terms of the Replacement Facility to
those incorporated by reference under Condition 16.1 above. In the event that
the Obligors and the Noteholders fail to agree such amendments within 30 days
of the commencement of such negotiations, the dispute shall be referred to such
independent bank or financial institution (the “Expert”)
as may be agreed between the Obligors and the Noteholders for resolution.

 

28

 

The Expert shall act
in the capacity of expert and not arbitrator and, in the absence of any
manifest error, the decision of the Expert shall bind each of the Obligors and
each of the Noteholders.

 

19                               Additional Guarantors

 

19.1                    The Company
and the Noteholders agree that any Group Company that becomes a Guarantor under
the RCF after the date of this Instrument shall, no later than the date falling
30 days after the date that Group Company becomes a guarantor under the RCF,
accede to the Instrument as a Guarantor on equivalent terms to those under the
RCF.

 

19.2                    The Company
and the Noteholders agree to make such amendments to the terms of the
Instrument to effect the provision of a guarantee by the relevant Group Company
in accordance with Condition 20.1 above.

 

20                               Confidentiality

 

Each
Noteholder undertakes with each Obligor:

 

20.1                    to
keep confidential and not to disclose to anyone any information (including any
projections) received by it in its capacity as Noteholder relating to the
Obligors, the Group, any member of the Group or any Note Document, in whatever
form, and including information given orally and any document, electronic file
or any other way of representing or recording information which contains or is
derived or copied from such information except:

 

(i)           for
any lawfully obtained from any other source, or that is or becomes public
knowledge, other than as a direct or indirect result of any breach of any
obligation of confidentiality;

 

(ii)          disclosure
to persons to the extent that such information is required to be disclosed by
any applicable law or regulation;

 

(iii)         disclosure
by any original Noteholder which is expressly permitted under the terms of the
Confidentiality Agreement referred to in the Master Agreement;

 

(iv)          disclosure
to any person that a Noteholder assigns or transfers (or may potentially assign
or transfer) all or any of its rights and obligations under the Notes; or

 

(v)           disclosure
to any person with whom a Noteholder enters into (or may potentially enter
into) any sub-participation of the Notes or any other transaction under which
payments are to be made by reference to the Notes or any Obligor;

 

if, in relations to sub-paragraphs (iv) and
(v) above the person to whom the information is disclosed has entered into
a confidentiality undertaking on substantially the same terms as this Condition
20.1.

 

20.2                    to
ensure that such information is protected with security measures and a degree
of care that would apply to that Noteholder’s own confidential information;

 

29

 

20.3       to
use that information only for the purpose of, or as permitted by, the Note
Documents; and

 

20.4       to
use all reasonable endeavours to ensure that any person to whom that Noteholder
passes any such information acknowledges and complies with the provisions of
this Condition 21 as if that person were also bound by it.

 

30

 

THE
THIRD SCHEDULE

Provisions for meetings of the Noteholders

 

1             Calling of
meetings

 

The
Company may at any time and shall, upon request in writing signed by the
registered holders of not less than one-third in nominal value of the Notes for
the time being outstanding (excluding any in respect of which a notice
requiring repayment shall have been given), convene a meeting of the Noteholders
to be held at such time and place as the Company shall determine, but in no
event in Austria.

 

2             Notice of
meetings

 

2.1         The
Company shall give to the Noteholders at least 14 or, in the case of a meeting
convened for the purpose of passing an Extraordinary Resolution, at least 21
clear days’ notice, of any meeting of Noteholders, specifying the place, day
and time of meeting. Any such notice shall specify the general nature of the
business to be transacted at the meeting thereby convened but, except in the
case of a resolution to be proposed as an Extraordinary Resolution, it shall
not be necessary to specify the terms of any resolution to be proposed.

 

2.2         The
accidental omission to give notice of a meeting, or to send a form of proxy
with a notice, to any person entitled to receive the same, or the non-receipt
of a notice of meeting or form of proxy by any such person, shall not
invalidate the proceedings, including any resolution duly passed at that
meeting.

 

3             Chairman of
meetings

 

Some
person nominated by the Company shall be entitled to take the chair at any such
meeting and if no such nomination is made or, if at any meeting the person
nominated shall not be present within 30 minutes after the time appointed for
holding the meeting, the Noteholders present shall choose one of their number
to be Chairman.

 

4             Quorum at
meetings

 

At
any such meeting, persons (at least two in number) holding or representing by
proxy at least one-tenth (or at any such meeting at which an Extraordinary
Resolution is to be considered, one-quarter) in nominal value of the Notes for
the time being outstanding shall form a quorum for the transaction of business.
No business (other than the choosing of a Chairman) shall be transacted at any
meeting unless the requisite quorum be present at the commencement of business.

 

5             Absence of
quorum

 

If
within 30 minutes from the time appointed for any meeting of the Noteholders a
quorum is not present, the meeting shall, if convened upon the requisition of
the Noteholders, be dissolved. In any other case it shall stand adjourned to
such day and time (being not less than 14 nor more than 42 days thereafter) and
to such place as may be appointed by the Chairman. At such adjourned meeting,
the Noteholders present in person or by proxy and entitled to vote, whatever
the number of persons or the nominal value of the Notes held by them, shall
form a quorum and shall have

 

31

 

power
to pass any Extraordinary Resolution or other resolution and to decide upon all
matters which could properly have been disposed of at the meeting from which
the adjournment took place.

 

6             Notice of
adjourned meetings

 

At
least seven days’ notice of any adjourned meeting at which an Extraordinary
Resolution is to be submitted shall be given in the manner provided by this
Instrument and such notice shall state that the Noteholders present in person
or by proxy at the adjourned meeting will form a quorum. Notice is not required
for any adjourned meeting at which no Extraordinary Resolution is to be
submitted.

 

7             Adjournment of
meetings

 

The
Chairman may, with the consent of (and shall if directed by) any such meeting,
adjourn the same from time to time and from place to place but no business
shall be transacted at any adjourned meeting except business which might
lawfully have been transacted at the meeting from which the adjournment took
place.

 

8             Resolution on
show of hands

 

Every
question submitted to a meeting of Noteholders shall be decided in the first
instance by a show of hands and, in case of an equality of votes, the Chairman
shall, both on a show of hands and on a poll, have a casting vote in addition
to the vote or votes (if any) to which he may be entitled as a Noteholder or as
a duly appointed proxy of a Noteholder.

 

9             Demand for poll

 

At
any meeting of Noteholders, unless (before or on the declaration of the result
of the show of hands) a poll is demanded by the Chairman or by one or more
Noteholders present in person or by proxy and holding or representing in aggregate
not less than one-tenth in nominal value of the Notes then outstanding, a
declaration by the Chairman that a resolution has been carried or carried by a
particular majority or lost or not carried by a particular majority shall be
conclusive evidence of the fact.

 

10          Manner of taking poll

 

If
at any such meeting a poll is so demanded it shall be taken in such manner as
the Chairman may direct and the result of such poll shall be deemed to be the
resolution of the meeting at which the poll was demanded.

 

11           Time for taking poll

 

Any
poll demanded at any such meeting on the election of a Chairman or on any
question of adjournment shall be taken at the meeting without adjournment. A
poll demanded on any other question shall be taken in such manner and place
immediately or at any time within ten days of such demand, as the Chairman may
direct. No notice need be given of a poll not taken immediately. The demand for
a poll shall not prevent the continuance of a meeting for the transaction of
any business other than the question on which the poll has been demanded. The
demand for a poll may be withdrawn.

 

32

 

12          Persons entitled to attend and vote

 

12.1       The
registered holder of any of the Notes shall be entitled to vote in respect
thereof either in person or by proxy.

 

12.2       The
Directors and the Secretary and solicitors to and auditors of the Company and
any other person authorised by the Directors may attend and speak (but not
vote) at any such meeting.

 

13          Instrument appointing proxy

 

Every
instrument appointing a proxy must be in writing signed by the appointor or his
attorney or, in the case of a corporation, under its common seal or signed by
its attorney or a duly authorised officer and shall be in the usual or common
form or in such other form as the Directors may approve. Such instrument of
proxy shall unless the contrary is stated thereon be valid as well for an
adjournment of the meeting as for the meeting to which it relates and need not
be witnessed. A person appointed to act as a proxy need not be a Noteholder.

 

14          Deposit of instrument appointing proxy

 

The
instrument appointing a proxy and the power of attorney or other authority (if
any) under which it is signed or a notarially certified or office copy of such
power or authority shall be deposited at such place or places as the Company
may in the notice of meeting direct or, if no such place is specified, then at
the registered office of the Company not less than 48 hours before the time
appointed for holding the meeting or adjourned meeting or the taking of a poll
at which the person named in such instrument proposes to vote; in default the
instrument of proxy shall not be treated as valid. A vote given in accordance
with the terms of an instrument appointing a proxy shall be valid
notwithstanding the previous death or insanity of the principal or revocation
of the instrument of proxy or of the authority under which the instrument of
proxy is given or transfer of the Notes in respect of which it is given, unless
previous notice in writing of such death, insanity, revocation or transfer
shall have been received at the registered office of the Company. No instrument
appointing a proxy shall be valid after the expiration of 12 months from the
date of its execution.

 

15          Votes

 

On
a show of hands, every Noteholder who (being an individual) is present in
person or by proxy or (being a corporation) is present by a representative
shall have one vote and, on a poll, every Noteholder present in person or by
proxy shall have one vote for every €1 in nominal amount of the Notes of which
he or it is the holder. A Noteholder entitled to more than one vote need not
use all his or its votes or cast all the votes he or it uses in the same way.

 

16          Powers of Meetings of Noteholders

 

A
meeting of the Noteholders shall, in addition to any other powers, have the
following powers exercisable by Extraordinary Resolution namely:

 

16.1       power
to sanction any compromise or arrangement proposed to be made between, on the
one hand, the Company or the Guarantors or both and, on the other hand, the
Noteholders;

 

33

 

16.2       power
to sanction any abrogation, modification or compromise or any arrangement in
respect of the rights of the Noteholders against the Company or the Guarantors
or both or their respective properties, whether such rights arise under the
Instrument or otherwise;

 

16.3       power
to sanction any scheme or proposal for the sale or exchange of the Notes or for
the conversion of the Notes into shares, stock, debentures, debenture stock or
other obligations or securities of the Company or any other company formed or
to be formed or cash or partly for or into such shares, stock, debentures,
debenture stock or other obligations or securities as aforesaid and partly for
or into cash and for the appointment of some person with power on behalf of the
Noteholders to execute an instrument of transfer of the Notes held by them in
favour of the person to or with whom the Notes are to be sold or exchanged
respectively;

 

16.4       power
to assent to any modification or abrogation of the provisions of this
Instrument or of the Notes which shall be proposed by the Company and for which
the consent of Noteholders is required and to authorise the Company and/or the
Guarantors to execute an instrument supplemental to this Instrument embodying
any such modification or abrogation;

 

16.5       power
to give any authority or sanction which under the provisions of this Instrument
is required to be given by Extraordinary Resolution;

 

Provided
that no modification of the Conditions or the Instrument shall be made or take
effect unless the Company and the Guarantors shall have consented to any such
modification.

 

17          Definition of Extraordinary Resolution

 

The
expression “Extraordinary Resolution”
means a resolution passed at a meeting of the Noteholders, duly convened and
held in accordance with the provisions herein contained, by a majority
consisting of not less than three-fourths of the persons voting thereat upon a
show of hands or, if a poll is demanded, by a majority consisting of not less
than three-fourths of the votes given on such poll.

 

18          Extraordinary Resolution binding on all
Noteholders

 

An
Extraordinary Resolution shall be binding upon all the Noteholders whether or
not present at such meeting and each of the Noteholders shall be bound to give
effect to it accordingly. The passing of any such resolution shall be
conclusive evidence that the circumstances justify the passing thereof, the
intention being that it shall rest with the meeting to determine without appeal
whether or not the circumstances justify the passing of such resolution.

 

19          Resolutions in writing

 

A
resolution in writing signed by the holders of not less than 75 per cent in
nominal amount of the Notes for the time being outstanding who are for the time
being entitled to receive notice of meetings in accordance with the provisions
herein contained shall for all purposes be as valid and effectual as an
Extraordinary Resolution. Such resolution in writing may be contained in one
document or in several documents in similar form each signed by one or more of
the Noteholders.

 

34

 

20          Minutes of meetings

 

Subject
to Clause 12.2 of the Instrument (Stamp Taxes),
minutes of all resolutions and proceedings at every meeting of Noteholders
shall be made and duly entered in books to be from time to time provided for
that purpose by the Company. Any such minutes, if purporting to be signed by
the Chairman of the meeting at which such resolutions were passed or
proceedings held or by the Chairman of the next succeeding meeting of the
Noteholders, shall be conclusive evidence of the matters therein contained.
Until the contrary is proved, every such meeting in respect of the proceedings
of which minutes have been made shall be deemed to have been duly convened and
held and all resolutions passed at that meeting to have been duly passed.

 

35

 

THE
FOURTH SCHEDULE

Terms and Conditions of the Guarantee

 

	
  1

  	
  Guarantee and Indemnity

  
	
   

  	
   

  	
   

  
	
   

  	
  Each Guarantor irrevocably and
  unconditionally jointly and severally and subject to Clause 17 (Place of Performance and Payments) of the Instrument:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  guarantees to each Noteholder punctual
  performance by the Company of all the Company’s obligations under the Note
  Documents;

  
	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  undertakes with each Noteholder that
  whenever the Company does not pay any amount when due under or in connection
  with any Note Document, that Guarantor shall immediately on demand pay that
  amount as if it was the principal obligor; and

  
	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  indemnifies each Noteholder
  immediately on demand against any cost, loss or liability suffered by that
  Noteholder if any obligation guaranteed by it is or becomes unenforceable,
  invalid or illegal. The amount of the cost, loss or liability shall be equal
  to the amount which that Noteholder would otherwise have been entitled to
  recover.

  
	
   

  	
   

  	
   

  
	
  2

  	
  Continuing guarantee; Nature of guarantee

  
	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  This guarantee is a continuing
  guarantee and will extend to the ultimate balance of sums payable by any
  Obligor under the Note Documents, regardless of any intermediate payment or
  discharge in whole or in part.

  
	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  Notwithstanding anything to the
  contrary herein or in any other of the Note Documents, this guarantee is
  meant to be and shall be interpreted as “abstract guarantee” (abstrakter Garantievertrag) and the
  obligations of the Guarantors hereunder shall be obligations of the
  Guarantors as principal debtors and not as sureties (Buergschaft) and not as a joint
  obligation as a borrower (Mitschuldner)
  and the Guarantors undertake to pay the amounts due under or pursuant to this
  guarantee unconditionally, irrevocably, upon first demand and without raising
  any defences (unbedingt, unwiderruflich,
  auf erste Aufforderung und unter Verzicht auf alle Einwendungen).

  
	
   

  	
   

  	
   

  
	
  3

  	
  Reinstatement

  
	
   

  	
   

  	
   

  
	
   

  	
  If any payment by
  an Obligor or any discharge given by a Noteholder (whether in respect of the
  obligations of any Obligor or any security for those obligations or
  otherwise) is avoided or reduced as a result of insolvency or any similar
  event:

  
	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  the liability of each Obligor shall
  continue as if the payment, discharge, avoidance or reduction had not
  occurred; and

  
	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  each Noteholder shall be entitled to
  recover the value or amount of that security or payment from each Obligor, as
  if the payment, discharge, avoidance or reduction had not occurred.

  

 

36

 

	
  4

  	
  Waiver of defences

  
	
   

  	
   

  	
   

  
	
   

  	
  The obligations of each Guarantor
  under this Fourth Schedule will not be affected by an act, omission, matter
  or thing which, but for this Fourth Schedule, would reduce, release or
  prejudice any of its obligations under this Fourth Schedule (without limitation
  and whether or not known to it or any Noteholder) including:

  
	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  any time, waiver or consent granted
  to, or composition with, any Obligor or other person;

  
	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  the release of any other Obligor or
  any other person under the terms of any composition or arrangement with any
  creditor of any member of the Group;

  
	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  the taking, variation, compromise,
  exchange, renewal or release of, or refusal or neglect to perfect, take up or
  enforce, any rights against, or security over assets of, any Obligor or other
  person or any non-presentation or non-observance of any formality or other
  requirement in respect of any instrument or any failure to realise the full
  value of any security;

  
	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
  any incapacity or lack of power,
  authority or legal personality of or dissolution or change in the members or
  status of an Obligor or any other person;

  
	
   

  	
   

  	
   

  
	
   

  	
  (v)

  	
  any amendment (however fundamental)
  or replacement of a Note Document or any other document or security;

  
	
   

  	
   

  	
   

  
	
   

  	
  (vi)

  	
  any unenforceability, illegality or
  invalidity of any obligation of any person under any Note Document or any
  other document or security; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (vii)

  	
  any insolvency or similar
  proceedings.

  
	
   

  	
   

  	
   

  
	
  5

  	
  Immediate recourse

  
	
   

  	
   

  	
   

  
	
   

  	
  Each Guarantor
  waives any right it may have of first requiring any Noteholder (or any
  trustee or agent on its behalf) to proceed against or enforce any other
  rights or security or claim payment from any person before claiming from that
  Guarantor under this Fourth Schedule. This waiver applies irrespective of any
  law or any provision of a Note Document to the contrary.

  
	
   

  	
   

  	
   

  
	
  6

  	
  Appropriations

  
	
   

  	
   

  	
   

  
	
   

  	
  Until all amounts
  which may be or become payable by the Obligors under or in connection with
  the Note Documents have been irrevocably paid in full, each Noteholder (or
  any trustee or agent on its behalf) may:

  
	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  refrain from applying or enforcing
  any other moneys, security or rights held or received by that Noteholder (or
  any trustee or agent on its behalf) in respect of those amounts, or apply and
  enforce the same in such manner and order as it sees fit (whether against
  those amounts or otherwise) and no Guarantor shall be entitled to the benefit
  of the same; and

  
	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  hold in an interest-bearing suspense
  account any moneys received from any Guarantor or on account of any
  Guarantor’s liability under this Fourth Schedule.

  

 

37

 

	
  7

  	
  Deferral of Guarantors’ rights

  
	
   

  	
   

  	
   

  
	
   

  	
  Until all amounts which may be or
  become payable by the Obligors under or in connection with the Note Documents
  have been irrevocably paid in full and unless the Noteholders otherwise
  direct, no Guarantor will exercise any rights which it may have by reason of
  performance by it of its obligations under the Note Documents:

  
	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  to be indemnified by an Obligor;

  
	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
  to claim any contribution from any
  other guarantor of any Obligor’s obligations under the Note Documents; and/or

  
	
   

  	
   

  	
   

  
	
   

  	
  (v)

  	
  to take the benefit (in whole or in
  part and whether by way of subrogation or otherwise) of any rights of the
  Noteholders under the Note Documents or of any other guarantee or security
  taken pursuant to, or in connection with, the Note Documents by any
  Noteholder.

  
	
   

  	
   

  	
   

  
	
  8

  	
  Additional security

  
	
   

  	
   

  	
   

  
	
   

  	
  This guarantee is
  in addition to and is not in any way prejudiced by any other guarantee or
  security now or subsequently held by any Noteholder.

  
	
   

  	
   

  	
   

  
	
  9

  	
  Belgian Guarantee Limitation

  
	
   

  	
   

  	
   

  
	
   

  	
  In the case of
  Sappi International S.A. (the “Belgian
  Guarantor”), with respect to the obligations of any Obligor which
  is not a Subsidiary of the Belgian Guarantor, its liability under this
  Guarantee shall be limited, at any time, to a maximum aggregate amount equal
  to the greater of (i) an amount equal to 90% of the Belgian Guarantor’s
  net assets (as determined in accordance with the Belgian Companies Code and
  accounting principles generally accepted in Belgium, but not taking
  intra-group debt into account as debts) as shown by its then most recent
  audited annual financial statements and (ii) the aggregate amount of the
  principal amount raised by the Belgian Guarantor pursuant to the Notes and
  the aggregate amount of any intra-group loans or facilities made to it by any
  other member of the Group directly and/or indirectly using all or part of the
  proceeds of the Notes (whether or not such intra-group loan is retained by
  the Belgian Guarantor for its own purposes or on-lent to another Group
  company) outstanding at any given time between the date of the issue of the
  Notes and the date on which the relevant demand is made.

  
	
   

  	
   

  	
   

  
	
  10

  	
  Swiss Restrictions

  
	
   

  	
   

  	
   

  
	
   

  	
  In respect of Sappi Papier Holding GmbH’s
  obligations under the Note Documents, the Restricted Obligations of Sappi
  Trading Pulp AG, if and to the extent required by any applicable Swiss law in
  force at the relevant point in time under the Note Documents, shall, subject
  to the proviso below, be limited to the amount obtained by applying the
  following formula on the date on which the guarantee is called (the “SPH Maximum Guaranteed Amount”):

  
	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  EUR 150 million, multiplied by

  
	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  the principal amount of Notes issued
  by Sappi Papier Holding GmbH under the Note Documents, divided by

  

 

38

 

	
   

  	
  (iii)

  	
  the total principal amount
  outstanding of Sappi Papier Holding GmbH’s borrowings under any facility where
  Sappi Trading Pulp AG has issued a guarantee in respect of such borrowings
  (including, for the avoidance of doubt, under the Note Documents),

  
	
   

  	
   

  	
   

  
	
   

  	
  provided that payments of the SPH Maximum
  Guaranteed Amount shall be limited to the maximum amount of Sappi Trading
  Pulp AG’s profits available for distribution as dividends at any given time
  (being the balance sheet profits and any reserves made for this purpose, in
  each case in accordance with articles 804, 675(2) and 671(1) and
  (2), no. 3 of the Swiss Federal Code of Obligations), and further provided
  that, to the extent permitted by law, such further limitation (as may apply
  from time to time or not) shall not (generally or definitively) free Sappi
  Trading Pulp AG from its payment obligations under the Note Documents in
  respect of the payment of the SPH Maximum Guaranteed Amount, but merely
  postpone the payment date of the unpaid portion of the SPH Maximum Guaranteed
  Amount until such time as payment is again permitted notwithstanding such
  further limitation.

  
	
   

  	
   

  	
   

  
	
  In this Fourth Schedule, “Restricted Obligations” means to the extent Sappi Trading
  Pulp AG guarantees obligations other than obligations of one of its
  subsidiaries (i.e. obligations of its direct or indirect parent companies
  (up-stream guarantee) or sister companies (cross-stream guarantee)).

  
	
   

  	
   

  	
   

  
	
  11

  	
  General Limitation

  
	
   

  	
   

  	
   

  
	
   

  	
  Without prejudice
  and in addition to any limitation on the liability of any entity that becomes
  an additional guarantor under Condition 20 (an “Additional Guarantor”), the liability of each Additional
  Guarantor under this guarantee shall not at any time exceed the lower of the
  amount of that Additional Guarantor’s outstanding indebtedness (excluding for
  this purpose any indebtedness owing by one Group Company to another Group
  Company) or any limits imposed upon its maximum liability under this
  guarantee by mandatorily applicable law.

  

 

39

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