Document:

Exhibit 4.13

 

AMENDING AGREEMENT

dated 18 November 2005

 

 

relating to

 

 

SAPPI PAPIER HOLDING GMBH’S

EUR 500,106,406 FACILITY AGREEMENT

dated 7 May 2003

 

 

between

 

 

SAPPI PAPIER HOLDING GMBH

as Borrower

 

 

and

 

 

SAPPI INTERNATIONAL S.A.

as Original Guarantor

 

 

and

 

 

SAPPI LIMITED

SAPPI TRADING PULP AG

as Further Guarantors

 

 

and

 

 

BANK AUSTRIA CREDITANSTALT AG

as Mandated Lead Arranger and Agent

 

 

and

 

 

the Lenders as defined below

 

 

(Stamp Duty
exempt pursuant to Sec 33 TP 19 para 4 nr 4 Stamp Duty Act)

 

 

THIS AMENDING AGREEMENT is
made on 18
November 2005

 

AMONG

 

(1)               SAPPI
PAPIER HOLDING GMBH (the “Borrower”);

(2)               SAPPI
INTERNATIONAL S.A. (the “Original Guarantor”);

(3)               SAPPI
LIMITED and SAPPI TRADING PULP AG (the “Further
Guarantors”);

(4)               BANK
AUSTRIA CREDITANSTALT AG (the “Mandated Lead
Arranger” and “Agent”);
and

(5)               the
Lenders (as defined below).

 

WHEREAS

 

(A)                                          Pursuant
to the terms of a facility agreement dated 7 May 2003 (the “Facility Agreement”) made between (1) the
Borrower, (2) the Original Guarantor, (3) the Mandated Lead Arranger
and Agent, and (4) the banks and other financial institutions named
therein as lenders (as defined in the Facility Agreement, the “Lenders”), the Lenders agreed to make
available to the Borrower a loan facility of EUR 500,106,406 upon the terms and
conditions set out in the Facility Agreement.

 

(B)                                            The
Borrower has requested the Lenders to amend the Facility Agreement and the
Lenders have agreed to that request on the condition (inter alia) that the Borrower enter into this
Amending Agreement.

 

IT IS AGREED as follows:

 

1.                 INTERPRETATION

 

1.1               Interpretation

 

Unless the context otherwise requires,
terms defined in or construed for the purposes of the Facility Agreement shall
have the same meanings when used in this Amending Agreement.  Clause headings shall be ignored in
construing this Amending Agreement.

 

1.2               Clause
References

 

Unless otherwise stated, references to
Clauses are references to Clauses of the Facility Agreement.

 

2

 

2.                 EFFECTIVE DATE

 

2.1               Effective
Date

 

The amendments set out in this Amending
Agreement shall not become effective until the “Effective Date”, being the date
on which the Agent notifies the Lenders and the Borrower that it has received
the following in such number of copies or counterparts as it requires and in
form and substance satisfactory to it:

 

(a)                             this Amending Agreement duly executed by all parties;

 

(b)                            a Further Guarantee issued by each Further Guarantor substantially
in the form set out in Schedule 11 (Form of Further Guarantee and
Additional Guarantee) of the Facility Agreement, as amended and restated
pursuant to this Amending Agreement;

 

(c)                            a copy of a
resolution of the relevant bodies of the Borrower, the Original Guarantor and
each Further Guarantor:

 

(i)          approving the terms of,
and the transactions contemplated by, this Amending Agreement and the other
Finance Documents and resolving that it execute this Amending Agreement and the
other Finance Documents;

 

(ii)         authorising a specified
person or persons to execute this Amending Agreement and the other Finance
Documents on its behalf; and

 

(iii)        authorising a specified
person or persons, on its behalf, to sign and/or despatch all other documents
and notices to be signed and/or despatched by it under or in connection with
the Finance Documents;

 

(d)                           a copy of any other
Authorisation or other document, opinion or assurance which the Agent considers
to be necessary or desirable in connection with the entry into and performance
by each Further Guarantor of the transactions contemplated by the Further
Guarantee or for the validity and enforceability of such Further Guarantee,
including without limitation evidence of exchange control approval of the
Exchange Control Department of the South African Reserve Bank in relation to
the

 

3

 

guarantee given by Sappi and approval for
Sappi to fulfil all of its obligations under this Amending Agreement; and

 

(e)                            if available, the
latest audited financial statements of each Further Guarantor.

 

2.2               References

 

With effect from the Effective Date, every
reference in the Facility Agreement shall be construed as a reference to the
Facility Agreement as amended by this Amending Agreement and any reference to “this Agreement”, “herein”, “hereof”
or words to the same effect in the Facility Agreement shall be deemed to be a
reference to the Facility Agreement as amended by this Amending Agreement.  For the avoidance of doubt, with effect from
the Effective Date, references to “the date of this Agreement” or words to the
same effect shall be deemed to be references to May 7, 2003.

 

3.                 AMENDMENT

 

On the Effective Date, the Facility
Agreement shall for all purposes be amended and restated so as to incorporate
all amendments reflected in the Schedule hereto and so that the Facility
Agreement shall be read and construed as so amended and restated.

 

4.                 REPRESENTATIONS AND WARRANTIES

 

Each Obligor represents and warrants to
each of the Lenders and the Agent in the terms of Clauses 20.1 (Corporate
status), 20.2 (Power and authority), 20.3 (Binding obligations), 20.4
(Non-conflict with other obligations) and 20.5 (Validity and admissibility in
evidence) of the Facility Agreement as if references to “the Finance Documents” were to this
Amending Agreement.

 

5.                 COVENANTS

 

The Borrower shall deliver to the Agent
all of the documents and evidence listed in this Clause 5 in form and substance
satisfactory to the Agent on or prior to the date which falls ten Business Days
after the Effective Date:

 

(a)                             a
copy of the constitutional documents of each Further Guarantor;

 

4

 

(b)                           a
certificate of each Further Guarantor (signed by an authorised signatory)
confirming that the guaranteeing of the Total Commitments would not cause any
guaranteeing or similar limit to be exceeded;

 

(c)                            a
certificate of an authorised signatory of the Borrower, the Original Guarantor
and each Further Guarantor certifying that each copy document listed in Clause
2.1 or Clause 5 of this Amending Agreement delivered by it is correct complete
and in full force and effect as at a date no earlier than the date of this
Amending Agreement;

 

(d)                           a
legal opinion of the legal advisor to each Further Guarantor in the
jurisdiction in which each such Further Guarantor is incorporated in respect of
the Further Guarantees and an advice letter of the legal advisor to the Belgian
Guarantor in respect of guarantee limitations under Belgian law; and

 

(e)                            a
legal opinion of Binder Grösswang Rechtsanwälte OEG, legal counsel licensed in
Austria, in respect of this Amending Agreement.

 

6.                 MISCELLANEOUS

 

6.1                                             Counterparts

 

This Amending Agreement may be executed in
any number of counterparts and all such counterparts taken together shall be
deemed to constitute one and the same instrument.

 

6.2                                             Finance Document

 

This Amending Agreement is designated as a
Finance Document.

 

6.3                                             General

 

Subject to the terms and conditions of
this Amending Agreement, the Facility Agreement remains in full force and effect.

 

5

 

7.                 GOVERNING LAW AND ENFORCEMENT

 

7.1                                             Governing law

 

This Amending Agreement shall be governed
by Austrian law, excluding its conflicts of law rules.

 

7.2                                             Enforcement

 

(a)       The
competent courts of Vienna have exclusive jurisdiction to settle any dispute
arising out of or in connection with this Amending Agreement (including a
dispute regarding the existence, validity or termination of this Amending
Agreement) (a “Dispute”).

 

(b)       This
Clause 7.2 is for the benefit of the Finance Parties only. As a result, no
Finance Party shall be prevented from taking proceedings relating to a Dispute
in any other courts with jurisdiction to the extent allowed by law. The Finance
Parties may take concurrent proceedings in any number of jurisdictions.

 

 

This Amending Agreement
has been entered into on the date stated at the beginning of this Amending
Agreement.

 

6

 

SCHEDULE

 

 

EUR 500,106,406 AMENDED AND RESTATED

FACILITY AGREEMENT

 

 

dated 7 May 2003

 

 

among

 

 

SAPPI PAPIER HOLDING GMBH

as Borrower

 

 

and

SAPPI INTERNATIONAL S.A.

as Original Guarantor

 

 

and

 

 

SAPPI LIMITED

 

 

SAPPI TRADING PULP AG

as Further Guarantors

 

 

and

 

 

BANK AUSTRIA CREDITANSTALT AG

as Mandated Lead Arranger and
Agent

 

 

and

the Lenders as defined below

 

 

(Stamp Duty exempt pursuant to Sec 33 TP 19
para 4 nr 4 Stamp Duty Act)

 

7

 

THIS AGREEMENT (this “Agreement”) is dated May 7, 2003, as amended and restated
pursuant to the Amending Agreement dated 18 November 2005, and made
between:

 

(1)                                           SAPPI PAPIER HOLDING GMBH (the “Borrower”);

(2)                                           SAPPI INTERNATIONAL S.A. (the “Original Guarantor”);

(3)                                           SAPPI LIMITED AND SAPPI TRADING PULP
AG (the “Further Guarantors”)

(4)                                           BANK AUSTRIA CREDITANSTALT AG (the “Mandated Lead Arranger” and “Agent”); and

(5)                                           the Lenders (as defined below).

 

IT IS AGREED as follows:

 

PREAMBLE

 

Whereas the Sappi Group has
acquired Potlatch Corporation’s Coated Fine Paper Division for a purchase price
amounting to USD 480,000,000 which was partially financed by Intercompany
Financings from Sappi Papier Holding GmbH to Sappi Lanaken Press Paper N.V.,
Belgium, S.D. Warren Company, USA and Sappi UK Holdings B.V., Netherlands.

 

The Borrower now intends to
partially refinance these Intercompany Financings through the Loan provided for
under this Agreement.

 

The Loan provided for under this
Agreement will be refinanced by the Lenders from Oesterreichische Kontrollbank
Aktiengesellschaft under refinancing arrangements on the basis of guarantees by
“aval” for the Borrower as acceptor of bills of exchange under sec 2 of the
Export Guarantees Act 1981 (“Ausfuhrförderungsgesetz 1981”). For this reason
this Agreement is stamp duty exempt pursuant to sec 33 TP 19 para 4 nr 4 of the
Austrian Stamp Duty Act.

 

8

 

SECTION 1  INTERPRETATION

 

1.                                                  Definitions and Interpretation

 

1.1.                                        Definitions

 

“Accession Letter” means a document
substantially in the form set out in Schedule 13 (Form of Accession
Letter).

 

“Additional Guarantees” means the guarantees granted or to be granted
by the Additional Guarantors in favour of the Agent for and on behalf of the
Finance Parties in accordance with Clause 26.2 (Additional Guarantors), substantially
in the form set forth in Schedule 11 (Form of Further Guarantee and
Additional Guarantee).

 

“Additional Guarantor” means a company which
becomes an Additional Guarantor in accordance with Clause 26 (Changes to the
Obligors).

 

“Affiliate” means, in relation to any person, a
Subsidiary of that person or a Holding Company of that person or any other
Subsidiary of that Holding Company.

 

“Agent’s Spot Rate of Exchange” means the
Agent’s spot rate of exchange for the purchase of the relevant currency with
Euro in the London foreign exchange market at or about 11:00 a.m. on a
particular day.

 

“Amending Agreement” means the amending
agreement dated 18 November 2005 pursuant to which this Agreement is,
subject to the terms and conditions set forth therein, amended and restated.

 

“Amount” means, in relation to the Loan, the
amount specified in the Drawdown Request delivered by the Borrower for that
Loan adjusted to reflect any repayment, prepayment or cancellation of the Loan
as the case may be.

 

“Applicable Facility Fee” means the fee specified in Schedule 10
(Applicable Facility Fee).

 

9

 

“Authorisation” means an authorisation, consent,
approval, resolution, licence, exemption, filing or registration.

 

“Availability Period” means the period from and including the date of
this Agreement to and including July 31, 2003.

 

“Available
Facility” means the aggregate of the Lenders’ Available Facility Commitments.

 

“Available
Facility Commitment” means, with respect to a Lender, such Lender’s
Commitment minus:

 

(a)                             the amount of its participation in
any outstanding Loans

 

(b)         in relation to any proposed Drawdown, the
amount of its participation in any Loans that are due to be made on or before
the proposed Drawdown Date.

 

“Belgian Guarantor” means Sappi
International S.A.

 

“Break
Costs” means
(i) as long as the Facility is refinanced by OeKB, the amount (if any)
determined by OeKB as cost associated with placing the prepaid principal amount
otherwise for the respective duration (such cost will be calculated by OeKB as
the present value of the difference between the interest OeKB would have
received had the principal amount not been prepaid and the interest OeKB is
able to obtain by placing an amount equal to the prepaid principal amount at
the respective money market interest rates or capital market interest rates
prevailing on the date on which the prepayment is made for the respective
duration which interest rate shall also be used as discount rate for the
calculation of present value of such difference) and (ii) if at any time
any outstanding portion of the Facility is no longer refinanced by OeKB, the
amount by which interest which a Lender would have received for the period from
the date of receipt of the prepaid principal amount to the last day of the
current Interest Period, had the principal received been paid on the last day
of that Interest Period exceeds the interest which that Lender would be able to
obtain by placing an amount equal to the prepaid principal

 

10

 

amount
received by it on deposit with a leading bank in the Relevant Interbank Market
for a period starting on the Business Day following receipt or recovery and
ending on the last day of the current Interest Period.

 

“Business
Day” means
a day (other than a Saturday or Sunday) on which banks are open for general
business in Vienna and which is a TARGET Day.

 

“Commitment”
means

 

(a)          in relation to an Original Lender, the
aggregate amount set opposite its name under the headings “Tranche A Commitment”
and “Tranche B Commitment” in Schedule 1 (The Original Lenders) and the
amount of any other commitment transferred to it under this Agreement; and

 

(b)                            in relation to any other Lender, the
amount of any commitment transferred to it under this Agreement,

 

to the extent
not cancelled, reduced or transferred by it under this Agreement.

 

“Compliance
Certificate” means a Certificate substantially in the form set out in Schedule 6
(Form of Compliance Certificate).

 

“Default” means any event or circumstance
specified in Clause 24 (Events of Default) which would (with the expiry of a
grace period, the giving of notice, the making of any determination under the
Finance Documents or any combination of any of the foregoing) be an Event of
Default.

 

“Disposal”
means
a sale, transfer or other disposal (including by way of lease or loan) by a
person of all or part of its assets, whether by one transaction or a series of
transactions.

 

“Drawdown” means the drawdown under the Facility.

 

“Drawdown
Date”
means the date of the Drawdown, being the date on which a Loan is to be made.

 

11

 

“Drawdown
Request” means a notice substantially in the form set out in Schedule 3
(Requests).

 

“Environmental
Claim” means
any claim, proceeding or investigation by or a payment obligation to, a person
in respect of any Environmental Law.

 

“Environmental
Law” means
any applicable law in any jurisdiction in which any Group Company conducts
business which relates to the pollution or protection of the environment or
harm to or the protection of human health or the health of animals or plants.

 

“EURIBOR” means, in relation to any Loan:

 

(a)                             the applicable Screen Rate; or

 

(b)         (if no Screen Rate is available for the period
of the Loan) the arithmetic mean of the rates (rounded upwards to four decimal
places) as supplied to the Agent at its request quoted by the Reference Banks
to leading banks in the European interbank market for the offering of deposits
in Euro for a period comparable to the Interest Period of the Loan to be
determined at 11.00 a.m. London time two TARGET Days before the first day
of any period for which an interest rate is to be determined.

 

“Event of
Default” means any event or circumstance specified as such in Clause 24 (Events
of Default).

 

“Facility”
means
the loan facility made available under this Agreement as described in Clause
2.1 (The Facility).

 

“Facility
Outstandings” means the aggregate of the Amount from time to time of the Loan.

 

“Facility
Office”
means the office or offices notified by a Lender to the Agent in writing on or
before the date it becomes a Lender (or, following that date, by not

 

12

 

less than five
Business Days’ written notice) as the office or offices through which it will
perform its obligations under this Agreement.

 

“Finance
Document” means this Agreement, the Amending Agreement, the Guarantees and any
Mandate Letter.

 

“Finance
Party”
means the Agent, the Mandated Lead Arranger or a Lender.

 

“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;

 

(c)          any amount raised pursuant to any note purchase
facility or the issue of bonds, notes, debentures, loan stock, participation
rights (“Genussrechte” under Austrian law) 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

 

13

 

(h)         any guarantee, indemnity or similar insurance
against financial loss given in respect of the obligation of any person falling
within any of 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.

 

“Further Guarantees” means the guarantees to
be granted by the Further Guarantors in favour of the Agent for and on behalf
of the Finance Parties pursuant to paragraph (b) of Clause 2.1 (Effective
Date) of the Amending Agreement on or about the date of the Amending Agreement,
substantially in the form set out in Schedule 11 (Form of Further
Guarantee and Additional Guarantee).

 

“Group” means Sappi and each of its
Subsidiaries and “Group Company” means
any one of the same.

 

“Guarantees” means the SISA Guarantee, the
Further Guarantees and any Additional Guarantee and “Guarantee” means any and each of them.

 

“Guarantor” means the Original Guarantor, a Further Guarantor or an Additional
Guarantor.

 

“Holding
Company” means, in relation to a company or corporation, any other company or
corporation in respect of which such other company or corporation is a
Subsidiary.

 

“IAS” means the international accounting
principles formulated by the International Accounting Standards Committee.

 

“IFRS” means International Financial Reporting Standards.

 

“Initial
Original Obligors’ Financial Statements” means the audited consolidations of
the financial statements of the Original Obligors and their respective
subsidiaries and the audited unconsolidated financial statements of

 

14

 

the Original
Obligors (if required to be produced by law) for the financial year ended 30 September 2002,
prepared in accordance with IAS.

 

“Initial Sappi Financial Statements” means
Sappi’s audited consolidated financial statements in respect of the financial
year ending September 30, 2004.

 

“Intercompany Financings” means the financings from Sappi
Papier Holding GmbH, Austria to Sappi Lanaken Press Paper N.V., Belgium, of
EUR 228,600,000 S.D. Warren Company, USA of USD 130,000,000 and Sappi
UK Holdings BV, Netherlands of EUR 133,179,102 for the purpose of the
acquisition of Potlatch Corporation’s Coated Fine Paper Division for USD
480,000,000.

 

“Interest
Period” means, in relation to the Loan, each period determined in accordance
with Clause 12 (Interest Periods and Terms) and, in relation to an Unpaid Sum,
each period determined in accordance with Clause 11.5 (Default Interest).

 

“Lender” means:

 

(a)                             any Original Lender; and

 

(b)         any bank or financial institution which has
become a Party as a Lender in accordance with Clause 25 (Changes to the
Lenders),

 

which in each
case has not ceased to be a Party in accordance with the terms of this
Agreement.

 

“Loan” means the loan made or to be made
under the Facility or the principal amount outstanding for the time being of
the loan.

 

“Majority
Lenders” means:

 

(a)          as long as there are no Facility Outstandings,
a Lender or Lenders whose Commitments are in aggregate 66 (sixty-six) or more
per cent of the Total Commitments; and

 

15

 

(b)         at any other time, a Lender or Lenders whose
participations in the Facility Outstandings at such time are in the aggregate
66 (sixty-six) or more per cent thereof.

 

“Mandate Letter” means the letter dated April 4,
2003 addressed by the Mandated Lead Arranger to the Borrower and any other fee
letter or letters dated on or about the date of this Agreement or the Amending
Agreement between the Agent and the Borrower setting out any of the fees
referred to in Clause 14 (Fees).

 

“Mandatory Cost” means the percentage rate per annum
calculated by the Agent in accordance with Schedule 4 (Mandatory Cost
Formulae).

 

“Material
Adverse Effect” means a material adverse effect on the ability of the Obligors (taken
together) to perform their payment obligations under the Finance Documents or
the ability of Sappi to comply with the financial undertakings set out in
Clause 23.1 (Financial Covenants).

 

“Material
Subsidiary” means, at any time, a subsidiary of Sappi which has:

 

(a)          earnings before interest and tax representing
10 per cent or more of the consolidated earnings before interest and tax of the
Group (the “Consolidated Earnings”); or

 

(b)         total assets representing 10 per cent or more
of the consolidated total assets of the Group (the “Consolidated Assets”); and

 

(c)          in the event that those Group Companies falling
within (a) and (b) above when taken together with the Obligors do not
account for at least 90 per cent of the Consolidated Earnings and at least 90
per cent of the Consolidated Assets, such other Group Companies as are
necessary to ensure that the Material Subsidiaries when taken together with the
Obligors account for at least 90 per cent of the Consolidated Earnings and at
least 90 per cent of the Consolidated Assets (with Group Companies being
included as Material

 

16

 

Subsidiaries in the order in which their earnings before interest and
tax and/or gross assets are closest to 10 per cent of the Consolidated Earnings
or, as the case may be, the Consolidated Assets),

 

in each case
as set out, until the first Compliance Certificate is delivered with respect to
the financial statements delivered pursuant to Clause 21.1(a)(i), in Schedule 12
(Material Subsidiaries) and thereafter, as calculated by reference to the
latest annual consolidated financial statements of the Group delivered by the
Borrower to the Agent pursuant to Clause 21.1(a)(i) (Financial Statements)
and as updated from time to time in each Compliance Certificate relating to
such annual consolidated financial statements of the Group.

 

“Moody’s” means Moody’s Investors Service
Inc.

 

“Negotiation Period” means the period which is the earliest to
expire of:

 

(a)          one month from the date on which the Borrower
is notified by the Agent that a Lender is obliged to prepay the OeKB
Refinancing; and

 

(b)         the period from the relevant date until the
date falling one Business Day prior to the date on which that Lender is obliged
to prepay the OeKB Refinancing.

 

“New
Lender” means a credit institution (“Kreditinstitut”)
within the meaning of the Austrian Banking Act (“Bankwesengesetz”) to which the rights and/or obligations may be
assigned/transferred in accordance with Clause
25.1 (Assignment and transfer by the Lenders).

 

“Obligors” means collectively the Borrower and
the Guarantors and “Obligor” means any
and each of them.

 

“OeKB” means Oesterreichische
Kontrollbank Aktiengesellschaft, Am Hof 4, 1010 Vienna, Austria.

 

“OeKB Financing Rates” means the
OeKB Fixed Financing Rate and the OeKB Floating Financing Rate.

 

17

 

“OeKB
Fixed Financing Rate” means an interest rate of 3.60 per cent per
annum as stipulated by OeKB for Tranche B of this specific transaction.

 

“OeKB
Floating Financing Rate” means the floating interest rate of the export
financing scheme operated by OeKB for export contracts (“Rahmen I Finanzierung”)
as published by OeKB on its Website (www.oekb.at) from time to time.

 

“OeKB
Refinancing” means the refinancing of the Facility by OeKB pursuant to various
agreements among OeKB and each of the Lenders.

 

“Original
Lender”
means each lender identified in Schedule 1 (The Original Lenders).

 

“Original Obligors” means the Borrower and
the Original 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.

 

“Participating
Member State” means any member state of the European Union that adopts or has adopted
the Euro as its lawful currency in accordance with legislation of the European
Union relating to European Monetary Union.

 

18

 

“Party” means a party to this Agreement and
includes its successors in title, permitted assignees and permitted transferees.

 

“Potlatch
Acquisition” means the acquisition by the Sappi Group of Potlatch Corporation’s
coated Fine Paper Division.

 

“Qualifying
Lender”
has the meaning given to it in Clause 15 (Tax Gross Up and Indemnities).

 

“Quarter” means each period of three months
ending on a Quarter Date.

 

“Quarter
Date”
means Sappi’s quarterly accounting date (which is usually the last Sunday of
the month) of any March, June, September or December.

 

“Reference
Banks”
means the principal London offices of Citibank N.A. and J.P. Morgan and the
principal Munich office of Bayerische Hypo- und Vereinsbank AG or such other
banks as may be appointed by the Agent after consultation with the Borrower.

 

“Relevant
Interbank Market” means the European interbank market.

 

“Reservations” means the principle that equitable
remedies are remedies which may be granted or refused at the discretion of the
court, the limitation of enforcement by laws relating to bankruptcy,
insolvency, liquidation, reorganisation, moratoria, administration and other
laws generally affecting the rights of creditors, defences of set-off or
counterclaim and similar principles, rights and defences under the laws of any
foreign jurisdictions in which relevant obligations may have to be performed,
and any qualifications relating to matters of law contained in or referred to
in the legal opinions to be delivered to the Agent pursuant to Schedule 2
(Conditions Precedent).

 

“Restricted Obligations” means up-stream or cross-stream benefits
granted by the Swiss Guarantor without full consideration under a Further
Guarantee, Clause 15 (Tax gross up and indemnities) and Clause 17 (Other
indemnities), in each case in respect of the Borrower’s payment obligations
under this Agreement.

 

19

 

“S&P” means Standard & Poor’s Rating Service.

 

“Sappi”
means
Sappi Limited, a company incorporated in the Republic of South Africa with
registered number 1936/008963/06.

 

“Sappi Manufacturing” means Sappi Manufacturing (Pty) Ltd.

 

“Sappi Manufacturing Group” means Sappi Manufacturing and its Subsidiaries
for the time being and “Sappi Manufacturing
Group Company” means any one of the same.

 

“Screen Rate” means, in relation to “EURIBOR”, the percentage
rate per annum determined by the Banking Federation of the European Union for
the relevant period, displayed on the appropriate page of the Reuters “EURIBOR”
screen. If the agreed page is replaced or service ceases to be available,
the Agent may specify another page or service displaying the appropriate
rate after consultation with the Borrower and the Lenders.

 

“Security” means a mortgage, charge, pledge,
lien, right of set-off, retention of title provision, 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.

 

“SISA
Guarantee” means the guarantee dated on or about the date of this Agreement
granted by the Original Guarantor in favour of the Agent for and on behalf of
the Finance Parties.

 

“South
African GAAP” means the Generally Accepted Accounting Principles of South Africa.

 

“Specified
Time”
means 10 Business Days prior to the proposed Drawdown Date at 10.00 am Central
European Time.

 

“Subsidiary” means in relation to any company or
corporation, a company or corporation:

 

20

 

(a)          which is controlled, directly or indirectly, by
the first mentioned company or corporation;

 

(b)         more than half of the issued share capital of
which is owned, directly or indirectly, by the first mentioned company or
corporation; or

 

(c)          which is a Subsidiary of another Subsidiary of
the first mentioned company or corporation,

 

and for this
purpose, a company or corporation shall be treated as being controlled by
another if that other company or corporation is able to direct its affairs
and/or to control the composition of its board of directors or equivalent body.

 

“Swiss Guarantor” means Sappi Trading Pulp AG.

 

“Syndicated Facility Agreement” means the
EUR 600 million facility agreement dated 29 June 2005 among Sappi Limited
(as Company), the subsidiaries of the Company named therein (as Original
Borrowers and Original Guarantors), BNP Paribas, J.P. Morgan Plc and SG
Corporate & Investment Banking (as Mandated Lead Arrangers), BNP
Paribas (as Agent) and the financial institutions named therein (as Original
Lenders).

 

“TARGET” means Trans-European Automated
Real-time Gross Settlement Express Transfer payment system.

 

“Target
Company” means Potlatch Corporation’s Coated Fine Paper Division.

 

“TARGET
Day”
means any day on which TARGET is open for the settlement of payments in Euro.

 

“Tax” means any tax, levy, impost, duty
or other charge or withholding of a similar nature (including any penalty or
interest payable in connection with any failure to pay or any delay in paying
any of the same).

 

“Total
Commitments” means the aggregate of the Commitments, being EUR 500,106,406 as
at the date of this Agreement.

 

21

 

“Transfer
Certificate” means a certificate substantially in the form set out in Schedule 5
(Form of Transfer Certificate) or any other form agreed between the Agent
and the Borrower.

 

“Tranche
A” means
the floating rate portion of the Facility amounting to 20 per cent thereof.

 

“Tranche A Loan” means a Loan made under Tranche A.

 

“Tranche
A Outstandings” means the aggregate of all Loans outstanding under Tranche A.

 

“Tranche
B” means
the fixed rate portion of the Facility amounting to 80 per cent thereof.

 

“Tranche B Loan” means a Loan made under Tranche B.

 

“Tranche
B Outstandings” means the aggregate of all Loans outstanding under Tranche B.

 

“Transfer
Date”
means, in relation to a transfer, the later of

 

(a)                             the proposed transfer date specified
in the Transfer Certificate; and

 

(b)                            the date on which the Agent executes
the Transfer Certificate.

 

“Unpaid
Sum”
means any sum due and payable but unpaid by an Obligor under the Finance
Documents.

 

“VAT” means value added tax as provided
for in the Value Added Tax Act (“Umsatzsteuergesetz”) 1994 as amended and any
other tax of a similar nature.

 

1.2.                                        Constructions

 

(a)                             Any reference in this Agreement to:

 

22

 

(i)            “assets” includes present and future
properties, revenues and rights of every description;

 

(ii)           the “European interbank market” means
the interbank market for Euro operating in Participating Member States;

 

(iii)          a “Finance Document” or any other
agreement or instrument is a reference to that Finance Document or other
agreement or instrument as amended or novated;

 

(iv)          “indebtedness” includes any obligation (whether incurred as principal or as surety)
for the payment or repayment of money, whether present or future, actual or
contingent;

 

(v)           a Lender’s “participation”,
in relation to a Loan, means the amount of such Loan that is owed to such
Lender or, as the case may be, the amount of such Loan that such Lender is
obliged to make available; and

 

(vi)          a “person” includes any person, firm,
company, corporation, government, state or agency of a state or any
association, trust or partnership (whether or not having separate legal
personality) or two or more of the foregoing;

 

(vii)         a “regulation” includes any regulation,
rule, official directive, request or guideline (whether or not having the force
of law but, in so far as the same applies to a class of financial institutions
of which a Lender is one, if not having the force of law, being a regulation or
the like with which such financial institutions customarily comply in the
ordinary course of their business) of any governmental, intergovernmental or
supranational body, agency, department or regulatory, self-regulatory or other
authority or organisation;

 

23

 

(viii)        a
provision of law is a reference to that provision as amended or re-enacted; and

 

(ix)           unless a contrary indication appears, a time of day is a reference to
Vienna time.

 

(b)                            Where there is reference in this
Agreement to any amount, limit or threshold specified in Euro, in ascertaining
whether or not that amount, limit or threshold has been attained, broken or
achieved, as the case may be, a non-Euro amount shall be counted on the basis
of the equivalent in Euro of that amount using the Agent’s Spot Rate of
Exchange.

 

(c)                             Section, Clause and Schedule headings
are for ease of reference only.

 

(d)                            Unless a contrary indication
appears, a term used in any other Finance Document or in any notice given under
or in connection with any Finance Document has the same meaning in that Finance
Document or notice as in this Agreement.

 

(e)                             A Default is “continuing” if it has not been remedied or
waived.

 

1.3.                                        Currency symbols and definitions

 

“EUR” and “Euro”
means the single currency unit of the Participating Member States.

 

24

 

SECTION 2 THE FACILITY

 

2.                                                  The Facility

 

2.1.                                        The Facility

 

Subject to the terms of this Agreement, the Lenders make available to
the Borrower a loan facility in a maximum aggregate amount of EUR 500,106,406
in two tranches as follows:

 

(a)                             Tranche A: EUR 100,021,281.20

 

(b)                            Tranche B: EUR 400,085,124.80

 

2.2.                                        Finance Parties’ rights and obligations

 

(a)          The obligations of each Finance Party under the
Finance Documents are several. Failure by a Finance Party to perform its
obligations under the Finance Documents does not affect the obligations of any
other Party under the Finance Documents. No Finance Party is responsible for
the obligations of any other Finance Party under the Finance Documents.

 

(b)         The rights of each Finance Party under or in
connection with the Finance Documents are separate and independent rights and
any debt arising under the Finance Documents to a Finance Party from an Obligor
shall be a separate and independent debt.

 

(c)          A Finance Party may, except as otherwise stated
in the Finance Documents, separately enforce its rights under the Finance
Documents.

 

25

 

3.                                                  Purpose

 

3.1.                                        Purpose

 

The Borrower
shall apply all amounts borrowed by it under the Facility for the refinancing
of the Intercompany Financings only.

 

3.2.                                        Monitoring

 

The Agent is
entitled but not bound to monitor the application of the proceeds under the
Loan borrowed pursuant to this Agreement. The Borrower will provide all
necessary information to the Agent upon request to verify the application of
the proceeds.

 

4.                                                  Conditions of Drawdown

 

4.1.                                        Initial conditions precedent

 

The Borrower
may not deliver the Drawdown Request unless the Agent has received all of the
documents and other evidence listed in Part I of Schedule 2
(Conditions Precedent) in form and substance satisfactory to the Agent. The
Agent shall notify the Borrower and the Lenders promptly upon being so
satisfied.

 

4.2.                                        Further conditions precedent

 

The Lenders
will only be obliged to comply with Clause 5.4 (Lenders’ participation) if on
the date of the Drawdown Request and on the proposed Drawdown Date:

 

(i)                                no Default is continuing or would
result from the proposed Loan, as the case may be; and

 

(ii)                             all representations to be made by
each Obligor under the Finance Documents are true in all respects.

 

26

 

4.3.                                        (Intentionally omitted)

 

4.4.                                        Number of Drawdowns

 

The Facility shall be drawn in 1 (one)
Drawdown.

 

27

 

SECTION 3  DRAWDOWN

 

5.                                                  Drawdown

 

5.1.                                        Delivery of Drawdown Request

 

The Borrower
may draw under the Facility by delivery to the Agent of the duly completed
Drawdown Request not later than at the Specified Time.

 

5.2.                                        Completion of Drawdown Request

 

The
Drawdown Request is irrevocable and will not be regarded as having been duly
completed unless:

 

(i)                                the proposed Drawdown Date is a
Business Day within the Availability Period; and

 

(ii)                             the currency and amount of the
Drawdown comply with Clause 5.3 (Currency and amount).

 

5.3.                                        Currency and amount

 

(a)                             The currency specified in the
Drawdown Request must be Euro.

 

(b)                            The amount of the proposed Drawdown
must not exceed the Available Facility.

 

5.4.                                        Lenders’ participation

 

(a)          If the conditions set out in this Agreement
have been met, each Lender shall make its participation in the Loan available
through its Facility Office.

 

28

 

(b)         The amount of each Lender’s participation in
the Loan will be equal to the proportion of its Commitment immediately prior to
making of the Loan.

 

5.5.                                        Notification

 

The Agent shall
(i) notify each Lender of the Amount of the Loan seven Business Days prior
to the Drawdown Date and (ii) confirm that it has received all documents
listed in Schedule 2 (Conditions Precedent) to this Agreement.

 

6.                 Splitting of Loan

 

The
Amount specified in the Drawdown Request shall be divided into and paid as (i) one
Tranche A Loan and (ii) one Tranche B Loan in a way that the Tranche A
Loan is equal to 20 per cent and the Tranche B Loan is equal to 80 per cent of
such Amount.

 

7.                 (intentionally omitted)

 

29

 

SECTION 4  REPAYMENT, PREPAYMENT AND CANCELLATION

 

8.                 Repayment

 

(a)          The Borrower shall repay the Tranche A
Outstandings on the last Business Day of the calendar year 2004.  The Parties confirm that as at the date of
the Amending Agreement, all Tranche A Outstandings have been repaid in full.

 

(b)                            The Borrower shall repay the Tranche
B Outstandings on the last Business Day of the calendar year 2010.

 

9.                 (Intentionally omitted)

 

10.              Prepayment and cancellation

 

10.1.                                 Mandatory Prepayment - Illegality

 

If, at any
time after the date of this Agreement, it becomes unlawful in any applicable
jurisdiction for a Lender to perform any of its obligations as contemplated by
this Agreement or to fund its participation in any Loan:

 

(i)           that Lender shall promptly notify the Agent
upon becoming aware of that event;

 

(ii)          upon the Agent notifying the Borrower, the
Commitment of that Lender will be immediately cancelled; and

 

(iii)         if the relevant Lender so requires, the
Borrower shall repay that Lender’s participation in the Loans on the last day
of the Interest Period for each Loan occurring after the Agent has notified the
Borrower or, if earlier, the date specified by the Lender in the notice
delivered to the Agent (being no earlier than the last day of any applicable
grace period permitted by law).

 

30

 

10.2.                                 Prepayment of OeKB Refinancing

 

If the
Borrower is notified by the Agent that a Lender is obliged to prepay the OeKB
Refinancing, then the Borrower and the Lender shall negotiate in good faith for
a period of not less than the Negotiation Period with a view to agreeing an
alternative interest rate based on EURIBOR to apply to Tranche B. If no such
agreement is reached with the concerned Lender during the Negotiation Period
the Borrower must as soon as practicable upon the expiry of the Negotiation
Period and in any event not later than one Business Day prior to the date on
which that Lender is obliged to prepay the OeKB Refinancing, prepay to that
Lender such proportion of the outstanding Loan under Tranche B advanced by it.

 

10.3.                                 Change of control

 

(a)                             For purposes of this Clause 10.3, “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 of England) with that person
or is a connected person (as defined in section 839 of the Income and
Corporation Taxes Act 1988 of England) of that person.

 

(b)                            If, on any date (a “Change of Control
Date”) (i) the whole of the issued share capital of any Obligor ceases to
be wholly owned, directly or indirectly by Sappi, or (ii) 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 each Lender may by written notice to the Borrower and to the Agent
demand on or following the date falling 30 days after the Change of Control
Date:

 

(i)                               that the Borrower shall prepay such
Lender’s participation in the Loan; and

 

31

 

(ii)         that such Lender’s obligations under the
Agreement shall be terminated and that Lender’s Commitments be reduced to zero.

 

10.4.                                 Intercompany Financings

 

If the aggregate outstanding amount of the Intercompany Financings is
lower than the outstanding Loan under the Facility, the Borrower shall prepay
the difference amount (such difference amount to be calculated as the
difference between the aggregate of the Tranche A Outstandings and the Tranche
B Outstandings under the Facility and all outstanding amounts under the Intercompany
Financings). The Borrower shall notify to the Agent at each Quarter Date the
amount, if any, of such difference and shall make, upon request of the Agent,
the prepayment on the date (a “Prepayment Date”) falling 30 Business Days after
such request. The Agent may also demand payment of such difference amount
determined on the basis of the financial statements to be provided in
accordance with Clause 21.1.

 

10.5.                                 Mandatory prepayment – adversely determined litigation

 

If any
litigation is finally determined against any Group Company which has, or is
reasonably likely to have, in the reasonable opinion of the Majority Lenders, a
Material Adverse Effect:

 

(a)          the Agent shall promptly notify the Borrower
and the Lenders that the Majority Lenders have established that the litigation
finally determined against the concerned Group Company has, or is reasonably
likely to have, in their reasonable opinion, a Material Adverse Effect; and

 

(b)         each Lender may by written notice to the
Borrower and the Agent demand, on or following the date falling 30 days after
receipt of such written notice, that the Borrower prepay such Lender’s
participation in the Loans.

 

10.6.                                 Voluntary cancellation

 

(a)          During the Availability Period, the Borrower
may, if it gives the Agent not less than 3 Business Days (or such shorter
period as the Majority

 

32

 

Lenders may agree) prior notice, cancel the whole or any part (being a
minimum amount of EUR 50,000,000 and in integral multiples of EUR 10,000,000)
of the Available Facility.

 

(b)                            Any amounts that have not been drawn
at the end of the Availability Period are deemed to be cancelled.

 

10.7.                                 Voluntary prepayment of the Loan

 

The
Borrower may, if it gives the Agent not less than one month’s prior notice,
prepay the whole or any part of the Loan (but if in part, being an amount that
reduces the Loan by a minimum amount of EUR 10,000,000 (unless the outstanding
amount is less).

 

10.8.                                 Right of repayment and cancellation in relation to a
single Lender

 

(a)                             If:

 

(i)                               any sum payable to any Lender by an
Obligor is required to be increased under paragraph (c) of Clause 15.2
(Tax gross-up); or

 

(ii)                            any Lender claims indemnification
from the Borrower under Clause 15.3 (Tax indemnity) or Clause 16.1 (Increased
costs),

 

the Borrower may, whilst the circumstance giving rise to the
requirement or indemnification continues, give the Agent notice of cancellation
of the Commitment of that Lender and its intention to procure the repayment of
that Lender’s participation in the Loan.

 

(b)         On receipt of a notice referred to in paragraph
(a) above, the Commitment of that Lender shall immediately be reduced to
zero.

 

(c)          On the last day of each Interest Period in
respect of the Loan outstanding under the Facility in respect of which the
Borrower has given notice under paragraph (a) above (or, if earlier, the
date specified

 

33

 

by the Borrower in that notice), the Borrower
shall repay that Lender’s participation in the Loan.

 

10.9.                                 Prepayments and cancellation

 

(a)          Any notice of cancellation or prepayment given
by any Party under this Clause 10 shall be irrevocable and, unless a contrary
indication appears in this Agreement, shall specify the date or dates upon
which the relevant cancellation or prepayment is to be made and the amount of
that cancellation or prepayment.

 

(b)         Any prepayment under this Agreement shall be
made at the end of an Interest Period together with accrued interest on the
amount prepaid and, subject to any Break Costs, without premium or penalty.

 

(c)          The Borrower may not reborrow any part of the
Facility which is prepaid.

 

(d)         The Borrower shall not repay or prepay all or
any part of the Loans or cancel all or any part of the Commitments except at
the times and in the manner expressly provided for in this Agreement.

 

(e)          No amount of the Total Commitments cancelled
under this Agreement may be subsequently reinstated.

 

(f)          If the Agent receives a notice under this
Clause 10, it shall promptly forward a copy of that notice to either the
Borrower or the affected Lender, as appropriate.

 

34

 

SECTION 5  COSTS OF DRAWING

 

11.              Interest

 

11.1.                                 Tranche A interest rate

 

The rate of
interest for the Tranche A Outstandings for each Interest Period is calculated
as a floating rate interest. The percentage rate per annum is the aggregate of:

 

(i)                                the applicable OeKB Floating
Financing Rate;

 

(ii)                             the Applicable Facility Fee; and

 

(iii)                          Mandatory Costs, if any.

 

11.2.                                 Tranche B interest rate

 

The rate of
the interest for the Tranche B Outstandings for each Interest Period is a fixed
interest rate. The percentage rate per annum is the aggregate of:

 

(i)                                the OeKB Fixed Financing Rate;

 

(ii)                             the Applicable Facility Fee; and

 

(iii)                          Mandatory Cost, if any.

 

11.3.                                 Calculation of interest

 

Interest will
be calculated on the Facility Outstandings from time to time on the basis of
the actual number of days elapsed in a year of 360 days.

 

35

 

11.4.                                 Payment of interest

 

Subject to
clause 12.2. below, on the last Business Day of each Interest Period the
Borrower shall pay accrued interest on the Loan to which that Interest Period
relates.

 

11.5.                                 Default
interest

 

(a)                             If the Borrower fails to pay any
amount payable by it under a Finance Document on its due date, it shall pay
default interest as follows:

 

Default interest shall accrue on
the overdue amount from the due date up to the date of actual payment (both
before and after judgment) at a rate 2.00 per cent above the interest rate
which is determined pursuant to Clause 11.1 or 11.2, but subject to the
following:

 

(i)          if the OeKB Refinancing is extended
at an interest rate not higher than the OeKB Floating Financing Rate prevailing
from time to time, such interest rate shall replace the OeKB Financing Rates
for Tranches A and B for the purpose of calculating the default interest; or

 

(ii)         in any other case, the EURIBOR for the relevant Interest Period as
specified by the Agent plus 0.5 per cent per annum shall replace the OeKB
Financing Rates for the purpose of calculating the default interest.

 

(b)                            Any interest accruing under this
Clause 11.5 shall be immediately payable by the Borrower on demand by the
Agent. Default interest (if unpaid) arising on an overdue amount will be
compounded with the overdue amount at the end of each Interest Period
applicable to that overdue amount, but will remain immediately due and payable.

 

36

 

11.6.                                 Notification of rates of interest

 

The Agent
shall promptly notify the Borrower and the Lenders of a determination of a rate
of interest under this Agreement.

 

12.              Interest periods

 

12.1.                                 Interest Periods

 

Each Interest
Period relating to a Loan shall be of three months and shall coincide with
calender quarters, the first Interest Period however being from the date of
Drawdown up to the end of the then current calendar quarter.

 

12.2.                                 Non-Business Days

 

If an Interest
Period ends on a day which is not a Business Day, the calculation of the
interest shall be made for the respective Interest Period including such day.
In such case payment shall be made on the next Business Day.

 

13.              Break Costs

 

13.1.                                 Break Costs

 

(a)          The Borrower shall, within three
Business Days of demand by a Finance Party, pay to that Finance Party its Break
Costs.

 

(b)         Each Lender shall, as soon as
reasonably practicable after a demand by the Agent, provide a certificate
confirming the amount of its Break Costs and, with respect to the break costs
referred to in sub-paragraph (ii) of the definition of “Break Costs”,
providing reasonable details of the calculation of such amount.

 

37

 

14.              Fees

 

14.1.                                 Commitment fee

 

(a)          The Borrower shall pay to the Agent (for the
account of each Lender) a fee computed at the rate of 0.25 per cent per annum
on the Available Commitment for the Availability Period.

 

(b)         The accrued commitment fee will be calculated
on the daily undrawn and uncancelled amount of the Available Committment during
the Availability Period on the basis of the actual number of days elapsed in a
year of 360 days. The accrued commitment fee is payable on the last Business
Day of each calendar quarter.

 

14.2.                                 OeKB Administration Fee

 

The
Borrower shall pay directly to OeKB the OeKB Administration Fee (“Wechselbürgschaftsentgelt”)
in the manner prescribed by OeKB, which is, for information purposes, currently
as described below.

 

The
OeKB Administration Fee is at a rate of 0.05% per quarter. It accrues quarterly
and will be calculated in advance based on the Facility Outstandings (“Finanzierungsbedarf”)
at the beginning of each calendar quarter.

 

The
OeKB Administration Fee falls due for payment as from the date of the guarantee
by “aval” on bills of exchange (“Wechselbürgschaft”) of the Republic of Austria
and subsequently for each commenced calendar quarter. The OeKB Administration
Fee is payable upon receipt of the debit orders from OeKB through direct debit
to the Borrower’s current account.

 

Contrary
to the above, in the first relevant calendar quarter, the OeKB Administration
Fee will fall due on the date of the issuance of the guarantee by “aval” and
will be calculated proportionally on a daily basis and on the basis of the Loan
to be made during such calendar quarter.

 

38

 

14.3.                                 Arrangement fee

 

The
Borrower shall pay to the Mandated Lead Arranger an arrangement fee in the
amount and at the times as agreed in the Mandate Letter.

 

14.4.                                 Agency Fees

 

The Borrower
shall pay to the Agent (for its own account) an agency fee in the amount and at
the times agreed in the Mandate Letter.

 

39

 

SECTION 6 ADDITIONAL PAYMENT
OBLIGATIONS

 

15.              Tax gross up and indemnities

 

15.1.                                 Definitions

 

In this Clause
15:

 

“Protected
Party”
means a Finance Party which is or will be, for or on account of Tax, subject to
any liability or required to make any payment in relation to a sum received or
receivable (or any sum deemed for the purposes of Tax to be received or
receivable) under a Finance Document.

 

“Qualifying Lender” means a Lender which is (on the date a payment
falls due) entitled (subject to the completion of any necessary procedural
formalities) to that payment without a Tax Deduction.

 

“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 Finance Document.

 

“Tax
Payment” means an increased payment made by an Obligor to a Finance Party under
Clause 15.2 (Tax gross-up) or a payment under Clause 15.3 (Tax indemnity).

 

15.2.                                 Tax gross-up

 

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

 

(b)         An Obligor or a Lender shall promptly upon
becoming aware that an Obligor must make a Tax Deduction (or that there is any
change in the rate or the basis of a Tax Deduction) notify the Agent
accordingly. If

 

40

 

the Agent receives such notification from a
Lender it shall notify the relevant Obligor.

 

(c)                             If a Tax Deduction is required by
law to be made by an Obligor in one of the circumstances set out in paragraph (d) 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.

 

(d)                            The circumstances referred to in
paragraph (c) above are where a person entitled to receive the payment:

 

(i)          is the Agent (on its own behalf and, in the
case of payments made under the Guarantees, acting in its capacity as trustee
for the Finance Parties) or the Mandated Lead Arranger (on its own behalf); or

 

(ii)         is a Lender which is a Qualifying Lender in
respect of which the completion of procedural formalities is required before
the relevant Obligor can make payments thereto without a Tax Deduction but such
procedural formalities have not been completed; or

 

(iii)        is a Lender which would have been a Qualifying
Lender but for any change after the date of this Agreement in (or in the
interpretation, administration, or application of) any law or double taxation
agreement or any published practice or published concession of any relevant
taxing authority.

 

(e)                             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.

 

41

 

(f)                               Within thirty days of making either
a Tax Deduction or any payment required in connection with that Tax Deduction,
the Obligor making that Tax Deduction shall deliver to the Agent for the
Finance Party entitled to the payment evidence reasonably satisfactory to that
Finance Party that the Tax Deduction has been made or (as applicable) any
appropriate payment paid to the relevant taxing authority.

 

(g)                            A Qualifying Lender and each Obligor
which makes a payment to which that Qualifying Lender is entitled shall
co-operate in completing any procedural formalities necessary for that Obligor
to obtain authorisation to make that payment without a Tax Deduction.

 

15.3.                                 Tax indemnity

 

(a)                             Subject to Clause 15.5 (Stamp
Taxes), the Borrower shall (within five Business Days of demand by the Agent)
pay to a Protected Party an amount equal to the loss, liability or cost which
that Protected Party reasonably determines will be or has been (directly or
indirectly) suffered for or on account of Tax by that Protected Party in
respect of a Finance Document.

 

(b)                            Paragraph (a) above shall not
apply with respect to any Tax assessed on a Finance Party:

 

(i)          under the law of the jurisdiction in which that
Finance Party is incorporated or, if different, the jurisdiction (or
jurisdictions) in which that Finance Party is treated as resident for tax
purposes; or

 

(ii)         under the law of the jurisdiction in which that
Finance Party’s Facility Office is located in respect of amounts received or
receivable in that jurisdiction,

 

if that Tax is imposed on or calculated by reference to the net income
received or receivable (but not any sum deemed to be received or receivable) by
that Finance Party.

 

42

 

(c)                             A Protected Party making, or
intending to make a claim pursuant to paragraph (a) above shall promptly
notify the Agent of the event which will give, or has given, rise to the claim,
following which the Agent shall notify the Borrower.

 

(d)                            A Protected Party shall, on
receiving a payment from an Obligor under this Clause 15.3, notify the Agent.

 

15.4.                                 Tax credit

 

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

 

(a)                             a Tax Credit is attributable to that
Tax Payment; and

 

(b)                            that Finance Party has obtained,
utilised and retained that Tax Credit, on a consolidated group basis,

 

the Finance Party shall pay an amount to the Obligor which that Finance
Party determines in its absolute discretion 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.

 

15.5.                                 Stamp taxes

 

The Borrower shall pay and, within five Business Days of demand,
indemnify each Finance Party against any cost, loss or liability which that
Finance Party incurs in relation to all stamp duty, registration and other
similar Taxes payable in respect of any Finance Document or other document
which relates to any Finance Document.

 

15.6.                                 Value added tax

 

(a)                             All consideration payable under a
Finance Document by an Obligor to a Finance Party shall be deemed to be
exclusive of any VAT. If VAT is chargeable, the Obligor shall pay to the
Finance Party (in addition to

 

43

 

and at the same time as paying the consideration) an amount equal to
the amount of the VAT.

 

(b)                            Where a Finance Document requires an
Obligor to reimburse a Finance Party for any costs or expenses, that Obligor
shall also at the same time pay and indemnify that Finance Party against all
VAT incurred by that Finance Party in respect of the costs or expenses save to
the extent that that Finance Party is entitled to repayment or credit in
respect of the VAT.

 

15.7.                                 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 or any other deduction contemplated by this Clause 15, such
Obligor and each relevant Finance Party shall make reasonable endeavours to
file such forms and documents as the appropriate taxation authority may
reasonably require in order to enable such Obligor to make relevant payments
under the Finance Documents without having to make such deduction or withholding.

 

15.8.                                 Exemptions from gross up

 

Notwithstanding
anything contained in this Clause 15 (Tax gross up and indemnities), no
additional amount will be payable to a Lender under Clause 15.2 (Tax gross up)
in respect of Taxes to the extent that such additional amount would not be
payable if that Lender had complied with its obligations under Clause 15.7
(Filings) (unless such failure to comply resulted from a failure by any Obligor
to comply with its obligations there under).

 

16.              Increased costs

 

16.1.                                 Increased costs

 

(a)          Subject to Clause 16.3 (Exceptions) the
Borrower shall, within three Business Days of a demand by the Agent, pay for
the account of a

 

44

 

Finance Party the amount of any Increased Costs incurred by that
Finance Party or any of its Affiliates as a result of (i) the introduction
of or any change in (or in the interpretation or application of) any law or
regulation occurring after the date of this Agreement or (ii) compliance
with any law or regulation made after the date of this Agreement.

 

(b)                            In this Agreement “Increased Costs”
means:

 

(i)          a reduction in the rate of return from the
Facility or on a Finance Party’s (or its Affiliate’s) overall capital
attributable to making or maintaining a Loan or Commitment hereunder;

 

(ii)         additional or increased cost resulting from a
change of law, regulation, minimum reserve requirements or similar reasons; or

 

(iii)        a reduction of any amount due and payable under
any Finance Document

 

other than, in each case, any payment on account of Tax imposed on the
overall net income of the relevant Finance Party which is incurred or suffered
by a Finance Party or any of its Affiliates to the extent that it is
attributable to that Finance Party having entered into its Commitment or
funding or performing its obligations under any Finance Document. For the
avoidance of doubt, any costs paid to the Lenders as Mandatory Costs shall not
be deemed to be Increased Costs.

 

16.2.                                 Increased cost claims

 

(a)                             A Finance Party intending to make a
claim pursuant to Clause 16.1 (Increased costs) shall notify the Agent of the
event giving rise to the claim, following which the Agent shall promptly notify
the Borrower.

 

(b)                            Each Finance Party shall, as soon as
practicable after a demand by the Agent, provide a certificate confirming the
amount of its Increased

 

45

 

Costs and providing reasonable details of the calculation of such
amount.

 

16.3.                                 Exceptions

 

(a)                             Clause 16.1 (Increased costs) does
not apply to the extent any Increased Cost is:

 

(i)                               attributable to a Tax Deduction
required by law to be made by an Obligor;

 

(ii)                            attributable to any cost, increased
cost, liability or reduction resulting from any change in the rate of taxation
on the overall net income or gross turnover of a Lender imposed in the
jurisdiction in which the principal office of the relevant Lender is located or
the overall net income or gross turnover of the Facility Office of the relevant
Lender imposed in the jurisdiction in which such Facility Office is located;

 

(iii)                         compensated for by Clause 15.3 (Tax
indemnity) (or would have been compensated for under Clause 15.3 (Tax
indemnity) but was not so compensated solely because one of the exclusions in
paragraph (b) of Clause 15.3 (Tax indemnity) applied);

 

(iv)                        compensated for by the payment of
the Mandatory Cost; or

 

(v)                           attributable to the breach by the
relevant Finance Party or its Affiliates of any law or regulation or failure to
comply with any request from or requirement of any central bank or other
fiscal, monetary or other authority (whether or not having the force of law).

 

(b)                            In this Clause 16.3, a reference to
a “Tax Deduction” has the same meaning given to the term in Clause 15.1
(Definitions).

 

46

 

17.                                                       Other indemnities

 

17.1.                                 Currency indemnities

 

(a)                             If any sum due from an Obligor under
the Finance Documents (a “Sum”), or any order, judgment or award given or made
in relation to a Sum, has to be converted from the currency (the “First
Currency”) in which that Sum is payable into another currency (the “Second
Currency”) for the purpose of:

 

(i)                               making or filing a claim or proof
against that Obligor;

 

(ii)                            obtaining or enforcing an order,
judgment or award in relation to any litigation or arbitration proceedings,

 

that Obligor shall as an independent obligation, within five Business
Days of demand, indemnify each Finance Party to whom that Sum is due against
any cost, loss or liability arising out of or as a result of the conversion
including any discrepancy between (A) the rate of exchange used to convert
that Sum from the First Currency into the Second Currency and (B) the rate
or rates of exchange available to that person at the time of its receipt of
that Sum.

 

(b)                            Each Obligor waives any right it may
have in any jurisdiction to pay any amount under the Finance Documents in a
currency or currency unit other than that in which it is expressed to be
payable.

 

17.2.                                 Other indemnities

 

The Borrower
shall (or shall procure that an Obligor will), within five Business Days of
demand, indemnify each Lender against any cost, loss or liability incurred by
that Lender as a result of:

 

(a)                             the occurrence of any Event of
Default;

 

47

 

(b)         a failure by an Obligor to pay any amount due
under a Finance Document on its due date, including without limitation, any
cost, loss or liability arising as a result of Clause 30 (Sharing Among the
Lenders);

 

(c)          funding, or making arrangements to fund, its
participation in a Loan requested by the Borrower in the Drawdown Request but
not made by reason of the operation of any one or more of the provisions of
this Agreement (other than by reason of default or negligence by that Lender
alone); or

 

(d)         a Loan (or part of a Loan) not being prepaid in
accordance with a notice of prepayment given by the Borrower.

 

17.3.                                 Indemnity of the Agent

 

The Borrower
shall promptly indemnify the Agent against any cost, loss or liability incurred
by the Agent (acting reasonably) as a result of:

 

(a)                             investigating any event which it
reasonably believes is a Default; or

 

(b)                            acting or relying on any notice,
request or instruction which it reasonably believes to be genuine, correct and
appropriately authorised, provided that such notice, request or instruction is
given in accordance with this Agreement.

 

18.              Mitigation by the Lender

 

18.1.                                 Mitigation

 

(a)                             Each Finance Party shall, in
consultation with the Borrower, take all reasonable steps to mitigate any
circumstances which arise and which would result in any amount becoming payable
under, or cancelled pursuant to, any of Clause 10.1 (Mandatory Prepayment -
Illegality), Clause 15 (Tax gross up and indemnities) or Clause 16 (Increased
costs) including (but not limited to) transferring its rights and

 

48

 

obligations under the Finance Documents to another Affiliate or
Facility Office or any other financial institution.

 

(b)                            Paragraph (a) above does not in
any way limit the obligations of any Obligor under the Finance Documents.

 

18.2.                                 Limitation of liability

 

(a)                             The Borrower shall indemnify each
Finance Party, upon presentation of duly documented evidence thereof, for all
costs and expenses reasonably incurred by that Finance Party as a result of
steps taken by it under Clause 18.1 (Mitigation).

 

(b)                            A Finance Party is not obliged to
take any steps under Clause 18.1 (Mitigation) if, in the opinion of that
Finance Party (acting reasonably), to do so might have an adverse effect on its
business, operations or financial condition.

 

19.              Costs and expenses

 

19.1.                                 Transaction expenses

 

The Borrower
shall promptly on demand pay the Agent and the Mandated Lead Arranger the
amount of all reasonable costs and expenses (including legal fees other than in
case of an assignment or transfer of a Lender’s Commitment or participation in
a Loan) incurred by any of them in connection with the negotiation,
preparation, documentation, execution and syndication of:

 

(a)                             this Agreement and any other
documents referred to in this Agreement; and

 

(b)                            any other Finance Documents executed
after the date of this Agreement.

 

49

 

19.2.                                 Amendment costs

 

If an Obligor requests an amendment, waiver or consent, the Borrower
shall, within three Business Days of demand, reimburse the Agent for the amount
of all reasonable costs and expenses (including legal fees) incurred by the
Agent in responding to, evaluating, negotiating or complying with that request
or requirement.

 

19.3.                                 Enforcement costs

 

The Borrower
shall, within three Business Days of demand, pay to each Finance Party the
amount of all costs and expenses (including legal fees) properly incurred by
that Finance Party in connection with the enforcement of, or the preservation
of any rights under, any Finance Document.

 

50

 

SECTION 7  REPRESENTATIONS, UNDERTAKINGS 

AND EVENTS OF DEFAULT

 

20.              Representations

 

Each Obligor makes the representations and warranties set out in this
Clause 20 to each Finance Party on the date of this Agreement and on the
Drawdown Date.

 

20.1.                                 Corporate Status

 

(a)                             It is a corporation (“Kapitalgesellschaft”), duly incorporated and validly existing
under the law of its jurisdiction of incorporation.

 

(b)                            It and each of its
Subsidiaries has the power to own its assets and carry on its business as it is
being conducted.

 

20.2.                                 Power and authority

 

It has the power to enter into and perform
its obligations under, and has taken all necessary action to authorise its
entry into and performance of its obligations under the Finance Documents to
which it is a party and the transactions contemplated by those Finance
Documents.

 

20.3.                                 Binding obligations

 

The
obligations expressed to be assumed by it in each Finance Document are subject
to the Reservations legal, valid and binding obligations enforceable in
accordance with their terms.

 

20.4.                                 Non-conflict with other obligations

 

The
entry into and performance by it of, and the transactions contemplated by, the
Finance Documents do not and will not conflict with:

 

51

 

(a)                             any law or regulation applicable to
it;

 

(b)                            the constitutional documents of any
Group Company; or

 

(c)                             to an extent which could reasonably
be expected to have a Material Adverse Effect, any applicable financing
agreement or instrument binding upon it or any Group Company or any of their
assets.

 

20.5.                                 Validity and admissibility in evidence

 

All
Authorisations required or desirable:

 

(a)                             to enable it lawfully to enter into,
exercise its rights and comply with its obligations in the Finance Documents to
which it is a party; and

 

(b)                            so that the Finance Documents to
which it is a party can be presented in court proceedings as evidence in its
jurisdiction of incorporation,

 

have been
obtained or effected and are in full force and effect.

 

20.6.                                 No proceedings pending or threatened

 

No litigation,
arbitration or administrative proceedings of or before any court, arbitral body
or agency have been started against any Group Company which are reasonably
likely to be adversely determined and which, if so determined, are reasonably
likely to have a Material Adverse Effect.

 

20.7.                                 Financial Statements

 

The Initial
Original Obligors’ Financial Statements were prepared in accordance with IAS
consistently applied and give a true and fair view of the consolidated
financial position of the Group as at the date they were prepared.

 

52

 

20.8.           Business
Authorisations

 

Each Authorisation required by each Group
Company in connection with its business has been obtained and there has been no
default in the observance of the same except, where failure to obtain such
Authorisation or any such default is not reasonably likely to have a Material
Adverse Effect.

 

20.9.           Pari
passu ranking

 

Its payment obligations under the Finance
Documents 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.

 

20.10.         Environmental
compliance

 

Each Group Company has complied at all times in
all respects with all Environmental Laws save to the extent that non-compliance
would not reasonably be likely to have a Material Adverse Effect.

 

20.11.         Environmental
claim

 

No Environmental Claim has been commenced
against any Group Company which claim would be reasonably likely to have a
Material Adverse Effect.

 

20.12.         No
Material Adverse Effect

 

Since 30 September 2002, there has been no
change in the business, condition (financial or otherwise), operations or
performance of any Group Company that has had or would have, a Material Adverse
Effect.

 

20.13.         No
Default

 

No Event of Default or Default is continuing or
might reasonably be expected to result from the making of the Drawdown.

 

53

 

20.14.         No
misleading information

 

The factual information contained in the annual
and quarterly reports of the Group submitted and the bank presentation posted
to intralinks on April 8, 2003 was true and accurate in all material
respects when given.

 

20.15.         Ownership
of each Obligor

 

Each Obligor is 100 per cent directly or
indirectly beneficially owned by Sappi.

 

20.16.         Repayment
of syndicated loan

 

The Borrower has repaid the outstandings under
and cancelled Tranche B of the EUR 900,000,000 syndicated loan facility for the
Borrower through the issuing of a bond according to Rule 144 A and/or
Regulations S under the U.S. Securities Act on June 28, 2002.

 

21.              Positive undertakings

 

The undertakings in this Clause 21 remain in
force from the date of this Agreement for so long as any amount is outstanding
under the Finance Documents or any Commitment is in force.

 

21.1.           Financial
statements

 

The Borrower shall supply to the Agent (in
sufficient copies for all the Lenders):

 

(a)                    as soon as
they become available, but in any event within 180 days after the end of:

 

(i)                  each of
Sappi’s financial years, the audited consolidated financial statements of the
Group; and

 

54

 

(ii)                 each of the Obligors’
respective financial years, the audited unconsolidated financial statements of
each Obligor (if required to be produced by law),

 

in each case, for that
financial year; and

 

(b)                     as soon as
the same become available, but in any event within 45 days of each Quarter
Date, the unaudited consolidated interim report for the Group for the period of
3 months ending on such Quarter Date.

 

21.2.           Compliance
Certificate

 

The Borrower shall supply to the Agent, with
each set of financial statements or interim report delivered pursuant to Clause
21.1 (Financial statements), a
Compliance Certificate signed by a director of Sappi setting out (in reasonable
detail) computations as to compliance with Clause 23 (Financial Covenants) as
at the date at which those financial statements were drawn up.

 

21.3.           Requirements
as to Financial statements

 

(a)             Each set of financial
statements delivered by the Borrower pursuant to Clause 21.1(a)(i) and
(b) (Financial statements) shall be certified by a director of Sappi as
fairly representing the financial condition of the Group as at the date as at
which those financial statements were drawn up.

 

(b)                     The
Borrower shall procure that each set of financial statements or interim report
delivered pursuant to Clause 21.1(a)(i) and (b) (Financial
statements) is prepared using IFRS (or, for the financial period ending on 30
September 2005, are prepared using South African GAAP) (the “SA GAAP
Accounts”), and accounting practices and financial reference periods consistent
with those applied in the preparation of the Initial Sappi Financial Statements
unless, in relation to any set of financial statements or interim report, it
notifies the Agent that there has been a material change in IFRS (or in respect
of SA GAAP 

 

55

 

Accounts, in South African GAAP), or the
accounting practices or reference periods and its auditors deliver to the Agent:

 

(i)              a description of any
change necessary for those financial statements to reflect IFRS (or in the case
of the SA GAAP Accounts, South African GAAP), accounting practices and
reference periods upon which the Initial Sappi Financial Statements were prepared;
and

 

(ii)             sufficient
information, in form and substance as may be reasonably required by the Agent,
to enable the Lenders to determine whether Clause 23.1 (Financial covenants)
has been complied with and make an accurate comparison between the financial
position indicated in those financial statements or interim report and the
Initial Sappi Financial Statements.

 

The reference in Clause 23.1
(Financial covenants) to each of the financial statements and interim reports
delivered pursuant to Clause 21.1(a)(i) and (b) (Financial
statements) shall be construed as a reference to such financial statements and
interim reports as adjusted (up to and including any financial period ending on
September 30, 2005) to reflect the basis upon which the Initial Sappi Financial
Statements were prepared and after any financial period ending on
September 30, 2005 to reflect IFRS.

 

(c)                     If the
Borrower notifies the Agent of a change in accordance with paragraph
(b) above, then the Borrower and Agent shall enter into negotiations in
good faith with a view to agreeing:

 

(i)              whether or not the
change might result in any material alteration in the commercial effect of any
of the terms of this Agreement; and

 

(ii)             if so, any amendments
to this Agreement which may be necessary to ensure that the change does not
result in any material alteration in the commercial effect of those terms,

 

56

 

and if any amendments are
agreed they shall take effect and be binding on each of the Parties in
accordance with their terms.

 

For the purposes of Clause
23.3 (Financial Testing) each of the financial statements and interim reports
delivered pursuant to Clause 21.1(a) and (b) (Financial statements)
in respect of any accounting period falling after October 1, 2005 shall be
adjusted to exclude an amount equal to the amount that was reflected in the
first such set of financial statements or interim reports as a consequence of
any restatement of employee benefits (comprising pension and other post-retirement
benefits) upon the first time application of IFRS by Sappi which would not
otherwise have appeared in the Initial Sappi Financial Statements.

 

21.4.           Information

 

The Borrower shall provide the Agent (in
sufficient copies for all the Lenders, if the Agent so requests) promptly with
all information regarding the financial condition, business and operation of
the Group or one or more Group Companies reasonably requested by the Agent or
any Lender through the Agent.

 

OeKB or its trustee (which shall be bound by a
confidentiality obligation) shall at any time (i) be provided by the
Borrower with all information requested in relation to the Group’s financial
situation and (ii) be entitled to inspect the Borrower’s books and other
documents in this respect.

 

21.5.           Notification
of default

 

(a)                    Each
Obligor shall notify the Agent of any Default (and the steps, if any, being
taken to remedy it) promptly upon becoming aware of its occurrence (unless the
Agent has received such notification by another Obligor).

 

(b)                    Promptly
upon a request by the Agent, the Borrower shall supply to the Agent a
certificate signed by a director or senior officer of the Borrower 

 

57

 

certifying that no Default is continuing (or,
if a Default is continuing, specifying the Default and the steps, if any, being
taken to remedy it).

 

21.6.           Authorisation

 

Each Obligor shall promptly obtain, comply with
and do all that is necessary to maintain in full force and effect any
Authorisation required to enable it to perform its obligations under the
Finance Documents and to ensure the legality, validity and (subject to the
Reservations) enforceability or admissibility in evidence in its jurisdiction
of incorporation of each Finance Document.

 

21.7.           Pari passu
ranking

 

Each Obligor shall ensure that its payment
obligations under the Finance Documents 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.

 

21.8.           Compliance
with laws

 

Each Obligor shall procure that each Group
Company shall comply with all laws and regulations (including, without
limitation, any Environmental Law) to which it may be subject to the extent
that failure so to comply does not have, or is not reasonably likely to have,
in the reasonable opinion of the Majority Lenders, a Material Adverse Effect.

 

21.9.           Environmental
Claims

 

The Borrower shall supply to the Agent (in
sufficient copies for all the Lenders, if the Agent so requests) promptly upon
becoming aware of the same, the details of any Environmental Claim made against
a Group Company which has, or would reasonably be likely to have a Material
Adverse Effect.

 

58

 

21.10.         Litigation

 

The Borrower shall supply to the Agent (in
sufficient copies for all the Lenders, if the Agent request so) promptly upon
becoming aware of them, the details of any litigation, arbitration or
administrative proceedings which are commenced against any Group Company which
is reasonably likely to be adversely determined and which, if so determined, is
reasonably likely to have a Material Adverse Effect.

 

21.11.         Insurance

 

The Borrower shall procure that each Group
Company shall maintain levels of insurance in respect of its assets and
business in a manner customary for businesses in the same business as such
Group Company.

 

21.12.         Change
in Material Subsidiaries

 

Together with each Compliance Certificate which
accompanies the financial statements delivered pursuant to Clause 21.1(a)(i),
the Borrower shall procure that Sappi sets out in each such Compliance
Certificate the identity and details of the Material Subsidiaries.

 

21.13.         “Know
your customer” checks

 

(a)                    If:

 

(i)              the introduction of
or any change in (or in the interpretation, administration or application of)
any law or regulation made after the date of this Agreement;

 

(ii)             any change in the
status of an Obligor after the date of this Agreement; or

 

(iii)            a proposed assignment
or transfer by a Lender of any of its rights and obligations under this
Agreement to a party that is not a Lender prior to such assignment or transfer,

 

59

 

obliges the Agent or any
Lender (or, in the case of paragraph (iii) above, any prospective new
Lender) to comply with “know your customer” or similar identification
procedures in circumstances where the necessary information is not already
available to it, each Obligor shall promptly upon the request of the Agent or
any Lender supply, or procure the supply of, such documentation and other
evidence as is reasonably requested by the Agent (for itself or on behalf of
any Lender) or any Lender (for itself or, in the case of the event described in
paragraph (iii) above, on behalf of any prospective new Lender) in order
for the Agent, such Lender or, in the case of the event described in paragraph
(iii) above, any prospective new Lender to carry out and be satisfied it
has complied with all necessary “know your customer” or other similar checks
under all applicable laws and regulations pursuant to the transactions
contemplated in the Finance Documents.

 

(b)                    Each
Lender shall promptly upon the request of the Agent supply, or procure the
supply of, such documentation and other evidence as is reasonably requested by
the Agent (for itself) in order for the Agent to carry out and be satisfied it
has complied with all necessary “know your customer” or other similar checks
under all applicable laws and regulations pursuant to the transactions
contemplated in the Finance Documents.

 

21.14.         Payments
to OeKB

 

The Borrower shall pay all amounts due to OeKB
for the guarantee by “aval” on bills of exchange (“Wechselbürgschaft”) at the
place at and in a manner in which they are expressed to be paid.

 

21.15.         Bills
of exchange

 

Upon request of a New Lender, the Borrower
shall accept bills of exchange issued by the New Lenders in the amount and
number required for the OeKB Refinancing. Upon such acceptance by the Borrower,
the Agent shall use reasonable efforts that 

 

60

 

OeKB invalidates the bills of exchange issued
by the Existing Lender replaced by the New Lender.

 

Upon return of bills of exchange invalidated by
OeKB to the Finance Parties, such bills of exchange shall be returned to the
Borrower.

 

21.16.         Swiss
Guarantor

 

(a)                    The
Borrower shall procure that the Swiss Guarantor shall not borrow any money
(excluding for this purpose any borrowings owing by the Swiss Guarantor to
another Group Company), the amount of which borrowings, in aggregate, exceeds
at any time EUR 150 million.

 

(b)                    If, at any
time:

 

(i)              the equity of the
Swiss Guarantor exceeds an amount representing the higher of: (A) 40% of
the Swiss Guarantor’s interest-bearing debt and (B) EUR 40 million (the
“Minimum Equity”); and

 

(ii)             profits are available
for distribution as dividends under applicable law,

 

the Borrower shall procure
that the Swiss Guarantor shall (as soon as reasonably practicable and in each
case in accordance with applicable law) pay, from the profits available for
distribution as dividends under applicable law, dividends to the Borrower in an
amount which is equal to the profits available for distribution as dividends
under applicable law which exceed the Minimum Equity.

 

61

 

22.              Negative undertakings

 

22.1.           Negative
pledge

 

No Obligor shall (and shall ensure that no
other Group Company will) create or permit to subsist any Security over any of
its assets other than:

 

(i)                     any
Security entered into pursuant to this Agreement;

 

(ii)                    any
Security arising by operation of law;

 

(iii)                   any
Security granted in the ordinary course of business of any Group Company;

 

(iv)                   any
Security over accounts created pursuant to any deposit or retention of purchase
price arrangements granted in the ordinary course of trade;

 

(v)                    any
netting or set-off arrangement entered into by any Group Company granted in the
ordinary course of its banking arrangements for the purpose of netting debit
and credit balances;

 

(vi)                   any
Security over an asset of a Group Company established to hold assets of any
share option scheme of the Group securing any loan to finance the acquisition
of such assets;

 

(vii)                  any
Security over an asset of a Group Company, or any company which becomes a Group
Company, to secure Financial Indebtedness incurred by such company for the
purpose of purchasing that asset or of refinancing any such Financial
Indebtedness where recourse for that Financial Indebtedness is limited solely
to such Security;

 

(viii)                 any Security over or
affecting any property or asset of a Group Company after the date of this
Agreement, where the Security is created prior to the date on which that
company becomes a Group Company, if:

 

62

 

(a)                   the
Security was not created in contemplation of the acquisition of that company;

 

(b)                  the
principal amount secured has not increased in contemplation of or since the
acquisition of that company; and

 

(c)                   the
Security is removed or discharged within 6 months of that company becoming a
Group Company;

 

(ix)                   any
Security over or affecting any property or asset acquired by a Group Company
after the date of this Agreement if:

 

(a)                   the
Security was not created in contemplation of the acquisition of that asset by a
Group Company;

 

(b)                  the
principal amount secured has not been increased in contemplation of, or since
the acquisition of that asset by a Group Company; and

 

(c)                   the
Security is removed or discharged within 6 months of the date of acquisition of
such asset;

 

(x)                    any
Security listed in Schedule 7 (Existing Security) where the principal
amount secured has not been increased since the date of this Agreement unless
expressly permitted by the terms of this Agreement;

 

(xi)                   any
Security granted by a Group Company over trade receivables as part of any
invoice discounting, factoring, securitisation or like financing which trade
receivables have a maturity of less than 364 days;

 

(xii)                  any
Security granted by a Group Company (other than an Obligor) in favour of any
other Group Company or Security granted by an Obligor in favour of another
Obligor;

 

(xiii)                 any Security granted
with the prior consent of the Majority Lenders; and

 

63

 

(xiv)                any Security not
falling within any of paragraphs (i) to (xiii) above (inclusive) over an
asset which secures indebtedness which when aggregated with any indebtedness
the subject of Security (other than Security falling within paragraphs
(i) to (xiii) above (inclusive)) does not exceed EUR 100,000,000.

 

22.2.           Disposals

 

(a)                    No Obligor
shall (and shall ensure that no other Group Company will), enter into a
Disposal other than a Disposal:

 

(i)                  made in
the ordinary course of day to day business of a Group Company;

 

(ii)                 by a Group Company to
another Group Company at fair market value and on arm’s length terms;

 

(iii)                of cash on terms not
otherwise prohibited by this Agreement;

 

(iv)               of an asset in
exchange for an asset or assets comparable or superior as to type, value and
quality;

 

(v)                of an asset or assets
in exchange (on arm’s length terms) for another asset or assets;

 

(vi)               of a business in
exchange for another business where the earnings before interest or tax and the
gross assets of the second mentioned business are not less than, respectively,
the earnings before interest and tax and gross assets of the first mentioned
business;

 

(vii)              of an asset which is
obsolete for the purpose for which such an asset is normally utilised;

 

(viii)             to which the Majority
Lenders have given their consent;

 

64

 

(ix)                occurring directly as
a result of any arrangement permitted by Clause 22.4 (Loans and Guarantees) to
the extent that any such arrangement constitutes a Disposal;

 

(x)                 occurring directly as
a result of any arrangement referred to in paragraph (g) of the definition
of Financial Indebtedness to the extent that such arrangement constitutes a
Disposal (each a “Permitted Sale and Leaseback Disposal”) provided that:

 

(A)                the only Group
Company party to Permitted Sale and Leaseback Disposals is Sappi Manufacturing;
and

 

(B)                the aggregate
principal amount of Financial Indebtedness to which Permitted Sale and
Leaseback Disposals relate does not exceed EUR 100,000,000; or

 

(xi)                (not falling within
paragraph (i) to (x) above (inclusive)) which does not result in the gross
book value of all the assets the subject of all such Disposals made after the
date of this Agreement, exceeding in aggregate 20 per cent. of the total gross
assets of the Group (as at the date of this Agreement).

 

22.3.           Financial
Indebtedness

 

No Group Company (other than
the Obligors and Sappi Manufacturing) shall incur any Financial Indebtedness
other than Financial Indebtedness:

 

(a)                referred to in Schedule 14
(Existing Subsidiary Indebtedness);

 

(b)               incurred pursuant to
paragraph (f) of the definition of Financial Indebtedness;

 

65

 

(c)                incurred pursuant to
paragraph (g) of the definition of Financial Indebtedness in an aggregate
amount of not more than EUR 100,000,000; and

 

(d)               not included in
paragraphs (a) to (c) above (inclusive) but which does not exceed,
for the Group, EUR 200,000,000 in aggregate principal amount.

 

22.4.           Loans
and Guarantees

 

(a)                No Obligor shall (and
shall ensure that no other Group Company shall) make any loans or grant any
credit (other than to another Group Company but excluding, for this purpose,
Sappi Manufacturing) which would constitute Long Term Financial Indebtedness
(as defined below) unless it is made or granted in compliance with paragraph
(b) below or:

 

(i)                the debtor in respect
of that Long Term Financial Indebtedness is Sappi Manufacturing and the payment
obligations of Sappi Manufacturing under such Long Term Financial Indebtedness
rank at least pari passu with the claims of all its other unsecured creditors
(except for obligations mandatorily preferred by law applying to companies
generally); or

 

(ii)               the debtor in respect
of that Long Term Financial Indebtedness (the “Debtor”) has either
(1) delivered satisfactory security to the creditor Group Company (the
“Creditor”) or (2) in the event that the delivery of such satisfactory
security by the Debtor would be (A) unduly onerous or impractical in the
reasonable opinion of the Majority Lenders or (B) unlawful or prohibited,
entered into arrangements with the Creditor approved by the Majority Lenders
(such approval not to be unreasonably withheld or delayed) whereby such
arrangements give the same (or reasonably similar) commercial effect as the
granting of satisfactory security pursuant to (1) above and delivered to
the Agent a legal opinion (in form and content reasonably satisfactory to the
Agent) in respect thereof; or

 

66

 

(iii)              at the same time as
such loans are made or credit granted, an equivalent amount is made
unconditionally available to the Creditor or any other Group Company from a
person (other than a Group Company) by way of:

 

(A)              equity contribution
or subscription; or

 

(B)               loan (but only to the
extent permitted under Clause 22.3 (Financial Indebtedness)); or

 

(C)               loan subordinated on
terms reasonably acceptable to the Majority Lenders (to the extent that such a
loan would not be permitted under Clause 22.3 (Financial Indebtedness).

 

(b)               No Obligor shall (and
shall ensure that no other Group Company shall) give any guarantee or indemnity
or enter into any other instrument of suretyship or make any loans or grant any
credit which would constitute Long Term Financial Indebtedness (as defined
below) other than:

 

(i)                pursuant to the
Finance Documents;

 

(ii)               guarantees,
indemnities or other instruments of suretyship given in respect of Long Term
Financial Indebtedness of an Obligor or given in favour of a Group Company in respect
of the Long Term Financial Indebtedness owed by it to another Group Company or
owed to it by another Group Company; or

 

(iii)              loans or other forms
of credit made by a Group Company to another Group Company (other than Sappi
Manufacturing) or as permitted pursuant to paragraphs (a)(i), (ii) or
(iii) above);

 

(iv)              guarantees,
indemnities or other instruments of suretyship given in respect of Long Term
Financial Indebtedness of a Group Company or loans or other forms of credit
made by a 

 

67

 

Group Company where the aggregate (without
double counting) of: (1) the aggregate liability (whether actual or
contingent) of Group Companies under all guarantees, indemnities and
instruments of suretyship given by a Group Company not falling in paragraphs
(b)(i) or (ii) above, (2) the amount made unconditionally
available by any Group Company by way of equity contribution or subscription or
loan to or in connection with any Joint Venture and (3) the amount of all
loans or other forms of credit made by any Group Company not falling within
paragraphs (a)(i), (ii) or (iii), or (b)(i) or (iii) above, does
not exceed EUR 100,000,000.

 

(c)                No Obligor shall give
any guarantee or indemnity or enter into any other instrument of suretyship in
connection with any Financial Indebtedness of Sappi Manufacturing.

 

For
the purposes of the above:

 

(i)                 “Long Term Financial Indebtedness” means indebtedness
for or in respect of the items specified in paragraphs (a) to
(d) inclusive and (h) (to the extent it relates to indebtedness
falling within paragraphs (a) to (d) inclusive) in each case of the
definition of “Financial Indebtedness” other than any such indebtedness which
is payable on demand or has a scheduled maturity of no more than a year; and

 

(ii)                “satisfactory security” means documentation creating, evidencing or
granting (subject to any prior interests) Security in respect of the obligation
of the Debtor to the Creditor in respect of such Long Term Financial
Indebtedness, over assets of the Debtor or over assets of any other person (in
each case, such assets shall at least be equivalent in value to the amount of
such Long Term Financial Indebtedness (as valued by, in the case of such Long
Term Financial Indebtedness being less than EUR 100,000,000, the Borrower and
in all other cases, Deloitte and Touche (or any other agreed accountancy
firm)), in favour of and on terms reasonably acceptable to the Creditor
together with a 

 

68

 

legal opinion (in form and content reasonably
satisfactory to the Agent) in respect thereof.

 

22.5.           Merger

 

(a)                     No Group
Company shall enter into any amalgamation, demerger or merger with a company
that is not a Group Company without the consent of the Majority Lenders, and if
involving an Obligor which is not the surviving entity, with the consent of all
Lenders (such consent not to be unreasonably withheld or delayed).

 

(b)                     Without
limitation to paragraph (a) above, no Obligor shall enter into any
amalgamation, demerger or merger, if such Obligor is not the surviving entity,
unless the liabilities owed to the Lenders under the Finance Documents will
survive and such event does not violate OeKB’s regulations or requirements.

 

22.6.           Change
of Business

 

The Obligors shall procure that the business of
the Group taken as a whole, remains the Paper Business.

 

23.              Financial covenants

 

23.1.           Financial
covenants

 

The following financial covenants shall be
satisfied and maintained for as long as any amount is outstanding under the
Finance Documents or any Commitment is in force:

 

(a)                     on each
Quarter Date the average of the ratios of EBITDA to Consolidated Net Interest
Expense in respect of the Quarter ending on such Quarter Date and each of the
three immediately preceding Quarters shall not be less than 3.00:1;

 

69

 

(b)                    on each
Quarter Date the average of the ratios of EBITDA to Consolidated Net Interest
Expense for the Quarter ending on such Quarter Date and each of the seven immediately
preceding Quarters shall not be less than 3.50:1;

 

(c)                    the ratio
of Net Debt to Capitalisation shall not, on any Quarter Date, be greater than
0.65:1; and

 

(d)                    the ratio
of Sappi Manufacturing Net Debt to Sappi Manufacturing Capitalisation shall
not, on any Quarter Date, be greater than 0.65:1.

 

23.2.           Financial
definitions

 

“Capitalisation”
means, at any time, the aggregate amount of Consolidated Capital and Net Debt
at such time.

 

“Consolidated
Capital” means, at any time, the aggregate of:

 

(a)                    the
aggregate amount of the paid up share capital of Sappi (as consolidated); and

 

(b)                    the total
of the amount standing to the credit of the consolidated capital and revenue
reserves of the Group but including any minority interest in a Group Company.

 

“Consolidated
Net Interest Expense” means, in relation to any period, the
aggregate of:

 

(a)               all interest,
commissions and other financing charges payable by any Group Company to any
person who is not a Group Company in respect of that period;

 

(b)               to the extent not
included in paragraph (a) above, all finance costs charged to the profit
and loss account of the Group in respect of that period;

 

70

 

(c)               all amounts payable
by any Group Company in respect of that period under any interest rate
protection agreement (less any amounts receivable by any Group Company in
respect of that period under any interest rate protection agreement); and

 

(d)               the interest element
of all rentals or, as the case may be, other amounts payable in respect of that
period under any finance lease entered into by any Group Company,

 

less any interest receivable (other than
interest receivable from Group Companies) by Group Companies.

 

“EBITDA”
means, in respect of any period, the consolidated profit on ordinary activities
of the Group before taxation and extraordinary items (if applicable) for such
period but adjusted:

 

(a)               by adding back Consolidated Net Interest
Expenses for such period;

 

(b)               by adding back depreciation for such period;

 

(c)               by adding back any
amount amortised in that period against the consolidated profit and loss
account of the Group; and

 

(d)               for other non-cash
items as described in Sappi’s consolidated financial statements.

 

“Net Debt”
means the aggregate, on a consolidated basis, of

 

(a)                    that part
of the Financial Indebtedness of Group Companies which relates to obligations
for the payment or repayment of money in respect of principal incurred in
respect of:

 

(i)           monies borrowed or
raised;

 

(ii)          any bond, note, loan
stock, participation right, debenture or similar instrument; or

 

71

 

(iii)                 any acceptance
credit, bill discounting, note purchase, factoring or documentary credit
facility (including, for the avoidance of doubt, any Financial Indebtedness
under this Agreement); and

 

(b)                    the
capital element of all rentals or, as the case may be, other payments payable
under any finance lease entered into by any Group Company,

 

less:

 

(i)                   cash at
hand and at bank of Group Companies;

 

(ii)                  bonds,
notes and commercial paper beneficially owned by Group Companies with a
maturity of not more than 6 months and rated at least A-1 by S&P or at
least P-1 by Moody’s (or an equivalent rating of another agency which the Agent
reasonably determines to be comparable); and

 

(iii)                 bonds or notes
maturing within 6 months and rated at least AA by S&P or at least Aa2 by
Moody’s (or an equivalent rating of another agency which the Agent reasonably
determines to be comparable).

 

“Sappi
Manufacturing Capitalisation” means, at any time, the aggregate
amount of Sappi Manufacturing Consolidated Capital and Sappi Manufacturing Net
Debt at such time.

 

“Sappi
Manufacturing Consolidated Capital” means, at any time, the
aggregate of:

 

(a)                    the
aggregate amount of the paid up share capital of Sappi Manufacturing (as
consolidated); and

 

72

 

(b)                    the total
of the amount standing to the credit of the consolidated capital and revenue
reserves of the Sappi Manufacturing Group but including any minority interest
in a Sappi Manufacturing Group Company.

 

“Sappi
Manufacturing Net Debt” means the aggregate, on a consolidated basis
at the level of Sappi Manufacturing, of:

 

(a)                    that part
of the Financial Indebtedness of the Sappi Manufacturing Group which relates to
obligations for the payment or repayment of money in respect of principal
incurred in respect of:

 

(i)            monies borrowed or raised;

 

(ii)           any bond, note, loan
stock, debenture or similar instrument; or

 

(iii)          any acceptance credit,
bill discounting, note purchase, factoring or documentary credit facility
(including, for the avoidance of doubt, any Financial Indebtedness under this
Agreement); and

 

(b)                  the
capital element of all rentals or, as the case may be, other payments payable
under any finance lease entered into by the Sappi Manufacturing Group,

 

less:

 

(i)            cash at hand and at bank of the Sappi
Manufacturing Group;

 

(ii)           bonds, notes and
commercial paper beneficially owned by the Sappi Manufacturing Group with a
maturity of not more than six months and rated at least A-1 by S&P or at
least P-1 by Moody’s (or an equivalent rating of another agency which the Agent
reasonably determines to be comparable); and

 

73

 

(iii)          bonds or notes
maturing within six months and rated at least AA by S&P or at least Aa2 by
Moody’s (or an equivalent rating of another agency which the Agent reasonably
determines to be comparable).

 

23.3.           Financial
Testing

 

The financial covenants set out in Clause 23
(Financial covenants) shall be tested by reference to each of the financial
statements and interim reports delivered pursuant to Clause
21.1(a) (Positive undertakings).

 

23.4.           Accounting
terms

 

All accounting expressions which are not
otherwise defined herein shall be construed in accordance with IFRS other than
in the case of the SA GAAP Accounts which shall be construed in accordance with
South African GAAP and any financial statements delivered pursuant to Clause
21.1(a)(ii) which shall be construed in accordance with current practice
in their respective jurisdiction.

 

24.              Events of Default

 

Each of the events or circumstances set out in
Clauses 24.1 to 24.13 is an Event of Default.

 

24.1.           Non-payment

 

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

 

(a)               its failure to pay is caused by administrative
or technical error; and

 

(b)               payment is made within 5 Business Days of its
due date.

 

74

 

24.2.           Financial
covenants

 

Any requirement of Clause 23 (Financial covenants) is not
satisfied.

 

24.3.           Other
obligations

 

An Obligor does not comply with any provision
of the Finance Documents (other than those referred to in Clause 24.1 (Non payment) and
Clause 24.2 (Financial covenants)) and, if the failure to comply is capable of remedy, it is
not remedied within 30 days of the Agent giving notice to the Borrower or an
Obligor becoming aware of the failure to comply.

 

24.4.           Misrepresentation

 

Any representation or statement made or deemed
to be made by an Obligor in the Finance Documents, the information specified in
Clause 20.14, the OeKB presentation dated April 16, 2002 and the
applications dated March 18, 2002 and March 27, 2003 for the issuance
of the commitment to guarantee bills of exchange by “aval”
(“Wechselbürgschaftszusage”) is or proves to have been incorrect in any
material 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 the Agent notifying the relevant Obligor of such representation or statement
being incorrect.

 

24.5.           Cross
default

 

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

 

(b)                    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).

 

75

 

(c)                    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).

 

(d)                    No Event
of Default will occur under this Clause 24.5 if the aggregate amount of
Financial Indebtedness or commitment for Financial Indebtedness falling within
paragraphs (a) to (c) above is less than EUR 10,000,000.

 

24.6.           Creditors’
process

 

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

 

24.7.           Insolvency

 

(a)                    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.

 

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

 

24.8.           Insolvency
proceedings

 

Any insolvency proceedings or other similar
procedure is (i) opened with respect to an Obligor, or (ii) an
Obligor has filed an application for such proceedings, or (iii) a third
party has filed an application for such proceedings and, with respect to
(i) or (iii) above such proceedings or application, as the case may
be, is not dismissed (for a reason other than a lack of assets) or withdrawn
within 10 Business Days from the date on which the relevant Obligor has
obtained knowledge thereof or 

 

76

 

such longer period as caused by the inactivity
of the competent court or authority evidenced to the reasonable satisfaction of
the Agent in relation to:

 

(a)                    the
bankruptcy, the suspension of payments, winding-up, dissolution, liquidation,
annulment as a legal entity, administration or reorganisation (by way of
voluntary arrangement, scheme of arrangement or otherwise) of an Obligor or any
Material Subsidiary other than a solvent liquidation or a solvent reorganisation
of any Material Subsidiary or to the extent mandatorily required pursuant to
section 19 of the Austrian Business Reorganisation Act
(“Unternehmensreorganisationsgesetz”), a solvent reorganisation of the
Borrower;

 

(b)                    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;

 

(c)                    the
appointment of a liquidator (other than 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 EUR 10,000,000) of its assets; or

 

(d)                    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 Swiss
Guarantor is subject to:

 

(i)           bankruptcy
proceedings (Betreibung auf Konkurs);

 

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

 

77

 

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

 

(iv)                postponement of the
opening of bankruptcy or moratorium proceedings pursuant to article 725a
or article 17 of the CO respectively (Konkursaufschub/Gesellschaftsrechliches
Moratorium); or

 

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

 

24.9.           Unlawfulness

 

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

 

24.10.         Repudiation

 

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

 

24.11.         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 Subsidiary or Disposal
permitted hereunder and other than as a result of corporate restructurings
within the Group) and such cessation would result in the Group as a whole,
ceasing to carry on the Paper Business.

 

24.12.         Payments
to OeKB

 

An Obligor does not pay on the due date any
amount payable to OeKB at the place at and in the manner in which it is to be
paid unless:

 

78

 

(a)               its failure to pay is caused by an
administrative or technical error;

 

(b)               payment is made within 5 Business Days of its
due date; and

 

(c)                that in case of
non-payment of the “Wechselbürgschaftsentgelt” such non-payment is caused by a
default of OeKB.

 

24.13.         South
Africa

 

Any Authorisation provided by the Exchange
Control Department of the South African Reserve Bank in connection with any
Finance Document, the guarantee given by Sappi under this Agreement or the
fulfilment by Sappi of its obligations under this Agreement is amended
adversely, repealed, revoked or terminated or expires and, if a new or amended
Authorisation may be requested, is not obtained within 30 days of the Agent
giving notice to the Borrower or Sappi becoming aware of the Authorisation’s
adverse amendment, repeal, revocation, termination or expiry.

 

24.14.         Acceleration

 

On and at any time after the occurrence of an
Event of Default which is continuing the Agent may, and shall if so directed by
the Majority Lenders, by notice to the Borrower:

 

(a)                    cancel the
Total Commitments whereupon they shall immediately be cancelled; and

 

(b)                    declare
that all or part of the Loans, together with accrued interest, and all other
amounts accrued under the Finance Documents be immediately due and payable,
whereupon they shall become immediately due and payable.

 

79

 

SECTION 8 
CHANGE TO PARTIES

 

25.              Change to the Lenders

 

25.1.           Assignment
and transfer by the Lenders

 

Subject to this Clause 25, a Lender (the
“Existing Lender”) may:

 

(a)                    assign any
of its rights; or

 

(b)                    transfer
any of its rights and obligations,

 

to a New Lender or to OeKB.

 

25.2.           Conditions
of assignment or transfer

 

(a)                    The
consent of the Borrower is required for an assignment or transfer by a Lender,
unless the assignment or transfer is to another Lender, an Affiliate of a
Lender or OeKB.

 

(b)                    The
consent of the Borrower to an assignment or transfer must not be unreasonably
withheld or delayed. The Borrower will be deemed to have given its consent five
Business Days after the Lender has requested it unless consent is expressly
refused by the Borrower within that time.

 

(c)                    No Obligor
shall bear any increased costs that arise at the time of or will arise with the
lapse of time as a direct result of an assignment or transfer of a Lender’s
rights and/or obligations hereunder solely by reason of the same.

 

(d)                    An
assignment or transfer by a Lender is subject to the prior written consent of
OeKB.

 

80

 

(e)                    An
assignment or transfer by a Lender of its Commitments under the Facility may be
in whole or in part, but if in part shall be in a minimum aggregate amount of
EUR 10,000,000.

 

(f)                     (intentionally
omitted)

 

(g)                    An
assignment or transfer to a New Lender other than OeKB will only be effective
if the procedure set out in Clause 25.5 (Procedure of transfer and assignment)
is complied with.

 

(h)                    If:

 

(i)                    a Lender
assigns or transfers any of its rights or obligations under the Finance
Documents or changes its Facility Office; and

 

(ii)                   as a
result of circumstances existing at the date the assignment, transfer or change
occurs, an Obligor would be obliged to make a payment to the New Lender or
Lender acting through its new Facility Office under Clause 15 (Tax gross up and
indemnities) or Clause 16 (Increased costs),

 

then the New Lender or
Lender acting through its new Facility Office is only entitled to receive
payment under those Clauses to the same extent as the Existing Lender or Lender
acting through its previous Facility Office would have been if the assignment,
transfer or change had not occurred.

 

25.3.           Assignment
or transfer fee

 

The New Lender shall, on the date upon which an
assignment or transfer takes effect (other than to OeKB), pay to the Agent (for
its own account) a fee of EUR 1,500.

 

81

 

25.4.           Limitation
of responsibility of Existing Lenders

 

(a)                    Unless
expressly agreed to the contrary, an Existing Lender makes no representation or
warranty and assumes no responsibility to a New Lender for:

 

(i)                    the
legality, validity, effectiveness, adequacy or enforceability of the Finance
Documents or any other documents;

 

(ii)                   the
financial condition of any Obligor;

 

(iii)                  the
performance and observance by any Obligor of its obligations under the Finance
Documents or any other documents; or

 

(iv)                  the
accuracy of any statements (whether written or oral) made in or in connection
with any Finance Document or any other document,

 

and any
representations or warranties implied by law are excluded.

 

(b)                    Each New
Lender confirms to the Existing Lender and the other Finance Parties that it:

 

(i)                  has made
(and shall continue to make) its own independent investigation and assessment
of the financial condition and affairs of each Obligor and its related entities
in connection with its participation in this Agreement and has not relied
exclusively on any information provided to it by the Existing Lender in
connection with any Finance Document; and

 

(ii)                 will continue to make
its own independent appraisal of the creditworthiness of each Obligor and its
related entities whilst any amount is or may be outstanding under the Finance
Documents or any Commitment is in force.

 

82

 

(c)                    Nothing in
any Finance Document obliges an Existing Lender to:

 

(i)                  accept a
re-transfer from a New Lender of any of the rights and obligations assigned or
transferred under this Clause 25; or

 

(ii)                 support any losses
directly or indirectly incurred by the New Lender by reason of the
non-performance by any Obligor of their obligations under the Finance Documents
or otherwise.

 

25.5.           Procedure
of transfer and assignment

 

(a)                    Subject to
the conditions set out in Clause 25.2 (Conditions of assignment or transfer) an
assignment or transfer (to a person other than to OeKB) is effected in
accordance with paragraph (b) below when the Agent executes an otherwise
duly completed Transfer Certificate delivered to it by the Existing Lender and
the New Lender. The Agent shall, as soon as reasonably practicable but in any
event within 5 Business Days after receipt by it of a duly completed Transfer
Certificate appearing on its face to comply with the terms of this Agreement
and delivered in accordance with the terms of this Agreement, execute that
Transfer Certificate and hold in accordance with Clause 27.15 (Agent to hold
original documents).

 

(b)                    On the
Transfer Date:

 

(i)                  to the
extent that in the Transfer Certificate the Existing Lender seeks to assign or
transfer its rights and obligations under the Finance Documents each of the
Obligors and the Existing Lender shall be released from further obligations
towards one another under the Finance Documents and their respective rights
against one another shall be cancelled (being the “Discharged Rights and
Obligations”);

 

(ii)                 each of the Obligors
and the New Lender shall assume obligations towards one another and/or acquire
rights against 

 

83

 

one another which differ from the Discharged
Rights and Obligations only insofar as that Obligor and the New Lender have
assumed and/or acquired the same in place of that Obligor and the Existing
Lender;

 

(iii)                the Agent, the
Mandated Lead Arranger and the other Lenders shall acquire the same rights and
assume the same obligations between themselves as they would have acquired and
assumed had the New Lender been an Original Lender with the rights and/or
obligations acquired or assumed by it as a result of the transfer and to that
extent the Agent, the Mandated Lead Arranger and the Existing Lender shall each
be released from further obligations to each other under this Agreement; and

 

(iv)                the New Lender shall
become a Party as a “Lender”.

 

25.6.           Disclosure
of information

 

(a)                   Subject to
this Clause 25.6 (Disclosure of information) each Lender shall treat all
information received in connection with a Finance Document confidential.

 

                        Any Lender may
disclose to any of its Affiliates, OeKB and any other person:

 

(i)                  to (or
through) whom that Lender assigns or transfers (or may potentially assign or
transfer), in accordance with this Agreement, all or any of its rights and
obligations under this Agreement;

 

(ii)                 with (or through)
whom that Lender enters into (or may potentially enter into), in accordance
with this Agreement, any sub-participation in relation to, or any other
transaction under which payments are to be made by reference to, this Agreement
or any Obligor; or

 

84

 

(iii)                 to whom, and to the
extent that, information is required to be disclosed by any applicable law or
regulation,

 

any information about any
Obligor, the Group and the Finance Documents as that Lender shall consider
appropriate if, in relation to sub-paragraphs (i) and (ii) above, the
person to whom the information is to be given has entered into a
confidentiality undertaking in the form set out in Schedule 9
(Form of Confidentiality Undertaking).

 

(b)                   For the
purposes only of and under the conditions set forth in this Clause 25.6, each
Obligor waives any rights it may have in respect of banking secrecy pursuant to
the Austrian Banking Act (“Bankwesengesetz”).

 

25.7.           No
Limitation of risk participation

 

Nothing contained in this Clause 25 shall
prevent the Lenders from entering into risk participation or sub-participation
agreements with other entities.

 

26.              Changes to the Obligors

 

26.1.           Assignment
and transfer by Obligors

 

No Obligor may assign any of its rights or
transfer any of its rights or obligations under the Finance Documents unless
provided for in this Clause 26.

 

26.2.           Additional
Guarantors

 

(a)                    The
Borrower may request that any of the wholly owned Subsidiaries of Sappi become
an Additional Guarantor. That Subsidiary shall become an Additional Guarantor
if:

 

(i)                    the
Borrower delivers to the Agent a duly completed and executed Accession Letter;
and

 

85

 

(ii)                   the Agent
has received all of the documents and other evidence listed in Part II of
Schedule 2 (Conditions Precedent) in relation to that Additional
Guarantor, each in form and substance satisfactory to the Agent.

 

(b)                    The Agent
shall notify the Borrower and the Lenders promptly upon being satisfied that it
has received (in form and substance satisfactory to it) all the documents and
other evidence listed in Part II of Schedule 2 (Conditions
Precedent).

 

26.3.           Repetition
of Representations

 

Delivery of an Accession Letter constitutes
confirmation by the relevant Subsidiary that each of the representations set
out in Clauses 20.1 (Corporate Status) to 20.5 (Validity and admissibility in
evidence) are true and correct in relation to it as at the date of delivery as
if made by reference to the facts and circumstances then existing.

 

86

 

SECTION 9  THE FINANCING
PARTIES

 

27.              Role of the Agent and the Mandated Lead Arranger

 

27.1.           Appointment
of the Agent

 

(a)                    The
Mandated Lead Arranger and each of the Lenders appoints the Agent to act as
their agent under and in connection with the Finance Documents.

 

(b)                    The
Mandated Lead Arranger and each of the Lenders authorises the Agent to exercise
the rights, powers, authorities and discretions specifically given to the Agent
under or in connection with the Finance Documents together with any other
incidental rights, powers, authorities and discretions, and such rights may,
subject to Clause 27.7 below, exclusively be exercised by the Agent.

 

27.2.           Duties
of the Agent

 

(a)                    The Agent
shall promptly forward to a Party the original or a copy of any document which
is delivered to the Agent for that Party by any other Party.

 

(b)                    If the
Agent receives notice from a Party referring to this Agreement, describing a
Default and stating that the circumstance described is a Default, it shall
promptly notify the Lenders.

 

(c)                    The Agent
shall promptly notify the Lenders and the Borrower of any Default.

 

(d)                    The
Agent’s duties under the Finance Documents are solely mechanical and
administrative in nature.

 

(e)                    The Agent
shall fulfil all tasks in connection with the OeKB Refinancing, including,
without limitation, the tasks provided for under 

 

87

 

this Agreement and under the power of attorney
granted to the Agent in the form as provided for in Schedule 8.

 

27.3.           Role
of the Mandated Lead Arranger

 

Except as specifically provided in the Finance
Documents, the Mandated Lead Arranger has no obligations of any kind to any
other Party under or in connection with any Finance Document.

 

27.4.           No
fiduciary duties

 

(a)                    Nothing in
this Agreement constitutes the Agent or the Mandated Lead Arranger as a trustee
or fiduciary of any other person.

 

(b)                    Neither
the Agent nor the Mandated Lead Arranger shall be bound to account to any
Lender for any sum or the profit element of any sum received by it for its own
account.

 

27.5.           Business
with the Group

 

The Agent and the Mandated Lead Arranger may
accept deposits from, lend money to and generally engage in any kind of banking
or other business with any Group Company.

 

27.6.           Rights
and discretions of the Agent

 

(a)                    The Agent
may rely on:

 

(i)                    any
representation, notice or document believed by it to be genuine, correct and
appropriately authorised; and

 

(ii)                   any
statement made by a director, authorised signatory or employee of any person
regarding any matters which may reasonably be assumed to be within his
knowledge or within his power to verify.

 

88

 

(b)                    The Agent
may assume (unless it has received notice to the contrary in its capacity as
agent for the Lenders) that:

 

(i)                    no Default
has occurred or will occur (unless it has actual knowledge of a Default arising
under Clause 24.1 (Non payment));

 

(ii)                   any right,
power, authority or discretion vested in any Party or the Majority Lenders has
not been exercised; and

 

(iii)                  any notice
or request made by the Borrower (other than the Drawdown Request) is made on
behalf of and with the consent and knowledge of the Guarantors.

 

(c)                    The Agent
may engage, pay for and rely on the advice or services of any lawyers,
accountants, surveyors or other experts.

 

(d)                    The Agent
may act in relation to the Finance Documents through its personnel and agents.

 

27.7.           Majority
Lenders’ instructions

 

(a)                    Unless a
contrary indication appears in a Finance Document, the Agent shall (a) act
in accordance with any instructions given to it by the Majority Lenders (or, if
so instructed by the Majority Lenders, refrain from acting or exercising any
right, power, authority or discretion vested in it as Agent) and (b) not be
liable for any act (or omission) if it acts (or refrains from taking any
action) in accordance with such an instruction of the Majority Lenders.

 

(b)                    Unless a
contrary indication appears in a Finance Document, any instructions given by
the Majority Lenders will be binding on all the Lenders and the Mandated Lead
Arranger.

 

89

 

(c)                    The Agent
may refrain from acting in accordance with the instructions of the Majority
Lenders (or, if appropriate, the Lenders) until it has received such security
as it may require for any cost, loss or liability (together with any associated
VAT) which it may incur in complying with the instructions.

 

(d)                    In the
absence of instructions from the Majority Lenders, (or, if appropriate, the
Lenders) the Agent may act (or refrain from taking action) as it considers to
be in the best interest of the Lenders.

 

(e)                    No Finance
Party is authorised to start any legal or arbitration proceedings relating to
any Finance Document without prior written approval of the Majority Lenders,
unless the Agent has notified the Borrower about the occurrence of an Event of
Default pursuant to Clause 24.15 (Acceleration).

 

27.8.           Responsibility
for documentation

 

Neither the Agent nor the Mandated Lead Arranger:

 

(a)                    is
responsible for the adequacy, accuracy and/or completeness of any information
(whether oral or written) supplied by the Agent, the Mandated Lead Arranger, an
Obligor or any other person given in or in connection with any Finance
Document; or

 

(b)                    is
responsible for the legality, validity, effectiveness, adequacy or
enforceability of any Finance Document or any other agreement, arrangement or
document entered into, made or executed in anticipation of or in connection
with any Finance Document.

 

27.9.           Exclusion
of liability

 

(a)                    Without
limiting paragraph (b) below, the Agent will not be liable for any action
taken by it under or in connection with any Finance Document, unless directly
caused by its gross negligence or willful misconduct.

 

90

 

(b)                    No Party
may take any proceedings against any officer, employee or agent of the Agent in
respect of any claim it might have against the Agent or in respect of any act
or omission of any kind by that officer, employee or agent in relation to any
Finance Document and any officer, employee or agent of the Agent may rely on
this Clause.

 

(c)                    The Agent
will not be liable for any delay (or any related consequences) in crediting an
account with an amount required under the Finance Documents to be paid by the
Agent if the Agent has taken all necessary steps as soon as reasonably
practicable to comply with the regulations or operating procedures of any
recognised clearing or settlement system used by the Agent for that purpose.

 

27.10.         Lenders’
indemnity to the Agent

 

Each Lender shall (in proportion to its share
of the Total Commitments or, if the Total Commitments are then zero, to its
share of the Total Commitments immediately prior to their reduction to zero)
indemnify the Agent, within three Business Days of demand, against any cost,
loss or liability incurred by the Agent (otherwise than by reason of the
Agent’s gross negligence or wilful misconduct) in acting as Agent under the
Finance Documents (unless the Agent has been reimbursed by an Obligor pursuant
to a Finance Document).

 

27.11.         Resignation
of the Agent

 

(a)                    The Agent
may resign and appoint one of its Affiliates acting through an office as
successor by giving notice to the Lenders and the Borrower.

 

(b)                    Alternatively
the Agent may resign by giving notice to the Lenders and the Borrower, in which
case the Majority Lenders (after consultation with the Borrower) may appoint a
successor Agent.

 

(c)                    If the
Majority Lenders have not appointed a successor Agent in accordance with
paragraph (b) above within 30 days after notice of 

 

91

 

resignation was given, the Agent (after
consultation with the Borrower) may appoint a successor Agent.

 

(d)                    The
retiring Agent shall, at its own cost, make available to the successor Agent
such documents and records and provide such assistance as the successor Agent
may reasonably request for the purposes of performing its functions as Agent
under the Finance Documents.

 

(e)                    The
Agent’s resignation notice shall only take effect upon the appointment of a
successor.

 

(f)                     Upon the
appointment of a successor, the retiring Agent shall be discharged from any
further obligation in respect of the Finance Documents but shall remain
entitled to the benefit of this Clause 27. Its successor and each of the other
Parties shall have the same rights and obligations amongst themselves as they
would have had if such successor had been an original Party.

 

(g)                    After
consultation with the Borrower, the Majority Lenders may, by notice to the
Agent, require it to resign in accordance with paragraph (b) above. In
this event, the Agent shall resign in accordance with paragraph (b) above.

 

(h)                    Any
appointment of a new agent requires the prior consent of the Borrower which
shall not be unreasonably withheld.

 

27.12.         Confidentiality

 

(a)                     In acting
as agent for the Finance Parties, the Agent shall be regarded as acting through
its respective department which shall be treated as a separate entity from any
other of its divisions or departments.

 

(b)                    If
information is received by another division or department of the Agent, it may
be treated as confidential to that division or department and the Agent shall
not be deemed to have notice of it.

 

92

 

(c)                    Notwithstanding
any other provision of any Finance Document to the contrary, neither the Agent
nor the Mandated Lead Arranger is obliged to disclose to any other person
(i) any confidential information or (ii) any other information if the
disclosure would or might in its reasonable opinion constitute a breach of any
law or a breach of a fiduciary duty.

 

27.13.         Relationship
with the Lenders

 

(a)                    The Agent
may treat each Lender as a Lender, entitled to payments under this Agreement
and acting through its Facility Office unless it has received not less than
five Business Days prior notice from that Lender to the contrary in accordance
with the terms of this Agreement.

 

(b)                    Each
Lender shall supply the Agent with any information required by the Agent in
order to calculate the Mandatory Cost in accordance with Schedule 4
(Mandatory Cost Formulae).

 

27.14.         Credit
appraisal by the Lenders

 

Without affecting the responsibility of any
Obligor for information supplied by it or on its behalf in connection with any
Finance Document, each Lender confirms to the Agent and the Mandated Lead
Arranger that it has been, and will continue to be, solely responsible for
making its own independent appraisal and investigation of all risks arising
under or in connection with any Finance Document including but not limited to:

 

(a)                    the
financial condition, status and nature of each Group Company;

 

(b)                    the
legality, validity, effectiveness, adequacy or enforceability of any Finance
Document and any other agreement, arrangement or document entered into, made or
executed in anticipation of, under or in connection with any Finance Document;

 

(c)                    whether
that Lender has recourse, and the nature and extent of that recourse, against
any Party or any of its respective assets under or in 

 

93

 

connection with any Finance Document, the
transactions contemplated by the Finance Documents or any other agreement,
arrangement or document entered into, made or executed in anticipation of,
under or in connection with any Finance Document; and

 

(d)                    the
adequacy, accuracy and/or completeness of any information provided by the
Agent, any Party or by any other person under or in connection with any Finance
Document, the transactions contemplated by the Finance Documents or any other
agreement, arrangement or document entered into, made or executed in
anticipation of, under or in connection with any Finance Document.

 

27.15.         Agent
to hold original documents

 

The Agent shall hold one of each of the
complete originals of this Agreement, the Amending Agreement, the Guarantees
and any Transfer Certificate for the benefit of the Finance Parties and each
copy shall be clearly marked “Agent’s Copy”.

 

28.              (intentionally omitted)

 

29.              Conduct of business by the Financing
Parties

 

No provision of this Agreement will:

 

(a)                    interfere
with the right of any Finance Party to arrange its affairs (tax or otherwise)
in whatever manner it thinks fit;

 

(b)                    oblige any
Finance Party to investigate or claim any credit, relief, remission or
repayment available to it or the extent, order and manner of any claim; or

 

(c)                    oblige any
Finance Party to disclose any information relating to its affairs (tax or
otherwise) or any computations in respect of Tax.

 

94

 

30.              Sharing among the Lenders

 

30.1.           Payment
to Lenders

 

If a Lender (a “Recovering Lender”)
receives or recovers any amount from an Obligor other than in accordance with
Clause 31 (Payment mechanics) and applies that amount to a payment due under
the Finance Documents then:

 

(a)                    the
Recovering Lender shall, within three Business Days, notify details of the
receipt or recovery, to the Agent;

 

(b)                    the Agent
shall determine whether the receipt or recovery is in excess of the amount the
Recovering Lender would have been paid had the receipt or recovery been
received or made by the Agent and distributed in accordance with Clause 31
(Payment mechanics), without taking account of any Tax which would be imposed
on the Agent in relation to the receipt, recovery or distribution; and

 

(c)                    the
Recovering Lender shall, within three Business Days of demand by the Agent, pay
to the Agent an amount (the “Sharing Payment”) equal to such receipt or
recovery (together with interest thereon at the rate determined by the Agent)
less any amount which the Agent determines may be retained by the Recovering
Lender as its share of any payment to be made, in accordance with Clause 31.5
(Partial payments).

 

30.2.           Redistribution
of payments

 

The Agent shall treat the Sharing Payment as if
it had been paid by the relevant Obligor and distribute it between the Finance
Parties (other than the Recovering Lender) in accordance with Clause 31.5
(Partial payments).

 

95

 

30.3.           Recovering
Lenders’ rights

 

(a)                    On a
distribution by the Agent under Clause 30.2 (Redistribution of payments), the
Recovering Lender will be subrogated to the rights of the Finance Parties which
have shared in the redistribution.

 

(b)                    If and to
the extent that the Recovering Lender is not able to rely on its rights under
paragraph (a) above, the relevant Obligor shall be liable to the
Recovering Lender for a debt equal to the Sharing Payment which is immediately
due and payable.

 

30.4.           Reversal
of redistribution

 

If any part of the Sharing Payment received or
recovered by a Recovering Lender becomes repayable and is repaid by that
Recovering Lender, then:

 

(a)                    each
Lender which has received a share of the relevant Sharing Payment pursuant to Clause
30.2 (Redistribution of payments) shall, upon request of the Agent, pay to the
Agent for account of that Recovering Lender an amount equal to its share of the
Sharing Payment (together with an amount as is necessary to reimburse that
Recovering Lender for its proportion of any interest on the Sharing Payment
which that Recovering Lender is required to pay); and

 

(b)                    that
Recovering Lender’s rights of subrogation in respect of any reimbursement shall
be cancelled and the relevant Obligor will be liable to the reimbursing Lender
for the amount so reimbursed.

 

30.5.           Exceptions

 

(a)                    This
Clause 30 shall not apply to the extent that the Recovering Lender would not,
after making any payment pursuant to this clause, have a valid and enforceable
claim against the relevant Obligor.

 

96

 

(b)                    A
Recovering Lender is not obliged to share with any other Lender any amount
which the Recovering Lender has received or recovered as a result of taking
legal or arbitration proceedings, if:

 

(i)                  it
notified the other Lenders of the legal or arbitration proceedings; and

 

(ii)                 the other Lenders had
an opportunity to participate in those legal or arbitration proceedings but did
not do so as soon as reasonably practicable having received notice or did not
take separate legal or arbitration proceedings.

 

97

 

SECTION 10 
ADMINISTRATION

 

31.              Payment mechanics

 

31.1.           Payment
to the Agent

 

(a)                    On each
date on which an Obligor or a Lender is required to make a payment under a
Finance Document, that Obligor or Lender shall make the same available to the
Agent (unless a contrary indication appears in a Finance Document) for value on
the due date at the time and in such funds specified by the Agent as being
customary at the time for settlement of transactions in the place of payment.

 

(b)                    Payment
shall be made to such account in the principal financial centre of a
Participating Member State or London as the Agent specifies.

 

31.2.           Distribution
by the Agent

 

Each payment received by the Agent under the
Finance Documents for another Party shall, subject to Clause 31.3 (Distribution
to an Obligor) and Clause 31.4 (Clawback) be made available by the Agent as
soon as practicable after receipt to the Party entitled to receive payment in
accordance with this Agreement (in the case of a Lender, for the account of its
Facility Office), to such account as that Party may notify to the Agent by not
less than five Business Days’ notice with a bank in the principal financial
centre of a Participating Member State or London.

 

31.3.           Distribution
to an Obligor

 

The Agent may (with the consent of the Obligor
or in accordance with Clause 32 (Set-off)) apply any amount received by it for that Obligor in or
towards payment (on the date and in the currency and funds of receipt) of any
amount due from that Obligor under the Finance Documents or in or towards the
purchase of any amount of any currency to be so applied.

 

98

 

31.4.           Clawback

 

(a)                    Where a
sum is to be paid to the Agent under the Finance Documents for another Party,
the Agent is not obliged to pay that sum to that other Party (or to enter into
or perform any related exchange contract) until it has been able to establish
to its satisfaction that it has actually received that sum. In such a case, the
Agent will inform the other Parties of its decision to delay payment. If the
decision to delay payment causes such a delay in passing on the money to the
other Parties that the other Parties receive the amounts to which they are
entitled late, the Party which violated the obligation to effect payment to the
Agent shall pay any costs incurred, less any realised investment profits.

 

(b)                    Subject to
Clause (a) above, if the Agent is not notified in writing by the Borrower
at least five Business Days prior to the due date that a payment owed under
this Agreement will not be rendered by the due date, the Agent is entitled to
assume that the payment will be paid and, in reliance thereon, to make
available to the respective Party on the applicable payment date an amount of
the expected payment to be attributed to such Party. For the avoidance of
doubt, the Borrower is not obliged to notify the Agent or any other Finance
Party that a payment owed by it or any other Obligor will not be paid on the
due date and neither the Borrower nor any other Obligor shall be liable for any
costs, losses, fees or expenses suffered or incurred by any Party arising from
the fact that such notice was not given.

 

(c)                    If the
Agent pays an amount to another Party and it proves to be the case that the
Agent had not actually received that amount, then the Party to whom that amount
(or the proceeds of any related exchange contract) was paid by the Agent shall
on demand refund the same to the Agent together with interest on that amount
from the date of payment to the date of receipt by the Agent, calculated by the
Agent to reflect its cost of funds. Any such costs, less any realised
investment profits, will be charged to the 
Party which violated the obligation to effect payment to the Agent.

 

99

 

31.5.           Partial
payments

 

(a)                    If the
Agent receives a payment that is insufficient to discharge all the amounts then
due and payable by an Obligor under the Finance Documents, the Agent shall
apply that payment towards the obligations of that Obligor under the Finance
Documents in the following order:

 

(i)                    first, in
or towards payment pro rata of any unpaid fees, costs and expenses of the Agent
under the Finance Documents;

 

(ii)                   second, in
or towards payment pro rata of any accrued interest due but unpaid under this
Agreement;

 

(iii)                  third, in
or towards payment pro rata of amounts of principal due but unpaid under this
Agreement; and

 

(iv)                  fourth, in
or towards payment pro rata of any other sum due but unpaid under the Finance
Documents.

 

(b)                    The Agent
shall, if so directed by the Majority Lenders, vary the order set out in
paragraphs (a)(ii) to (iv) above.

 

(c)                    Paragraphs
(a) and (b) above will override any appropriation made by an Obligor.

 

31.6.           No
set-off by Obligors

 

All payments to be made by an Obligor under the
Finance Documents shall be calculated and be made without (and free and clear
of any deduction for) set-off or counterclaim or bank charges.

 

100

 

31.7.           Business
Day

 

(a)                    Unless
otherwise provided for under this Agreement, any payment which is due to be
made on a day that is not a Business Day shall be made on the immediately
preceeding Business Day.

 

(b)                    During any
extension of the due date for payment of any principal or an Unpaid Sum under
this Agreement interest is payable on the principal at the rate payable on the
original due date.

 

31.8.           Currency
of account

 

(a)                     The
currency of account is Euro and payment for any sum due from an Obligor under
any Finance Document shall be in Euro.

 

(b)                     Each
payment in respect of costs, expenses or Taxes shall be made in the currency in
which the costs, expenses or Taxes are incurred.

 

(c)                     Any amount
expressed to be payable in a currency other than Euro shall be paid in that
other currency.

 

31.9.           Notice
of payments

 

Not later than 10 Business Days prior to each
date on which payments are due to be paid by an Obligor to the Lenders in
accordance with the provisions of this Agreement the Agent shall notify the
respective Obligor of such amounts provided that failure to give such notice
shall not relieve an Obligor of its obligation to make payments of such amounts
when due. For the avoidance of doubt, this Clause 31.9 shall not apply to the
payment of the OeKB Administration Fee.

 

32.              Set-off

 

Without prejudice to the rights of the Finance
Parties at law, whilst an Event of Default is continuing unremedied and
unwaived, a Finance Party may set off any matured obligation due from an
Obligor under the Finance Documents (to the

 

101

 

extent beneficially owned by that Finance
Party) against any matured obligation owed by that Finance Party to that
Obligor, regardless of the place of payment, booking branch or currency of
either obligation. If the obligations are in different currencies, the Finance
Party may convert either obligation at a market rate of exchange in its usual
course of business for the purpose of the set-off.

 

33.              Notice

 

33.1.           Communications
in writing

 

Any communication to be made under or in
connection with the Finance Documents shall be made in writing and, unless
otherwise stated, may be made by fax or letter.

 

33.2.           Addresses

 

Subject to the other terms of this Agreement,
the address and fax number (and the department or officer, if any, for whose
attention the communication is to be made) of each Party for any communication
or document to be made or delivered under or in connection with the Finance
Documents is:

 

	
   

  	
  (a)

  	
  in the case of the Borrower:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Sappi Papier Holding GmbH

  	
   

  
	
   

  	
   

  	
  c/o Sappi International S.A.

  	
   

  
	
   

  	
   

  	
  154 Chaussée de la Hulpe,

  	
   

  
	
   

  	
   

  	
  B-1170 (Watermael-
  Boitsfort),

  	
   

  
	
   

  	
   

  	
  Brussels,

  	
   

  
	
   

  	
   

  	
  Belgium

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  Executive Director

  
	
   

  	
   

  	
  Fax:

  	
  +32 2 676 9601

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in the case of the
  Original Guarantor:

  
					

 

102

 

	
   

  	
   

  	
  Sappi International S.A.

  	
   

  
	
   

  	
   

  	
  154 Chaussée de la Hulpe

  	
   

  
	
   

  	
   

  	
  B-1170 Brussels
  (Watermael-Boitsfort)

  	
   

  
	
   

  	
   

  	
  Belgium

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  Mr. Kaj Burchardi

  
	
   

  	
   

  	
   

  	
  Executive Director

  
	
   

  	
   

  	
   

  	
  Group Treasury

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Fax:

  	
  +32 2676 9601

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in the case of the Further
  Guarantors:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Sappi Limited

  	
   

  
	
   

  	
   

  	
  48 Ameshoff St.

  	
   

  
	
   

  	
   

  	
  Braamfontein

  	
   

  
	
   

  	
   

  	
  Johannesburg

  	
   

  
	
   

  	
   

  	
  Republic of South Africa

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  Group Secretary

  
	
   

  	
   

  	
  Fax:

  	
  +27 11 403 1493

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Sappi Trading Pulp AG

  	
   

  
	
   

  	
   

  	
  Wiesenstrasse 17

  	
   

  
	
   

  	
   

  	
  CH-8008 Zurich

  	
   

  
	
   

  	
   

  	
  Switzerland

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  Chief Executive Officer
  and Dr. H J Schürmann

  
	
   

  	
   

  	
  Fax:

  	
  +41 44421 4450

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in the case of each Lender
  and each Additional Guarantor, that notified in writing to the Agent on or
  prior to the date on which it becomes a Party; and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in the case of the Agent:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Bank Austria Creditanstalt AG

  
						

 

 

 

103

 

	
   

  	
   

  	
  Schottengasse 6

  	
   

  
	
   

  	
   

  	
  A-1010 Vienna

  	
   

  
	
   

  	
   

  	
  Austria

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: Martin Swoboda

  	
   

  
	
   

  	
   

  	
  Fax:

  	
  +43 (0) 50505-44208

  	
   

  
					

 

or any substitute address, fax number or
department or officer as the Party may notify to the Agent (or the Agent may
notify to the other Parties, if a change is made by the Agent) by not less than
five Business Days’ notice.

 

33.3.           Delivery

 

(a)                    Any
communication or document made or delivered by one person to another under or
in connection with the Finance Documents will only be effective:

 

(i)                    if by way
of fax, when received in legible form; or

 

(ii)                   if by way
of letter, when it has been left at the relevant address seven Business Days
after being deposited in the post postage prepaid in an envelope addressed to
it at that address,

 

and, if a particular
department or officer is specified as part of its address details provided
under Clause 33.2 (Addresses), if addressed to that department or officer.

 

(b)                    Any
communication or document to be made or delivered to the Agent will be
effective only when actually received by the Agent and then only if it is
expressly marked for the attention of the department or officer identified with
the Agent’s signature below (or any substitute department or officer as the
Agent shall specify for this purpose).

 

(c)               All notices from or to an Obligor shall be sent
through the Agent.

 

104

 

33.4.           Notification
of address and fax number

 

Promptly upon receipt of notification of an
address and fax number or change of address or fax number pursuant to Clause
33.2 (Addresses) or changing its own address or fax number, the Agent shall
notify the other Parties.

 

33.5.           Electronic
Communication

 

(a)                    Any
communication to be made between the Parties under or in connection with the
Finance Documents (other than (i) delivery of the Drawdown Request, a
certificate in accordance with Clause 21.2 (Compliance Certificate) or any
request for an amendment to or waiver of this Agreement or the Amending
Agreement, (ii) in the case of a Guarantor, delivery of any request for an
amendment or waiver of this Agreement) may be made by electronic mail or other
electronic means and the Parties shall notify each other (in particular, the
Agent) in writing of their electronic mail address and/or any other information
required to enable the sending and receipt of information by that means.

 

(b)                    Each Party
shall promptly notify each other Party (in particular, the Agent) of any change
to their electronic mail address or any other such information supplied by
them.

 

(c)                    Any
electronic communication made:

 

(i)                    by the
Agent to another Party will be effective only when actually received by the
relevant recipient and then only if it is addressed in such a manner as that
relevant Lender or Obligor, as the case may be, shall specify to the Agent for
this purpose; and

 

(ii)                   by a
Lender or any Obligor to the Agent will be effective only when actually
received by the Agent, as the case may be, and then only if it is addressed in
such a manner as the 

 

105

 

Agent
shall specify to that Lender or that Obligor for this purpose.

 

(d)                    Each Party
shall notify any affected Parties promptly upon becoming aware that its
electronic mail system or other electronic means of communication cannot be
used due to technical failure (and that failure is continuing for more than 36
hours). Until that Party has notified the other affected Parties that the
failure has been remedied, all notices between those Parties shall be sent by
fax or letter in accordance with this Clause 33 (Notice).

 

(e)                    In the
case of notification of Rates of Interest by the Agent pursuant to Clause 11.6
(Notification of Rates of Interest) and in the case of the delivery of any
document by the Agent pursuant to paragraph (a) of Clause 27.2 (Duties of
the Agent), the Agent may refer a Lender or an Obligor (by fax, letter or
e-mail) to a web site and to the location of the relevant information and such
web site in discharge of such notification or delivery obligation.

 

33.6.           English
language

 

(a)                    Any notice
given under or in connection with any Finance Document must be in English.

 

(b)                    All other
documents provided under or in connection with any Finance Document must be:

 

(i)                in English; or

 

(ii)               if not in English,
and if so required by the Agent, accompanied by a certified English translation
and, in this case, the English translation will prevail unless the document is
a constitutional, statutory or other official document.

 

106

 

34.              Calculation and Certificates

 

34.1.           Accounts

 

In any litigation or arbitration proceedings
arising out of or in connection with a Finance Document the entries made in the
accounts maintained by the Agent and/or a Finance Party are prima facie
evidence of the matters to which they relate.

 

34.2.           Certificates and determinations

 

Any certification or determination by the Agent
and/or a Finance Party of a rate or amount under any Finance Document is, in
the absence of manifest error, conclusive evidence of the matters to which it
relates.

 

34.3.           Day
count convention

 

Any interest or fee payable to a Finance Party
accruing under a Finance Document will accrue from day to day and is calculated
on the basis of the actual number of days elapsed and a year of 360 days or, in
any case where the practice in the Relevant Interbank Market differs, in
accordance with that market practice.

 

35.              Partial invalidity

 

If, at any time, any provision of the Finance
Documents is or becomes illegal, invalid or unenforceable in any respect under
any law of any jurisdiction, neither the legality, validity or enforceability
of the remaining provisions nor the legality, validity or enforceability of
such provision under the law of any other jurisdiction will in any way be
affected or impaired.

 

36.              Remedies and waivers

 

No failure to exercise, nor any delay in
exercising, on the part of the Agent and/or any Finance Party, any right or
remedy under the Finance Documents shall operate as a waiver, nor shall any
single or partial exercise of any right or remedy prevent 

 

107

 

any further or other exercise or the exercise
of any other right or remedy. The rights and remedies provided in this
Agreement are cumulative and not exclusive of any rights or remedies provided
by law.

 

37.              Amendments and waivers

 

37.1.           Required
consents

 

(a)                    Subject to
Clause 37.2 (Exceptions) any term of the Finance Documents may be amended or
waived only with the consent of the Majority Lenders and the Obligors and any
such amendment or waiver will be binding on all Parties.

 

(b)                    The Agent
may effect, on behalf of any Finance Party, any amendment or waiver permitted
by this Clause.

 

37.2.           Exceptions

 

(a)                    An
amendment or waiver that has the effect of changing or which relates to:

 

(i)                    the
definition of “Majority Lenders” in Clause 1.1 (Definitions);

 

(ii)                   an
extension to the date of payment of any amount under the Finance Documents;

 

(iii)                  a
reduction in the Applicable Facility Fee, the amount of, or the currency of any
payment of principal, interest or fees payable;

 

(iv)                  an
increase in Commitment;

 

108

 

(v)                   a change
to the legal entity that is the Borrower or a Guarantor (save with respect to
an Additional Guarantor in accordance with Clause 26.2);

 

(vi)                  any
provision which expressly requires the consent of all the Lenders; or

 

(vii)                 Clause 2.2 (Finance
Parties’ rights and obligations), Clause 21.1 (Financial Statements) except for
reasonable extensions of periods for the submission of the statements under
Clause 21.1 (b), Clause 25 (Changes to the Lenders), Clause 30 (Sharing among the
Lenders) or this Clause 37 (Amendments and waivers),

 

shall not be made
without the prior consent of all the Lenders.

 

(b)                    An
amendment or waiver which relates to the rights or obligations of the Agent or
the Mandated Lead Arranger may not be effected without the consent of the Agent
or the Mandated Lead Arranger.

 

38.              Counterparts

 

38.1.           Multiple
counterparts

 

Each Finance Document may be executed in any
number of counterparts, and this has the same effect as if the signatures on
the counterparts were on a single copy of the Finance Document.

 

38.2.           Complete
originals

 

There shall only be two complete originals of
the Finance Documents (other than the Mandate Letter). For these purposes
“complete” means execution by each relevant Party to such Finance Document in
any number of counterparts.

 

109

 

39.              (intentionally omitted)

 

110

 

SECTION 11 GOVERNING LAW AND ENFORCEMENT

 

40.              Governing law

 

This Agreement is governed by Austrian law,
excluding its conflicts of law rules.

 

41.              Enforcement

 

41.1.           Jurisdiction
of Austrian Courts

 

(a)                    The
competent courts of Vienna have exclusive jurisdiction to settle any dispute
arising out of or in connection with this Agreement (including a dispute
regarding the existence, validity or termination of this Agreement) (a “Dispute”).

 

(b)                    This
Clause 41.1 is for the benefit of the Finance Parties only. As a result, no
Finance Party shall be prevented from taking proceedings relating to a Dispute
in any other courts with jurisdiction. To the extent allowed by law, the
Finance Parties may take concurrent proceedings in any number of jurisdictions.

 

111

 

SCHEDULE 1: THE ORIGINAL LENDERS (1)

 

	
  Name of Original Lender

  	
   

  	
  Address

  	
   

  	
  Tranche A

  Commitment

  	
   

  	
  Tranche B

  Commitment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bank Austria Creditanstalt AG

  	
   

  	
  Schottengasse 6-8, A-1010
  Vienna; Austria

  	
   

  	
  19,703,281.20

  	
   

  	
  78,813,124.8

  	
   

  
	
  Erste Bank der oesterreichischen Sparkassen AG

  	
   

  	
  Graben 21, A-1010 Vienna,
  Austria

  	
   

  	
  14,980,000

  	
   

  	
  59,920,000

  	
   

  
	
  Fortis Bank S.A.

  	
   

  	
  3 Montagne du Parc, B-1000
  Brussels, Belgium

  	
   

  	
  5,320,000

  	
   

  	
  21,280,000

  	
   

  
	
  BNP Paribas S.A. Belgium Branche

  	
   

  	
  Avenue Louise 489, B-1050
  Brussels, Belgium

  	
   

  	
  5,320,000

  	
   

  	
  21,280,000

  	
   

  
	
  Bayerische Landesbank

  	
   

  	
  Brienner Straße 20, D-80333
  Munich

  	
   

  	
  5,320,000

  	
   

  	
  21,280,000

  	
   

  
	
  Baden-Württembergerische Bank unselbständige Anstalt
  der Landesbank Baden-Württemberg

  	
   

  	
  Kleiner Schlossplatz 11,.
  D-70173 Stuttgart, Germany

  	
   

  	
  5,320,000

  	
   

  	
  21,280,000

  	
   

  
	
  Commerzbank Aktiengesellschaft Succursale de Bruxelles

  	
   

  	
  Boulevard Louis Schmidt 87,
  B-1040 Brussels, Belgium

  	
   

  	
  5,320,000

  	
   

  	
  21,280,000

  	
   

  
	
  Investkredit Bank AG

  	
   

  	
  Renngasse 10, A-1013 Vienna,
  Austria

  	
   

  	
  5,320,000

  	
   

  	
  21,280,000

  	
   

  
	
  WestLB AG

  	
   

  	
  Friedrichstraße 62-68, D-40217
  Düsseldorf, Germany

  	
   

  	
  5,320,000

  	
   

  	
  21,280,000

  	
   

  
	
  ABN AMRO BANK N.V. Niederlassung Deutschland

  	
   

  	
  Theodor-Heuss-Allee 80 D-60486 Frankfurt am
  Main

  	
   

  	
  5,320,000

  	
   

  	
  21,280,000

  	
   

  
	
  Barclays Bank plc

  	
   

  	
  54 Lombard Street, EC 3P3AH
  London, United Kingdom

  	
   

  	
  5,320,000

  	
   

  	
  21,280,000

  	
   

  
	
  BAWAG P.S.K. Bank für Arbeit und Wirtschaft und
  Österreichische Postsparkasse Aktiengesellschaft

  	
   

  	
  Seitzergasse 2-4, A-1010 Vienna,
  Austria

  	
   

  	
  3,920,000

  	
   

  	
  15,680,000

  	
   

  

 

(1) As at the date of the Amending Agreement.

 

112

 

	
  Österreichische Volksbanken Aktiengesellschaft

  	
   

  	
  Peregringasse 3, A-1090 Vienna,
  Austria

  	
   

  	
  3,920,000

  	
   

  	
  15,680,000

  	
   

  
	
  Calyon Corporate and Investment Bank

  	
   

  	
  9, Quai du President Paul
  Doumer, F-92920 Paris La Defense, France

  	
   

  	
  3,920,000

  	
   

  	
  15,680,000

  	
   

  
	
  Raiffeisenbank Oberösterreich Aktiengesellschaft

  	
   

  	
  Europaplatz 1a, A-4020 Linz,
  Austria

  	
   

  	
  1,960,000

  	
   

  	
  7,840,000

  	
   

  
	
  HVB Banque Luxembourg Société Anonyme

  	
   

  	
  4, rue Alphonse Weicker, L-2721,
  Luxembourg

  	
   

  	
  1,960,000

  	
   

  	
  7,840,000

  	
   

  
	
  Vorarlberger Landes- und Hypothekenbank
  Aktiengesellschaft

  	
   

  	
  Hypo-Passage 1, A-6900 Bregenz,
  Austria

  	
   

  	
  980,000

  	
   

  	
  3,920,000

  	
   

  
	
  Salzburger Landes- und Hypothekenbank
  Aktiengesellschaft

  	
   

  	
  Petersbrunnstraße 3, A-5020
  Salzburg, Austria

  	
   

  	
  798,000

  	
   

  	
  3,192,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  100,021,281.20

  	
   

  	
  400,085,124.80

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total of Tranche A and Tranche B

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  500,106,406.00

  	
   

  

 

113

 

SCHEDULE 2: CONDITIONS PRECEDENT

 

PART I

 

Conditions Precedent for Drawdown

 

1.                 Obligors

 

(a)               A certified copy of the constitutional
documents of each Obligor.

 

(b)                    A
certified copy of a resolution of (i) the board of directors of the
Borrower and (ii) the board of the Original Guarantor:

 

(i)                   approving
the terms of, and the transactions contemplated by, the Finance Documents and
resolving that it executes the Finance Documents to which it is a party;

 

(ii)                  authorising
a specified person or persons to execute the Finance Documents on its behalf;
and

 

(iii)                 authorising a
specified person or persons, on its behalf, to sign and/or despatch all
documents and notices (including, if relevant, the Drawdown Request) to be
signed and/or despatched by it under or in connection with the Finance
Documents.

 

(c)                    A copy of
a resolution of the supervisory board of the Borrower approving the terms of,
and transactions contemplated by, the Finance Documents to which it is a party
and resolving that it executes the Finance Documents to which it is a party.

 

(d)                    (intentionally
omitted)

 

114

 

(e)                    A
certificate of the Borrower (signed by a director) confirming that borrowing
the Facility would not cause any borrowing or similar limit binding on either
Obligor to be exceeded.

 

(f)                     A
certificate of an authorised signatory of the relevant Obligor certifying that
each copy document relating to it specified in this Schedule 2 is correct,
complete and in full force and effect as of a date no earlier than the date of
this Agreement.

 

(g)                    Each of
the Lenders shall have received bills of exchange duly accepted by the Borrower
in the amounts and number required for the OeKB Refinancing.

 

2.                 Legal opinions

 

(a)                    A legal
opinion of Binder Grösswang Rechtsanwälte OEG, legal counsel licensed in
Austria in form and substance reasonably satisfactory to the Agent.

 

(b)                    A legal
opinion of Freshfields Bruckhaus Deringer Brussels, legal counsel licensed in
Belgium in form and substance reasonably satisfactory to the Agent.

 

3.                 OeKB

 

(a)                    Each of
the Lenders shall have received on the bills of exchange accepted by the
Borrower in relation to the Facility a guarantee by “aval” of the Republic of
Austria under the Austrian Export Guarantees Act 1981
(“Ausfuhrförderungsgesetz1981”).

 

(b)                    Each of
the Lenders and OeKB shall have concluded a refinancing agreement in relation
to the Facility.

 

(c)                    Receipt of
payment from OeKB under the OeKB Refinancing.

 

115

 

4.                 Other documents and
evidence

 

(a)                    Evidence
that the fees, costs and expenses then due from the Borrower pursuant to Clause
14 (Fees) and Clause 19 (Costs and expenses) have been paid or will be paid
within 5 Business Days from the date of this Agreement.

 

(b)                    A
certificate of an authorised signatory of the Borrower that the Intercompany
Financings (i) have been disbursed (such disbursement also evidenced by
the respective bank confirmations) and (ii) are outstanding at least in
the amount of the aggregate Loans.

 

(c)                    A copy of
any other authorisation or other document in connection with the entry into and
performance of the transactions contemplated by any Finance Document or for the
validity and enforceability of any Finance Document required by law or which
the Agent has reasonably requested from the Borrower until signing of this
Agreement.

 

(d)                    The SISA
Guarantee duly executed by the Guarantor and the Agent.

 

(e)                    The
Initial Original Obligors’ Financial Statements.

 

PART II

 

Conditions Precedent required to be delivered
by an Additional Guarantor

 

1.                 An Accession Letter, duly executed by the
Additional Guarantor and the Borrower.

 

2.                 A copy of the constitutional documents of the
Additional Guarantor.

 

3.                 A copy of a resolution of the board of
directors of the Additional Guarantor:

 

116

 

(a)      approving the terms
of, and the transactions contemplated by, the Accession Letter and the Finance
Documents and resolving that it execute the Accession Letter;

 

(b)      authorising a
specified person or persons to execute the Accession Letter on its behalf; and

 

(c)      authorising a specified
person or persons, on its behalf, to sign and/or despatch all other documents
and notices to be signed and/or despatched by it under or in connection with
the Finance Documents.

 

4.             A specimen of the
signature of each person authorised by the resolution referred to in paragraph
3 above.

 

5.             A certificate of the
Additional Guarantor (signed by a director) confirming that guaranteeing the
Total Commitments would not cause any guaranteeing or similar limit binding on
it to be exceeded.

 

6.             A certificate of an
authorised signatory of the Additional Guarantor certifying that each copy
document listed in this Part II of Schedule 2 is correct, complete
and in full force and effect as at a date no earlier than the date of the
Accession Letter.

 

7.             A copy of any other
Authorisation or other document, opinion or assurance which the Agent considers
to be necessary or desirable in connection with the entry into and performance
of the transactions contemplated by the Accession Letter or for the validity
and enforceability of any Finance Document.

 

8.             If available, the
latest audited financial statements of the Additional Guarantor.

 

9.             A legal opinion of
the legal adviser to the Additional Guarantor in the jurisdiction in which the
Additional Guarantor is incorporated.

 

117

 

SCHEDULE 3: REQUESTS

 

Drawdown Request

 

From:          Sappi Papier Holding
AG

 

To:              Bank Austria Creditanstalt AG as Agent

 

Dated:

 

Dear Sirs,

 

Sappi Papier Holding AG - EUR
500,106,406 Facility Agreement dated May 7, 2003 (the “Facility
Agreement”)

 

1.                   We wish to
borrow a Loan on the following terms

 

	
   

  	
  Proposed Drawdown Date:

  	
  [

  	
  ]

  	
  (or,
  if that is not a Business Day, the

  
	
   

  	
   

  	
   

  	
   

  	
  next
  Business Day)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Amount:

  	
  [

  	
  ]

  	
   

  

 

2.                   We confirm
that each condition specified in Clause 4.2 (Further
conditions precedent) of the Facility Agreement referred to above is
satisfied on the date of this Drawdown Request.

 

3.                   The
proceeds of this Loan should be credited to [account].

 

4.                   This
Drawdown Request is irrevocable and signed at [     ].

 

 

	
  Yours faithfully

  
	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  
	
  authorised signatory for

  
	
  SAPPI PAPIER HOLDING AG

  

 

118

 

SCHEDULE 4: MANDATORY COST FORMULA

 

1.                   The
Mandatory Cost is an addition to the interest rate to compensate Lenders for
the cost of compliance with the requirements of the European Central Bank or
the central bank of any other country arising after the date of this Agreement.

 

2.                   On the
first day of each Interest Period (or as soon as possible thereafter) the Agent
shall calculate, as a percentage rate, a rate (the “Additional Cost Rate”) for
each Lender, in accordance with the paragraphs set out below. The Mandatory
Cost will be calculated by the Agent as a weighted average of the Lenders’
Additional Cost Rates (weighted in proportion to the percentage participation
of each Lender in the relevant Loan) and will be expressed as a percentage rate
per annum.

 

3.                   The
Additional Cost Rate for any Lender lending from a Facility Office in a
Participating Member State will be the percentage notified by that Lender to
the Agent as the net cost of complying with the minimum reserve requirements of
the European Central Bank after taking into account remuneration payable to it
by the European Central Bank under Council Regulation (EC) No. 2531/98 of
23 November 1998 as amended by Council Regulation (EC) No. 134/2002
of 22 January 2002.

 

4.                   The
Additional Cost Rate for any Lender lending from a Facility Office in  country other than a Participating Member
State will be the percentage notified by that Lender to the Agent as the net
cost of complying with the minimum reserve requirements of the respective
central bank.

 

5.                   Each
Lender shall supply any information required by the Agent for the purpose of
calculating its Additional Cost Rate. In particular, but without limitation,
each Lender shall supply the following information in writing on or prior to
the date on which it becomes a Lender:

 

(a)                 its jurisdiction of
incorporation and the jurisdiction of its Facility Office; and

 

119

 

(b)                 any other information
that the Agent may reasonably require for such purpose.

 

Each Lender shall promptly notify the Agent in
writing of any change to the information provided by it pursuant to this
paragraph.

 

6.                   The
percentages or rates of charge of each Lender for the purpose of item 1 above
shall be determined by the Agent based upon the information supplied to it
pursuant to paragraphs 3 and 4 above and on the assumption that, unless a
Lender notifies the Agent to the contrary, each Lender’s obligations in
relation to the requirements described in item 1 are the same as those of a
typical bank from its jurisdiction of incorporation with a Facility Office in
the same jurisdiction as its Facility Office.

 

7.                   The Agent
shall have no liability to any person if such determination results in an
Additional Cost Rate which over or under compensates any Lender and shall be
entitled to assume that the information provided by any Lender pursuant to
paragraphs 3, 4 and 5 above is true and correct in all respects.

 

8.                   The Agent
shall distribute the additional amounts received as a result of the Mandatory
Cost to the Lenders on the basis of the Additional Cost Rate for each Lender
based on the information provided by each Lender pursuant to paragraphs 3 and 4
above.

 

9.                   Any
determination by the Agent pursuant to this Schedule in relation to, the
Mandatory Cost, an Additional Cost Rate or any amount payable to a Lender
shall, in the absence of manifest error, be conclusive and binding on all
Parties.

 

10.                 The Agent may from
time to time, after consultation with the Borrower and the Lenders, determine
and notify to all Parties any amendments which are required to be made to this
Schedule in order to comply with any change in law, regulation or any
requirements from time to time imposed by the European Central Bank (or, in any
case, any other authority which replaces all or any of its functions) or the
central bank of any other country and any such determination shall, in the
absence of manifest error, be conclusive and binding on all Parties.

 

120

 

SCHEDULE 5: FORM OF TRANSFER CERTIFICATE

 

To:              Bank Austria Creditanstalt AG as Agent

 

From:          [The Existing
Lender] (the “Existing Lender”)
and [The New Lender] (the “New Lender”)

 

Dated:

 

Sappi Papier Holding GmbH -
EUR 500,106,406 Facility Agreement dated May 7, 2003, as amended and
restated pursuant to the amending agreement dated 18 November 2005 (the
“Facility Agreement”)

 

1.                 We refer to Clause 25.5 (Procedure of transfer)
of the Facility Agreement:

 

(a)                  The
Existing Lender and the New Lender agree to the Existing Lender and the New
Lender [assigning/transferring] all or part of the Existing Lender’s
Commitment, rights and obligations referred to in the Schedule in
accordance with Clause 25.5 (Procedure of transfer) of the Facility Agreement.

 

(b)                  The
proposed Transfer Date is [   ].

 

(c)                  The
Facility Office and address, fax number and attention details for notices of
the New Lender for the purposes of Clause 33.2 (Addresses) of the Facility
Agreement are set out in this Schedule.

 

2.                   The New
Lender expressly acknowledges the limitations on the Existing Lender’s
obligations set out in paragraph (c) of Clause 25.4 (Limitation of responsibility
of Existing Lenders) of the Facility Agreement.

 

3.                   This
Transfer Certificate is governed by Austrian law. All capitalized words and
expressions, which are not expressly defined herein, shall have the meaning
attributed to them in the Facility Agreement.

 

4.                   This
Transfer Certificate is signed at [    
].

 

121

 

THE SCHEDULE

 

Commitment/rights and
obligations to be transferred or assigned

 

[insert
relevant details]

[Facility Office address, fax number and attention details for notices and
account details for payments]

 

 

	
  [Existing Lender]

  	
  [New Lender]

  
	
  By:

  	
  By:

  

 

 

This Transfer Certificate is accepted by the
Agent and the Transfer Date is confirmed as [  
].

 

[Agent]

 

By:

 

122

 

SCHEDULE 6: FORM OF COMPLIANCE
CERTIFICATE

 

To:              Bank Austria Creditanstalt AG as Agent

 

From:          Sappi Papier Holding
GmbH

 

Dated:

 

Dear Sirs,

 

Sappi
Papier Holding GmbH - EUR 500,106,406 Facility Agreement dated May 7,
2003, as amended and restated pursuant to the amending agreement dated 18
November 2005 (the “Facility Agreement”)

 

1.                 We refer to the
Facility Agreement. All capitalized words and expressions, which are not
expressly defined herein, shall have the meaning attributed to them in the
Facility Agreement. This is a Compliance Certificate.

 

2.                 We confirm that:

 

(i)                 in respect of the
Quarter ending on [   ] and each of the
three immediately preceding Quarters the mean average of EBITDA was [   ] and the mean average of Consolidated Net
Interest Expense was [   ]. Therefore
EBITDA was [   ] times Consolidated Net
Interest Expense and the covenant contained in sub-clause (a) of Clause
23.1 (Financial Covenants) [has/has not] been complied with;

 

(ii)                in respect of the
Quarter ending on [   ] and each of the
seven immediately preceding Quarters the mean average of EBITDA was [   ] and the mean average of Consolidated Net
Interest Expense was [   ]. Therefore
EBITDA was [   ] times Consolidated Net
Interest Expense and the covenant contained in sub-clause (b) of Clause
23.1 (Financial Covenants) [has/has not] been complied with;

 

123

 

(iii)               in respect of the
Quarter ending on [   ] Net Debt was
[   ] and Capitalisation for such Quarter
was [   ] as at the end of that Quarter.
Therefore Net Debt at that time [was/was not] equal to or in excess of [   ] and the covenant contained in sub-clause
(c) of Clause 23.1 (Financial Covenants) [has/has not] been complied with;
and

 

(iv)              in respect of the
Quarter ending on [    ] Sappi
Manufacturing Net Debt was [     ] and
Sappi Manufacturing Capitalisation for such Quarter was [     ] at the end of that Quarter.  Therefore Net Debt at that time [was/was not]
equal to in excess of [      ] and the
covenant in sub-clause (d) of Clause 23.1 (Financial covenants) [has/has
not] been complied with.

 

3.                 As at the end of
Sappi’s financial year, the Material Subsidiaries are as follows: [   ]

 

We
confirm that the above companies account for at least 90 per cent of the
Consolidated Earnings and at least 90 per cent of the Consolidated Assets (as
such terms are defined in the definitions of Material Subsidiary set out in the
Facility Agreement).

 

4.                 [We confirm that no
Default is continuing.](2)

 

 

	
  Signed:

  
	
   

  
	
   

  
	
  Director for and an behalf of

  
	
  Sappi Limited

  

 

 

(2) If this statement cannot
be made, the certificate should identify any Default that is continuing and the
steps, if any, being taken to remedy it.

 

124

 

SCHEDULE 7: EXISTING SECURITY

 

	
  Name
  of Obligor

  	
   

  	
  Security

  	
   

  	
  Total Principal Amount of

  Indebtedness Secured

  
	
  Sappi Fine Paper North America

  	
   

  	
   

  	
   

  	
   

  
	
  -

  	
  Town of Skowhegan/Michigan 

  Strategic Fund/City of Westbrook

  	
   

  	
  Land and Buildings

  	
   

  	
  107 m USD

  
	
  Sappi Alfeld

  	
   

  	
   

  	
   

  	
   

  
	
  -

  	
  Allianz AG

  	
   

  	
  Assets

  	
   

  	
  9 m EUR

  
	
  Sappi Gratkorn

  	
   

  	
   

  	
   

  	
   

  
	
  -

  	
  Wasserwirtschaftsfonds

  	
   

  	
  Bonds

  	
   

  	
  9 m EUR

  

 

125

 

SCHEDULE 8 : FORM OF POWER OF ATTORNEY

 

To Bank Austria Creditanstalt AG

 

Re:

 

 

Dated:            ,
2003

 

POWER OF ATTORNEY

 

We, [...Bank...] a
legal entity duly organised under the laws of [...country of
incorporation] and registered with the commercial register at                      
under [...number  of
registration], with principal place of business in [...address] („Bank”), hereby authorise and appoint Bank Austria
Creditanstalt AG, Schottengasse 6, 1010 Vienna („Attorney”) in connection with
(i) the EUR 500,106,406 Credit Facility Agreement dated May 7, 2003
concluded between Sappi Papier Holding GmbH, as borrower, Sappi International
S.A. as Guarantor and Bank Austria Creditanstalt AG, as mandated lead arranger
and agent, and the syndicate of banks as listed in the afore mentioned Credit
Facility Agreement, as amended and restated pursuant to the amending agreement
dated 15 November 2005 and (ii) the respective refinancing agreement
concluded between the Bank and Oesterreichische Kontrollbank Aktiengesellschaft
(“OeKB”) (the “Refinancing Agreement”) to:

 

1)     demand and receive
payments from OeKB under the Refinancing Agreement upon receipt of a drawdown
notice from the Borrower; and

 

2)     to make to the Bank’s
account with OeKB all re-payments of principal and payments of interest and
fees under the Refinancing Agreement upon receipt of the relevant funds from
the borrower; and

 

3)     do all other acts and
things and sign, execute and deliver any and all other documents and give all
notices which may be required or which the Attorney shall in its absolute and
unfettered discretion consider desirable thereto in connection with clauses 1.
and 2. hereof.

 

126

 

The Bank shall indemnify the Attorney and keep
the Attorney indemnified against any and all reasonable costs, claims and
liabilities which the Attorney may incur as a result of anything done by the
Attorney in the exercise of any of its powers conferred, or purported to be
conferred, on him by this Power of Attorney.

 

The Attorney shall be entitled to grant
sub-powers of attorney.

 

The authority conferred on the Attorney by this
Power of Attorney shall terminate on [... insert date].

 

This Power of Attorney is governed by, and
shall be construed in accordance with, Austrian law.

 

IN WITNESS WHEREOF this Power of Attorney has
been executed by the Bank and is intended to be made on the date above written

 

 

	
   

  	
   

  	
   

  
	
  By:

  
	
  Title:

  

 

Note:      Unless
the signatories can be verified from a signatories’ book of the Bank, a notary
public has to certify as to the authenticity of the signatures and
his/her/their authority to validly represent the Bank, a company duly
incorporated and validly existing, upon the issuance of this power of attorney.

 

127

 

SCHEDULE 9: FORM OF CONFIDENTIALITY
UNDERTAKING

 

From:          [Proposed Transferee]

 

To:              Sappi Papier Holding GmbH

 

[   ] 200[ ]

 

Facility Agreement dated
May 7, 2003 among (1) Sappi Papier Holding GmbH as Borrower
(2) Sappi International S.A. as Guarantor (3) Bank Austria
Creditanstalt AG as Agent and (4) certain Lenders named therein, as
amended and restated pursuant to the amending agreement dated 18
November 2005 (the “Facility Agreement”)

 

1.                 We refer to the
Facility Agreement. All capitalized words and expressions, which are not
expressly defined herein, shall have the meaning attributed to them in the
Facility Agreement.

 

2.                 Subject as provided
below, we undertake to keep confidential and undertake not to, without your
prior written consent, (i) disclose any information (other than
information which is publicly available other than as a result of a breach of
this letter) supplied by or on behalf of Sappi Papier Holding GmbH, or
(ii) use any such information other than in relation to the Facility.
However, you agree that we are entitled to disclose information:

 

(a)   in connection with
any legal proceedings arising out of or in connection with the Facility
Agreement or any audit requirement;

 

(b)   if required to do so
by an order of a court of competent jurisdiction whether under any procedure
for discovering documents or otherwise;

 

(c)   pursuant to any law
or regulation in accordance with which we and/or any of our affiliates and/or
subsidiaries are required to act;

 

(d)   to a governmental banking,
taxation or other regulatory authority of any competent jurisdiction;

 

128

 

(e)   to our accountants or
legal or other professional advisers in connection with this letter or the
Facility Agreement;

 

(f)    which was lawfully in
our possession or in the possession of our advisers prior to such disclosure
and which was not acquired directly or indirectly from any Group Company;

 

(g)   the disclosure of
which is made to any of our affiliates in circumstances where it is our usual
practice to make such disclosure or where such disclosure is required as part
of our management or reporting policies; or

 

(h)   where such disclosure
is made to the Agent, the Arranger or any Lender.

 

3.                 We agree to inform
you of the full circumstances of any disclosure made pursuant to sub-paragraphs
(a) through (d) (inclusive) of paragraph 2 above or upon becoming
aware that confidential information has been disclosed in breach of this
letter.

 

4.                 The obligations in
this letter shall cease (a) if we become a party to or otherwise acquire
(by assignment or sub participation) an interest, direct or indirect in the
Facility or (b) twelve months after we have returned all information
received by you relating to the Facility (other than such information which has
been disclosed under paragraph 2 above).

 

5.                 This letter sets out
the full extent of our obligations of confidentiality owed to you in relation
to the information with respect to the Facility. The terms of this letter and
our obligations under this letter may only be amended or modified by written
agreement between us.

 

6.                 (a)               The terms of this
letter may be enforced and relied upon only by you and us.

 

(b)               Notwithstanding any
provisions of this letter, the parties to this letter do not require the
consent of any other person to rescind or vary this letter at any time.

 

129

 

7.                 If you so request in
writing, we shall return all confidential information supplied by you and
destroy or permanently erase all copies of confidential information made by us
and use all reasonable endeavours to ensure that anyone to whom we have
supplied any confidential information destroys or permanently erases such
confidential information and any copies made by them, in each case save to the
extent that we or the recipients are required to retain such confidential
information by any applicable law, rule or regulation or by a competent
judicial, governmental, supervisory or regulatory body.

 

8.                 This letter
(including the agreement constituted by your acknowledgement of its terms)
shall be governed by and construed in accordance with the laws of Austria and
the parties submit to the exclusive jurisdiction of the common courts in
Vienna.

 

 

Please countersign this letter to confirm your
agreement to its terms.

 

Yours faithfully,

 

 

	
   

  	
   

  	
   

  
	
  [name of proposed
  Transferee]

  

 

130

 

SCHEDULE 10: APPLICABLE FACILITY FEE

 

The Applicable Facility Fee shall be calculated
as follows:

 

(a)               During the
Availability Period, the Applicable Facility Fee shall be 0.50 per cent per
annum.

 

(b)               After the end of the
Availability Period, the Applicable Facility Fee shall be a rate determined by
the Agent at the end of any Interest Period for the next succeeding Interest
Period according to the following table:

 

	
  S&P credit rating for Sappi

  	
   

  	
  Applicable Facility Fee per

  annum

  
	
  A or higher

  	
   

  	
  0.20 per cent

  
	
  A-

  	
   

  	
  0.30 per cent

  
	
  BBB+

  	
   

  	
  0.40 per cent

  
	
  BBB

  	
   

  	
  0.50 per cent

  
	
  BBB-

  	
   

  	
  0.60 per cent

  
	
  Below BBB-

  	
   

  	
  1.00 per cent

  

 

From the time a S&P
credit rating is available for the Borrower, such credit rating shall apply.

 

If neither for Sappi nor for
the Borrower a S&P credit rating is available, the above table shall
without further action or analysis refer to the equivalent ratings used by
Moody’s.

 

If neither S&P nor
Moody’s nor an equivalent rating agency reasonably acceptable to the Agent
publishes a credit rating for Sappi or the Borrower, the applicable credit
rating shall be deemed to be “Below BBB-”.

 

131

 

SCHEDULE 11: 
FORM OF FURTHER GUARANTEE AND ADDITIONAL

 

GUARANTEE

 

 

Form of irrevocable, unconditional guarantee
for payment

 

This guarantee is dated the [   ]
day of [   ], 200[ ] and made between:

 

(1)   [Guarantor] (the “Guarantor”) and

 

(2)   BANK AUSTRIA CREDITANSTALT AG (the “Agent”).

 

It is hereby agreed
as follows:

 

1.                 Preamble

 

SAPPI PAPIER HOLDING GmbH has entered into a
facility agreement dated May 7, 2003 among (1) Sappi Papier Holding
GmbH as Borrower (2) Sappi International S.A. as Guarantor and
(3) Bank Austria Creditanstalt AG as Agent and (4) certain Lenders
named therein, as amended and restated pursuant to the amending agreement dated
18 November 2005 (the “Facility
Agreement”), whereby the Lenders will on the terms and subject to
the conditions therein contained, advance to the Borrower funds for the purpose
as defined in the Facility Agreement. The Guarantors have agreed to guarantee
the payment obligations of the Borrower under the Facility Agreement.

 

All capitalized words and expressions, which
are not expressly defined herein, shall have the meaning attributed to them in
the Facility Agreement.

 

2.                 Guarantee

 

The Guarantor hereby irrevocably and
unconditionally guarantees to the Agent for the benefit of the Lenders and the
Agent, as principal obligor and not merely as surety, the payment when due of
all amounts stated by the Agent to be owed by the Borrower to the Lenders under
the Facility Agreement.

 

132

 

3.                 Immediate Recourse

 

The Guarantor waives any right it may have of
first requiring the Lenders to proceed against or enforce any other rights or
security or claim payment from the Borrower or any other person before claiming
from the Guarantor hereunder.

 

4.                 Payment

 

4.1              The Guarantor agrees
to pay from time to time on first demand by the Agent against delivery by
letter or tested telex to the Guarantor of a demand stating that (i) a
specified amount has become due and payable by the Borrower under the Facility
Agreement and (ii) has not been paid by the Borrower within five days
after the due date (subject to the expiry of any applicable grace period).

 

If such demand is delivered to the Guarantor,
then, on the fifth Business Day after the date of delivery of such demand, the
Guarantor shall pay without review on the underlying legal relationship and
waiving all defenses thereunder the amounts specified in such certificate and
demand (including principal, interest, default interest, fees and ancillary claims)
exclusively to the account or the accounts (as the case may be) designated by
the Agent.

 

4.2               The repayment
obligation of a Finance Party pursuant to Clause 15.4 (Tax credit) of the
Facility Agreement shall not become due before the Guarantor has fulfilled its
payment obligations under a demand hereunder and shall in no event reduce the
payment obligation of the Guarantor under a demand hereunder.

 

4.3               The Agent may from
time to time make one or more demands for payment under this Guarantee.

 

5.                 Non-competition

 

So long as any amounts are or may be owed by
the Borrower under the Facility Agreement, the Guarantor shall not by virtue of
any payment made, security realised or moneys received for or on account of the
Guarantor’s liability hereunder:

 

133

 

(a)                be subrogated to any
rights, security or moneys held, received or receivable by the Lenders or be
entitled to any right of contribution; and

 

(b)               receive, claim or
have the benefit of any payment, distribution or security from or on account of
the Borrower or exercise any right of set-off as against the Borrower or any
other person or claim the benefit of any security or moneys held by or for the
account of the Lenders.

 

The Guarantor shall forthwith pay to the
Lenders an amount equal to any such set-off in fact exercised by it and shall
hold in trust for and forthwith pay or transfer, as the case may be, to the
Lenders any such payment or distribution or benefit of security in fact
received by it.

 

6.                 Preservation of Rights

 

The obligations of the Guarantor herein
contained shall continue to be effective or be reinstated, as the case may be,
if at any time any payment of any sums of money by the Borrower is rescinded or
must otherwise be returned by the Lender upon the insolvency, bankruptcy or
reorganisation of the Borrower, or otherwise, all as though such payment had
not been made.

 

7.                 Transferability, Assignment

 

The Guarantor may not assign or transfer the
whole or part of its obligations hereunder without the prior written consent of
the Agent acting on the instructions of all Lenders.

 

If a new agent is appointed in accordance with
Clause 27.11 of the Facility Agreement (Resignation of the Agent), the
resigning agent may without the Guarantor’s consent assign all or any part of
its rights hereunder. In any other case, the Agent may not assign its rights
hereunder except with the prior written consent of the Guarantor.

 

134

 

8.                 Duration

 

This Guarantee shall be valid so long as any
amounts under the Facility Agreement are or may be outstanding.

 

9.                 Guarantee Limitations

 

[9.1              Belgian Guarantee
Limitation

 

In the case of the Belgian Guarantor, with
respect to the obligations of the Borrower, its liability under this Guarantee
shall be limited, at any time, to a maximum aggregate 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.]

[Note: to be
inserted in the Belgian Guarantee.]

 

[9.1              Swiss Restrictions

 

The Restricted Obligations of the Swiss
Guarantor, if and to the extent required by any applicable Swiss law in force
at the relevant point in time, under:

 

(a)               this Guarantee;

 

(b)               Clause 15.2 (Tax gross-up);

 

(c)               Clause 15.3 (Tax indemnity); and

 

(d)               Clause 17.2 (Other indemnities),

 

shall, subject to the proviso below, be limited
to the amount obtained by applying the following formula on the date on which
this Guarantee is called (the “Maximum
Guaranteed Amount”):

 

(i)                EUR 150 million, multiplied
by

 

135

 

(ii)               the principal amount
outstanding under the Facility, divided by

 

(iii)              the total principal
amount outstanding of the Borrower’s borrowings under any facility where the
Swiss Guarantor has issued a guarantee (excluding the principal amount
outstanding of the Borrower’s borrowings under the Syndicated Facility
Agreement pursuant to which the Swiss Guarantor has issued a guarantee which is
not, as at the date of this Agreement, limited in terms of amounts guaranteed
thereunder, provided however that if and when the terms of that guarantee are
amended to include a limitation on the amounts guaranteed thereunder which is
similar to the limitation set forth in this Guarantee in terms of the maximum
guaranteed amount, the principal amount outstanding of the Borrower’s borrowings
under the Syndicated Facility Agreement shall be taken into account),

 

provided that payments of
the Maximum Guaranteed Amount shall be limited to the maximum amount of the
Swiss Guarantor’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 the Swiss
Guarantor from its payment obligations under this Guarantee in respect of the
payment of the Maximum Guaranteed Amount, but merely postpone the payment date
of the unpaid portion of the Maximum Guaranteed Amount until such time as
payment is again permitted notwithstanding such further limitation.

 

136

 

9.2              Swiss Guarantor Undertakings

 

(a)                The Swiss Guarantor
shall not borrow any money (excluding for this purpose any borrowings owing by
the Swiss Guarantor to another Group Company), the amount of which borrowings,
in aggregate, exceeds at any time EUR 150 million.

 

(b)               If, at any time:

 

(i)                the equity of the
Swiss Guarantor exceeds an amount representing the higher of: (A) 40% of
the Swiss Guarantor’s interest-bearing debt and (B) EUR 40 million (the “Minimum Equity”); and

 

(ii)               profits are available
for distribution as dividends under applicable law,

 

the Swiss Guarantor shall
(as soon as reasonably practicable and in each case in accordance with
applicable law) pay, from the profits available for distribution as dividends
under applicable law, dividends to the Borrower in an amount which is equal to
the profits available for distribution as dividends under applicable law which
exceed the Minimum Equity.

 

[Note: to be
inserted in the Swiss Guarantee].

 

[9.1              General Limitation –
Additional Guarantors

 

Without prejudice and in addition to any
limitation on the liability of any Additional Guarantor otherwise provided for
herein, the liability of the Additional Guarantor under this Guarantee shall
not at any time exceed the lesser of:

 

(a)                the amount obtained
by applying the following formula on the date on which this Guarantee is
called:

 

137

 

(i)                the principal amount
of the Additional Guarantor’s outstanding borrowings (excluding for this
purpose any borrowings owing by the Additional Guarantor to another Group
Company), multiplied by

 

(ii)               the principal amount
outstanding under the Facility, divided by

 

(iii)              the total principal
amount outstanding of the Borrower’s borrowings under any facility where the
Additional Guarantor has issued a guarantee; and

 

(b)               any limits imposed
upon its maximum liability under this Guarantee by mandatorily applicable law.]

 

[Note: to be inserted in Additional
Guarantor Guarantee]

 

10.              No Immunity

 

To the extent that the Guarantor has or
hereafter may acquire immunity from jurisdiction of any court or from any legal
process with respect to itself or its property, the Guarantor hereby
irrevocably waives such immunity in respect of its obligations under this
Guarantee.

 

11.              Partial Invalidity, Governing Law

 

If, at any time, any provision of this
Agreement is or becomes illegal, invalid or unenforceable in any respect under
any law of any jurisdiction, neither the legality, validity or enforceability
of the remaining provisions nor the legality, validity or enforceability of
such provision under the law of any other jurisdiction will in any way be
affected or impaired.

 

This Agreement is governed by Austrian law
excluding its conflicts of law rules.

 

138

 

The competent courts of Vienna shall have
exclusive jurisdiction to settle any dispute arising out of or in connection
with this Agreement (including a dispute regarding the existence, validity or
termination of this Agreement) (a “Dispute”).

 

This Clause 11 is for the
benefit of the Agent and the Lenders only. As a result, the Agent shall not be
prevented from taking proceedings relating to a Dispute in any other courts
with jurisdiction. To the extent allowed by law, the parties to this Agreement
may take concurrent proceedings in any number of jurisdictions.

 

 

Place/Date

 

	
  For and on behalf of

  	
   

  	
  For and on behalf of

  
	
  [Guarantor]

  	
   

  	
  Bank Austria Creditanstalt AG

  
	
   

  	
   

  	
   

  
	
  by:

  	
   

  	
   

  	
   

  	
  by:

  	
   

  	
   

  
							

 

139

 

SCHEDULE 12: 
MATERIAL SUBSIDIARIES

 

41.1.1.                                                                                        30 March 2003                                Sappi Papier Holding Group

 

	
   

  	
   

  	
   

  	
   

  	
  Country of

  	
   

  	
   

  	
   

  	
  Effective Holding

  	
   

  	
  Total Assets*

  	
   

  	
  EBIT** 12

  	
   

  
	
  Company Name

  	
   

  	
  ***

  	
   

  	
  Incorporation

  	
   

  	
  Address

  	
   

  	
  %

  	
   

  	
  Sep.02

  	
   

  	
  Months to Sep.02

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  EUR millions

  	
   

  	
  EUR millions

  	
   

  
	
  Sappi Gratkorn GmbH

  	
   

  	
  O

  	
   

  	
  Austria

  	
   

  	
  Brucker Strasse 21, A-8101
  Gratkorn, Austria

  	
   

  	
  100

  	
   

  	
  46,4

  	
   

  	
  3,2

  	
   

  
	
  Sappi Austria Produktions
  GmbH & Co KG

  	
   

  	
  O

  	
   

  	
  Austria

  	
   

  	
  Brucker Strasse 21, A-8101
  Gratkorn, Austria

  	
   

  	
  100

  	
   

  	
  731,8

  	
   

  	
  99,9

  	
   

  
	
  Sappi Austria Vertriebs
  GmbH & Co KG

  	
   

  	
  O

  	
   

  	
  Austria

  	
   

  	
  Brucker Strasse 21, A-8101
  Gratkorn, Austria

  	
   

  	
  100

  	
   

  	
  3,9

  	
   

  	
  0,7

  	
   

  
	
  Sappi International SA

  	
   

  	
  O

  	
   

  	
  Belgium

  	
   

  	
  154 Chaussee de la Hulpe, B-1170
  Brussels, Belgium

  	
   

  	
  42,8****

  	
   

  	
  1.255,9

  	
   

  	
  5,4

  	
   

  
	
  Sappi Lanaken NV

  	
   

  	
  O

  	
   

  	
  Belgium

  	
   

  	
  Montaigneweg 2, B-3620, Lanaken,
  Belgium

  	
   

  	
  100

  	
   

  	
  425,6

  	
   

  	
  17,7

  	
   

  
	
  Sappi Lanaken Press Paper NV

  	
   

  	
  O

  	
   

  	
  Belgium

  	
   

  	
  Montaigneweg 2, B-3620, Lanaken,
  Belgium

  	
   

  	
  100

  	
   

  	
  1.063,8

  	
   

  	
  26,7

  	
   

  
	
  Sappi Alfeld AG

  	
   

  	
  O

  	
   

  	
  Germany

  	
   

  	
  Mühlenmasch 1, D-31061 Alfeld,
  Germany

  	
   

  	
  99,9

  	
   

  	
  413,8

  	
   

  	
  15,9

  	
   

  
	
  Sappi Ehingen AG

  	
   

  	
  O

  	
   

  	
  Germany

  	
   

  	
  Biberacher Strasse 73,
  D089584, Ehingen, Germany

  	
   

  	
  95,9

  	
   

  	
  209,2

  	
   

  	
  18,2

  	
   

  
	
  Sappi Belgium Holding BV

  	
   

  	
  H

  	
   

  	
  Netherlands

  	
   

  	
  Biesenweg 16, NL-6211 AA
  Maastricht, The Netherlands

  	
   

  	
  100

  	
   

  	
  389,4

  	
   

  	
  —

  	
   

  
	
  Sappi Maastricht BV

  	
   

  	
  O

  	
   

  	
  Netherlands

  	
   

  	
  Biesenweg 16, NL-6211 AA Maastricht,
  The Netherlands

  	
   

  	
  100

  	
   

  	
  197,4

  	
   

  	
  25,3

  	
   

  
	
  Sappi Netherlands BV

  	
   

  	
  H

  	
   

  	
  Netherlands

  	
   

  	
  Erasmusdomein 50, NL-6229 BL
  Maastricht, The Netherlands

  	
   

  	
  100

  	
   

  	
  222,3

  	
   

  	
  —

  	
   

  
	
  Sappi Nijmegen BV

  	
   

  	
  O

  	
   

  	
  Netherlands

  	
   

  	
  Ambachtsweg 2, NL-6541 DB
  Nijmegen, The Netherlands

  	
   

  	
  100

  	
   

  	
  90,4

  	
   

  	
  4,3

  	
   

  
	
  Sappi Deutschland Holding GmbH

  	
   

  	
  H

  	
   

  	
  Germany

  	
   

  	
  Mühlenmasch 1, D-31061 Alfeld,
  Germany

  	
   

  	
  100

  	
   

  	
  326,7

  	
   

  	
  (0,1

  	
  )

  
	
  S D Warren Company

  	
   

  	
  O

  	
   

  	
  USA

  	
   

  	
  225 Franklin Street, Boston,
  Massachusetts, 02110, USA

  	
   

  	
  100

  	
   

  	
  1.755,3

  	
   

  	
  0,5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  TOTAL

  	
   

  	
  7.131,9

  	
   

  	
  217,7

  	
   

  

 

140

 

	
  * Total assets = current assets + non-current
  assets

  	
   

  	
  USD/EUR rate

  
	
  ** EBIT = Trading income (excluding
  non-operating income)

  	
   

  	
  Period end:

  
	
  *** O = Operating Company H = Holding Company

  	
   

  	
  1,0869

  
	
  **** The direct and indirect beneficial
  holding by Sappi amounts to 100%

  	
   

  	
   

  

 

141

 

SCHEDULE 13: FORM OF ACCESSION LETTER

 

To:              Bank Austria Creditanstalt AG as Agent

 

From:          [Additional
Guarantor] and Sappi Papier Holding GmbH

 

Dated:

 

Sappi Papier Holding GmbH –
EUR 500,106,406 facility agreement dated May 7, 2003, as amended and
restated pursuant to the amending agreement dated 18 November 2005 (the
“Facility Agreement”)

 

Dear Sirs,

 

1.             We refer to the
Facility Agreement. This is an Accession Letter. Terms defined in the Facility
Agreement have the same meaning in this Accession Letter unless given a
different meaning in this Accession Letter.

 

2.             [Subsidiary] agrees to become an Additional
Guarantor and to be bound by the terms of the Facility Agreement as an
Additional Guarantor pursuant to Clause 26.2 (Additional Guarantors) of the
Facility Agreement. [Subsidiary] is a company duly incorporated under the laws
of [name of relevant jurisdiction].

 

3.             [Subsidiary’s] administrative details are
as follows:

Address:

Fax No:

Attention:

 

4.             This Accession Letter
is signed at [•].

 

5.             This Accession Letter
is governed by Austrian law.

 

 

	
  Sappi Papier Holding GmbH

  	
   

  	
  [Subsidiary]

  

 

142

 

SCHEDULE 14 : EXISTING SUBSIDIARY
INDEBTEDNESS

 

 

EXISTING SUBSIDIARY INDEBTEDNESS

(as
at 31 July 2005)

 

	
  Name of Group Company

  	
   

  	
  Total Principal Amount of

  Indebtedness

  	
   

  
	
  Sappi
  Fine Paper North America

  	
   

  	
   

  	
   

  
	
  Town of Skowhegan/Michigan

  strategic fund/City of Westbrook

  	
   

  	
  USD

  	
  106,610,000

  	
   

  
	
  Sappi
  Germany

  	
   

  	
   

  	
   

  
	
  Allianz AG

  	
   

  	
  EUR

  	
  4,719,000

  	
   

  
	
  Sappi
  Austria

  	
   

  	
   

  	
   

  
	
  OeBB/WVBD

  	
   

  	
  EUR

  	
  7,945,000

  	
   

  
	
  Sappi
  Belgium

  	
   

  	
   

  	
   

  
	
  RZB

  	
   

  	
  EUR

  	
  12,300,000

  	
   

  
	
  Rabobank

  	
   

  	
  EUR

  	
  1,810,000

  	
   

  
	
  KBC Bank

  	
   

  	
  EUR

  	
  1,192,000

  	
   

  

 

143

 

SIGNATURES TO

AMENDING AGREEMENT DATED
18 NOVEMBER 2005 RELATING TO

EUR 500,106,406 FACILITY AGREEMENT DATED 7 MAY 2003

 

 

	
  The Borrower

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SAPPI PAPIER
  HOLDING GMBH

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Kaj Burchardi

  	
   

  	
  Victor Kamm

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The Original
  Guarantor

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SAPPI INTERNATIONAL
  S.A.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Kaj Burchardi

  	
   

  	
  Jörg Pässler

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The Further
  Guarantor

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SAPPI LIMITED

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Kaj Burchardi

  	
   

  	
  Don G. Wilson

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The Further
  Guarantor

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SAPPI TRADING PULP
  AG

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Dr. Hans-Jürg Schürmann

  	
   

  	
  Hans Weissberg

  	
   

  

 

144

 

SIGNATURES TO

AMENDING AGREEMENT DATED
18 NOVEMBER 2005 RELATING TO

EUR 500,106,406 FACILITY AGREEMENT DATED 7 MAY 2003

 

 

	
  The Agent, acting
  on its behalf and on behalf of the Lenders listed below

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  BANK AUSTRIA
  CREDITANSTALT AG

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Ingo Bleier

  	
   

  	
  Andrea Vaz-König

  	
   

  
						

 

 

The Lenders

 

ERSTE BANK
DER

ÖSTERREICHSICHEN
SPARKASSEN AG

 

FORTIS BANK S.A.

 

BNP PARIBAS S.A.
BELGIUM BRANCHE

 

 

BAYRISCHE LANDESBANK

 

BADEN-WÜRTTEMBERGERISCHE

BANK
UNSELBSTÄNDIGE ANSTALT

DER
LANDESBANK BADEN-

WÜRTTEMBERG

 

COMMERZBANK AKTIENGE-

SELLSCHAFT SUCCURSALE DE

BRUXELLES

 

INVESTKREDIT BANK AG

 

WESTLB AG

 

145

 

ABN AMRO BANK
N.V.

NIEDERLASSUNG
DEUTSCHLAND

 

BARCLAYS BANK PLC

 

BAWAG P.S.K. BANK FÜR ARBEIT UND

WIRTSCHAFT UND ÖSTERREICHISCHE

POSTSPARKASSE

AKTIENGESELLSCHAFT

 

ÖSTERREISCHISCHE VOLKSBANKEN

AKTIENGESELLSCHAFT

 

CALYON CORPORATE INVESTMENT

BANK

 

RAIFFEISENBANK OBERÖSTERREICH

AKTIENGESELLSCHAFT

 

HVB BANQUE LUXEMBOURG SOCIÉTÉ

ANONYME

 

VORARLBERGER LANDES- UND

HYPOTHEKENBANK

AKTIENGESELLSCHAFT

 

SALZBURGER LANDES- UND

HYPOTHEKENBANK

AKTIENGESELLSCHAFT

 

146Exhibit
10.1

 

EIGHTH
AMENDMENT TO CREDIT AGREEMENT

 

This EIGHTH
AMENDMENT TO CREDIT AGREEMENT (this “Eighth Amendment”), dated as of December 12,
2005, is by and among ATA AIRLINES INC., an Indiana corporation (the “Borrower”),
ATA HOLDINGS CORP. (the “Parent”), each of the Subsidiaries of the
Parent identified on the signature pages hereto (the “Subsidiaries”),
and SOUTHWEST AIRLINES CO., a Texas corporation (the “Lender”).

 

R E C I T A L
S

 

A.            The
Lender and the Borrower, the Parent and the Subsidiaries entered into that
certain Secured Debtor-in-Possession Credit and Security Agreement dated as of December 22,
2004, as amended by that certain First Amendment to Credit Agreement dated as
of January 30, 2005, that certain Second Amendment to Credit Agreement
dated as of February 25, 2005, that certain Third Amendment to Credit
Agreement dated as of March 31, 2005, that certain Fourth Amendment to
Credit Agreement dated as of April 30, 2005, that certain Fifth Amendment
to Credit Agreement dated as of May 30, 2005, that certain Sixth Amendment
to Credit Agreement dated as of June 30, 2005, and that certain Seventh
Amendment to Credit Agreement dated as of July 31, 2005 (the “Credit
Agreement”), pursuant and subject to the terms and conditions of which,
among other things, the Lender agreed to make loans and other financial
accommodations to the Loan Parties (as defined in the Credit Agreement).

 

B.            The
Borrower has requested that the Lender agree to amend certain provisions of the
Credit Agreement on terms and conditions set forth herein.

 

A G R E E M E
N T 

 

NOW,
THEREFORE, in consideration of the mutual agreements contained herein and
subject to the terms and conditions hereof, the parties hereto hereby agree as
follows:

 

1.             Incorporation
of Recitals.   The Recitals set forth
above are incorporated herein, are acknowledged by the Borrower to be true and
correct and are made a part hereof.

 

2.             Definitions.   All capitalized terms used but not elsewhere
defined herein shall have the respective meanings ascribed to such terms in the
Credit Agreement.

 

3.             Amendments
to Credit Agreement.   The Credit
Agreement is amended as set forth below:

 

(a)           Section 1.01-Definitions.

 

(i)            The
following definitions shall be added to Section 1.01 of the Credit
Agreement in the correct alphabetical location:

 

“Disclosure Statement Financial Projections”
means the Pro Forma Financial Projections which are attached as Exhibit 2
to the Disclosure Statement With Respect To First Amended Joint Chapter 11 Plan
for

 

1

 

Reorganizing Debtors, as
filed on or about December 12, 2005, with the Bankruptcy Court in the
Cases.

 

“New DIP Credit Agreement” means the Secured Superpriority
Debtor-In-Possession Credit Agreement, to be entered into among ATA, as
borrower, each of the other Reorganizing Debtors, as guarantors, and the New
DIP Lender, which is to be executed by the Reorganizing Debtors in connection
with the New DIP Facility, as such agreement may be amended from time to time
in accordance with terms thereof.

 

“New DIP
Facility” means the debtor-in-possession superpriority secured financing
facility provided to the Reorganizing Debtors by the New DIP Lender pursuant to
the New DIP Credit Agreement as authorized by the Bankruptcy Court pursuant to
the New DIP Facility Order.

 

“New DIP
Facility Order” means the final order that was issued by the Bankruptcy
Court from the bench on December 12, 2005 and subsequently entered by the
Bankruptcy Court authorizing and approving the New DIP Facility and the
agreements related thereto.

 

“New DIP
Lender(s)” means MatlinPatterson Global Opportunities Partners II, L.P.
and/or MatlinPatterson Global Opportunities Partners (Cayman) II, L.P. (and/or
one or more funding vehicles they may form and capitalize with one or more
related or unrelated co-investors) as the lender(s) under the New DIP Credit
Agreement.

 

“New Financing” means
the following financing and equity capitalization to be provided to the
Borrower and the Parent (or another holding company which owns all of the
issued and outstanding capital stock of the Borrower), for which commitments
have been made by the New Investor as set forth in the New Financing Commitment
and a certain investment agreement by and among the New Investor and the
Debtors: (i) a $30,000,000 loan to the Borrower as debtor in possession
financing (which loan at the Effective Date of the Borrowers’ Plan of
Reorganization may be satisfied by conversion to common stock equity in the
Parent or another holding company which owns all of the issued and outstanding
capital stock of the Borrower); (ii) purchase of up to $70,000,000 of
common stock of the Parent (or another holding company which owns all of the
issued and outstanding capital stock of the Borrower); and (iii) a
$20,000,000 exit facility to be provided to the Debtors.

 

“New Financing Commitment”
means the accepted letter of commitment and attached term sheet for the New
Financing (and other post-reorganization financing), executed by and
among the New Investor and the Debtors as of November 28, 2005, as
approved

 

2

 

pursuant to the Court’s order dated November 29,
2005 (Docket No. 3288),
a copy of which has been provided by the Borrower to the Lender.

 

“New
Investor” means MatlinPatterson Global Opportunities Partners II, L.P.
and/or MatlinPatterson Global Opportunities Partners (Cayman) II, L.P. (and/or
one or more funding vehicles they may form and capitalize with one or more
related or unrelated co-investors).

 

 “New Investor Exit Facility” means the
exit facility committed to by the New Investor the proceeds of which shall be
used to satisfy the Obligations under this Credit Agreement as of the Effective
Date.

 

(ii)   The definition of the term “Maturity Date,”
as set forth in Section 1.01 of the Credit Agreement, is amended, and is
amended and restated to read in its entirety as follows:

 

“ “Maturity Date” means the
earliest of (a) February 28, 2006, (b) the date of termination
in whole of the Commitments, pursuant to Section 2.06 and 8.02(b), and (c) the
effective date of a Reorganization Plan for the Borrower or the Parent.”

 

(b)           Section 2.02
– Prepayments.   Section 2.02(b) of
the Credit Agreement is hereby amended and supplemented by adding the following
as subsections (iv) and (v) thereto:

 

“(iv)  Upon the entry of an order by the
Bankruptcy Court approving the Debtors’ Motion for Approval of (1) Midway
Gate Restructuring Agreement to Transfer Certain Lease Rights to Southwest and
to Resolve Certain Issues with the City of Chicago, (2) Amendment to
Codeshare Agreement and (3) Amendments to Southwest Bid and Southwest DIP
Loan Agreement (Docket No. 3253) (the “Transfer and Settlement Motion”),
including the Midway Gate Restructuring Transaction (as defined therein), the
outstanding balance of the Loan will be reduced by the total amount of $20
million.

 

“(v) On the Effective Date of an Acceptable Plan of Reorganization, Borrower
shall (i) prepay in cash, by wire transfer, or as otherwise instructed by
the Lender, the aggregate amount of principal of the Loan, together with all
accrued and unpaid interest and fees, and (ii) provide to Lender cash
collateral or any other security in form and substance solely acceptable to the
Lender to reimburse the Lender all amounts of the Obligations resulting from
any draw under the Chicago Guaranty.”

 

(c)           Section 2.05(c) –
Payment of Fees.   Section 2.05(c) of
the Credit Agreement is hereby amended by deleting the current version of Section 2.05(c) in
its entirety and substituting the following in lieu thereof:

 

3

 

“(c)  Payment of Fees.  Except as may otherwise by provided in any
amendment to this Credit Agreement, all fees to be paid by any Loan Party
pursuant to this Credit Agreement and any other Loan Document shall be paid on
the Effective Date of an Acceptable Plan of Reorganization.”

 

(d)           Section 7.11(a) –
Minimum Consolidated EBITDARR.   The
Credit Agreement is amended by deleting the current version of Section 7.11(a) in
its entirety and substituting the following in lieu thereof:

 

“(a) Minimum
Consolidated EBITDARR.   (i) Permit
Consolidated EBITDARR for each calendar month beginning on November 1,
2005 and ending with February 28, 2006 to be less than 75% of the
projected EBITDARR for each such month as derived from the Disclosure Statement
Financial Projections; nor (ii) permit cumulative Consolidated EBITDARR
for each month beginning on November 1, 2005 and ending on February 28,
2006 to be less than 80% of the cumulative Consolidated EBITDARR for each such
calendar month as set forth in the Disclosure Statement Financial Projections.”

 

(e)           Section 7.11(b) –
Minimum Adjusted EBITDARR.   The
Credit Agreement is amended by deleting the current version of Section 7.11(b) in
its entirety and substituting the following in lieu thereof:

 

“(b)   Minimum Adjusted EBITDARR.   (i) Permit Adjusted EBITDARR for each
month beginning on November 1, 2005 and ending with February 28, 2006
to be less than 75% of the projected Adjusted EBITDARR for each such month as
derived from the Disclosure Statement Financial Projections; nor (ii) permit
cumulative Adjusted EBITDARR for each month beginning on November 1, 2005
and ending on February 28, 2006 to be less than 80% of the cumulative
Adjusted EBITDARR for each such month as derived from the Disclosure Statement
Financial Projections.”

 

(f)            Section 7.11(c) -
Liquidity.   The Credit Agreement is
amended by deleting the current version of Section 7.11(c) in its
entirety and substituting the following in lieu thereof.

 

“(c)   Liquidity. 
(i)   Permit Liquidity on any
day during the calendar months beginning on November 1, 2005 through February 28,
2006 to be less than 75% of the projected Liquidity for the last day of each
such calendar month as set forth in the Disclosure Statement Financial
Projections with respect to Parent and its Subsidiaries, including Borrower, on
a consolidated basis.”

 

(g)           Section 6.01(d)-Financial
Statements and Other Reporting.   Section 6.01(d) of
the Credit Agreement is amended by deleting both references

 

4

 

therein to the
Borrower’s Projections and substituting in place thereof reference to the
Disclosure Statement Financial Projections.

 

(h)           Section 6.07(b) and
(c)-Insurance Requirements.           (i) War Risk
and Terrorist Insurance.  The term “Loan
Party” as used in Section 6.07(b) shall only be applicable to the
Borrower and any other Loan Party which is a United States air carrier.  (ii)  
Business Interruption Insurance. 
The term “Loan Party” as used in Section 6.07(c) shall not
include Ambassadair Travel Club, Inc., Amber Travel, Inc., or C8
Airlines, Inc., formerly named Chicago Express Airlines, Inc., as
each of those Loan Parties have ceased business operations.

 

(i)            Section 6.16-Compliance
with Terms of Leaseholds.   Section 6.16
of the Credit Agreement is amended by adding thereto at the end thereof the
following text:

 

“The Borrower shall not be
in violation of this Section 6.16 by reason of: (i) its sale or
assignment of any of the Gate Leaseholds to Lender, or with Lender’s consent,
any assignment or relinquishment of any Gate Leaseholds to the City of Chicago;
or (ii) its termination, cancellation, rejection, failure to renew or
assignment of any Gate Leaseholds or any other leases of real property with
approval of the Bankruptcy Court pursuant to any order issued in the Cases
prior to November 30, 2005, or as contemplated by the Disclosure Statement
Financial Projections.”

 

(j)            Section 6.21-
Gate Utilization.   Section 6.21
of the Credit Agreement is amended by adding thereto at the end thereof the
following text:

 

“The Borrower shall not be
in violation of this Section 6.21 by reason of: (i) its sale or
assignment of any of the Gate Leaseholds to Lender, or with Lender’s consent,
any assignment or relinquishment of any Gate Leaseholds to the City of Chicago;
or (ii) its termination, cancellation, rejection, failure to renew or
assignment of any Gate Leaseholds or any other leases of real property with
approval of the Bankruptcy Court pursuant to any order issued in the Cases
prior to November 30, 2005, or as contemplated by the Disclosure Statement
Financial Projections.”

 

(k)           Section 6.22-Filing
of Disclosure Statement and Reorganization Plan. Section 6.22 of the
Credit Agreement is amended by deleting the current version of Section 6.22
in its entirety and substituting the following in lieu thereof:

 

“6.22   Reorganization Plan.   The Borrower shall obtain confirmation of a
Reorganization Plan which is effective not later than February 28, 2006,
(or such later date as Lender may approve in writing) and which is either: (i) substantially
the same as the First Amended Plan of Reorganization filed by the Borrower with
the Bankruptcy Court for notice purposes on December 12, 2005, with
revisions or amendments

 

5

 

thereto as are approved and
consented to by (i) MatlinPatterson (as that term is defined in such First
Amended Plan of Reorganization) and (ii) Lender.  (A Reorganization Plan which complies with
this Section 6.22 is referred to as an “Acceptable Plan of Reorganization”)”

 

(l)            Section 6.26
- Investment Agreement and Exit Facility. Notwithstanding the terms of Section 6.26
of the Credit Agreement, or any other provision of the Credit Agreement and the
DIP Financing Orders, upon funding of the New Investor Exit Facility, any
obligations or commitments of Lender to provide (i) an equity investment
pursuant to the Bid Proposal, Investment Agreement, Investment Agreement Term
Sheet, Asset Acquisition Agreement, any Orders approving the foregoing or the
DIP Financing Orders and/or (ii) exit financing pursuant to the Bid
Proposal, any Exit Facility documents, the Exit Facility Term Sheet, the Asset
Acquisition Agreement, any Orders approving the foregoing or the DIP Financing
Orders, shall terminate, Lender shall be released from any and all such
obligations or commitments, and the Loan Parties shall deliver to Lender a
release in form and substance acceptable to Lender.

 

(m)          Section 7.01(h)-Permitted
Liens.   Section 7.01(h) of
the Credit Agreement, which has been a “Reserved” section of the Credit
Agreement, is amended to read in its entirety as follows:

 

“(h)   Liens which are both: (i) junior and
subordinate in priority and rank to the Liens held by Lender pursuant to the
terms of this Credit Agreement and the Final Order; and (ii) granted to
secure the New Financing in accordance with the requirements of the New
Financing Commitment, as approved by order of the Bankruptcy Court.  For avoidance of doubt, any such liens,
including without limitation, any liens granted pursuant to the New DIP Credit
Agreement or the New DIP Facility Order, shall not constitute “Permitted Senior
Liens,” as such term is defined in this Credit Agreement.

 

(n)           Section 7.03-Permitted
Indebtedness.   Section 7.03(c)(vi) of
the Credit Agreement, which has been a “Reserved” section of the Credit
Agreement, is amended to read in its entirety as follows:

 

“(vi)   Indebtedness which comprises all or any part
of the New Financing or New Financing Commitment or arises in connection
therewith, including without limitation, any Indebtedness pursuant to the New
DIP Credit Agreement or the New DIP Facility Order, not to exceed the principal
amount of $30,000,000; provided, however, that any such indebtedness shall only
constitute Permitted Indebtedness under this Section 7.03 to the extent
such indebtedness is junior to the Obligations under this Credit Agreement.”

 

(o)           Section 7.06-Collateral
Dispositions.    Section 7.06 of
the Credit Agreement shall be amended as follows:

 

6

 

(i)   Section 7.06(f)(iv) of the Credit
Agreement is amended by deleting the current version of Section 7.06(f)(iv) in
its entirety and substituting the following in lieu thereof:

 

“(iv) such Disposition
shall not be a Disposition of any Gate Leasehold, other than a Disposition by
way of an assignment or transfer of a Gate Leasehold to Lender or with Lender’s
consent.”

 

(ii)   Section 7.06(k) of the Credit Agreement
is amended by deleting the current version of Section 7.06(k) in its
entirety and substituting the following in lieu thereof:

 

“(k)   termination or rejection of any lease or the
return, surrender or abandonment of any property subject thereto, other than
any such termination or rejection which is with respect to a lease of Section 1110
Assets or to which Lender has consented or which has been approved by the
Bankruptcy Court prior to November 30, 2005, or which is pursuant to or
provided for in an Acceptable Reorganization Plan.”

 

(p)           Section 7.07-Restricted
Payments.   Section 7.07 of the
Credit Agreement is amended by adding thereto at the end thereof the following
additional text:

 

“The foregoing
shall not prohibit or restrict Parent and the other Loan Parties from making
commitments solely with respect to (i) the New Financing in accordance
with the terms and conditions set forth in the New Financing Commitment or (ii) the
issuance of equity pursuant to any Acceptable Reorganization Plan.”

 

(q)           Section 7.20-Change
in Capital Structure.   Section 7.20
of the Credit Agreement is amended by deleting the current version of Section 7.20
in its entirety and substituting the following in lieu thereof:

 

“7.20   Change in Capital Structure.   Make any material change in its equity
capital structure as in existence on the Petition Date except pursuant to an
Acceptable Reorganization Plan.”

 

(r)            Section 11.04-Expense
Reimbursements.   Notwithstanding the
terms of Section 11.04 of the Credit Agreement, it is agreed by the Borrower
and the Lender that the expense reimbursements required by Section 11.04(a) shall
be in the fixed sum of $1,000,000 and shall be due and payable to Lender upon
entry of an order by the Bankruptcy Court approving the Transfer and Settlement
Motion and shall be paid to Lender upon the funding of the New DIP Facility.
The Lender agrees that this payment shall be in lieu of any other or additional
expense reimbursement otherwise due to it and not previously paid by the
Borrower or any other Loan Party under the Investment Agreement Term Sheet, the
Bid Proposal, the Bid Procedures Order or the Asset Acquisition Agreement.

 

7

 

For the
avoidance of doubt, neither this Eighth Amendment nor this Section 11.04
shall in any way affect the obligation to pay and the payment of any fees and
interest due and payable under the Credit Agreement, including without
limitation, any fees due and payable under Section 2.05 of the Credit
Agreement and any interest due and payable under Section 2.04 of the
Credit Agreement.  Notwithstanding the
terms of this Eighth Amendment, nothing herein shall in any way affect or
relieve Borrower of its obligations under Section 11.04(b) nor shall
it constitute a waiver of any of Lender’s rights thereunder.

 

(s)                                  Section 8.01
– Events of Default.

 

(i)            Section 8.01
of the Credit Agreement is hereby amended and supplemented by adding the
following as subsection (u) thereto:

 

“(u)  Midway Gate Restructuring Transaction and New
Financing Commitment.  The Borrower or
any Loan Party fails to perform or observe any term, covenant or agreement
contained in, related to or executed in connection with (i) the Amended
Gate Restructuring Term Sheet, the Midway Gate Restructuring Transaction (as
such terms are defined in the Transfer and Settlement Motion or order approving
same), and/or the order of the Bankruptcy Court approving the Transfer and
Settlement Motion, and the transactions, documents, and agreements contemplated
thereby or (ii) the New Financing or New Financing Commitment, and the
transactions, documents and agreements contemplated thereby, including without
limitation, the New DIP Facility, the New DIP Credit Agreement, and the New DIP
Facility Order.”

 

(ii)           Section 8.01(b) of
the Credit Agreement is amended by deleting the current version of Section 8.01(b) in
its entirety and substituting the following in lieu thereof:

 

“(b)     Special
Covenants. The Borrower or any Loan Party fails to perform or observe any term,
covenant or agreement contained in any of (i) Section 6.03 (Notices),
6.05 (Preservation of Existence), 6.10 (Inspection Rights), 6.11 (Use of
Proceeds), 6.12 (Covenant to Give Security), 6.17 (Cash Management) or 6.20
(FAA Matters), 6.19 (Slot Utilization) and 6.20 (Gate Utilization) and such
failure continues for one (1) Business Day after the earlier of the date
on which (A) a Responsible Officer becomes aware of such failure or (B) written
notice thereof shall have been given to the Borrower by the Lender, (ii) Article VII
or (iii) the Borrower fails to perform or observe any term, covenant or
agreement contained in any of Section 6.01 or 6.02 (provided, however,
that the Loan Parties’ failure to obtain a consent of the City of Chicago to
transfer to the Lender the

 

8

 

Midway Hangar
Property pursuant to the Asset Acquisition Agreement shall not constitute a
Default or an Event of Default under this Credit Agreement, notwithstanding any
other provision of this Credit Agreement to the contrary) and such failure
continues for ten (10) Business Days after the earlier of the date on
which (A) a Responsible Officer becomes aware of such failure or (B) written
notice thereof shall have been given to the Borrower by the Lender.”

 

4.             Conditions
to Effectiveness.   The effectiveness
of this Eighth Amendment shall be subject to the satisfaction of all of the
following conditions in a manner, form and substance satisfactory to the
Lender:

 

(a)           Delivery
of Documents.   The following shall
have been delivered to the Lender, each duly authorized and executed and each
in form and substance satisfactory to the Lender:

 

(1)           this
Eighth Amendment; and

 

(2)           such
other instruments, documents, certificates, consents, waivers and opinions as
the Lender may reasonably request.

 

(b)           No
Default.   No Event of Default or
event which, with the giving of notice or the lapse of time, or both, would
constitute an Event of Default, shall exist as of the effective date of this Eighth Amendment,
after giving effect to this Eighth Amendment.

 

(c)           Approval
of the ATSB and the Creditors Committee.  
The Lender shall have received satisfactory evidence that the ATSB and
the Creditors Committee shall have consented to this Eighth Amendment in
accordance with the provisions of Section 11.01 of the Credit Agreement.

 

Upon the
satisfaction of all of the conditions set forth in this Paragraph 4, this
Amendment for all purposes shall be effective as of and prior to the close of October 31,
2005 (the “Effective Date.”)

 

5.             References.   From and after the Effective Date, all terms
used in the Credit Documents which are defined in the Credit Agreement shall be
deemed to refer to such terms, as amended by this Eighth Amendment.  This Eighth Amendment shall constitute a “Loan
Document.”

 

6.             Representations
and Warranties.  Each Loan Party
hereby confirms to the Lender that the representations and warranties set forth
in the Loan Documents are true and correct in all respects as of the date
hereof, and shall be deemed to be remade as of the date hereof.  Each Loan Party represents and warrants to
the Lender that (i) such Loan Party has full power and authority to
execute and deliver this Eighth Amendment and to perform its obligations
hereunder, (ii) upon the execution and delivery hereof, this Eighth
Amendment will be valid, binding and enforceable upon such Loan Party in
accordance with its terms, (iii) the execution

 

9

 

and delivery of this Eighth Amendment does
not and will not contravene, conflict with, violate or constitute a default
under (A) its organizational documents or (B) any applicable law,
rule, regulation, judgment, decree or order or any agreement, indenture or
instrument to which such Loan Party is a party or is bound or which is binding
upon or applicable to all or any portion of such Loan Party’s properties or
assets and (iv) as of the date hereof no Event of Default exists.

 

7.             No Further
Amendments; Ratification of Liability.  
Except as amended hereby, the Credit Agreement and each of the other
Loan Documents shall remain in full force and effect in accordance with its
respective terms.  Each Loan Party hereby
ratifies and confirms its liabilities, obligations and agreements under the
Credit Agreement and the other Loan Documents, all as amended by this Eighth
Amendment, and the Liens created thereby, and acknowledges that (i) it has
no defenses, claims or set-offs to the enforcement by the Lender of such
liabilities, obligations and agreements, (ii) the Lender has fully
performed all obligations to the Loan Parties which it may have had, or has, on
and as of the date hereof and (iii) other than as specifically set forth
herein, the Lender does not waive, diminish or limit any term or condition
contained in the Credit Agreement or the other Loan Documents.  The agreement of the Lender to the terms of
this Eighth Amendment or any other amendment of the Credit Agreement shall not
be deemed to establish or create a custom or course of dealing among the Lender
and the Loan Parties.

 

8.             Incorporation
by Reference.   The following
sections of the Credit Agreement are incorporated by reference in this Eighth
Amendment: 1.02 (Other Interpretive Provisions); 11.02(b) (Effectiveness
of Facsimile Documents and Signatures); 11.11 (Counterparts); 11.12
(Integration); 11.14 (Severability); and 11.15 (Governing Law).

 

9.             Further
Assurances.   Each Loan Party will at
any time and from time to time do, execute, acknowledge and deliver, or will
cause to be done, executed, acknowledged and delivered, all such further acts,
documents and instruments as reasonably may be required by the Lender in order
to effectuate fully the intent of this Eighth Amendment.

 

 

[Signatures of
the Lender and the Loan Parties are on following pages and the remainder
of this page is intentionally blank]

 

10

 

IN WITNESS
WHEREOF, this Eighth Amendment has been executed and delivered by each of the
parties hereto by a duly authorized officer of each such party on the date
first set forth above.

 

	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  SOUTHWEST
  AIRLINES CO., a Texas

  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Laura Wright

  
	
   

  	
  Name:

  	
  Laura
  Wright

  
	
   

  	
  Title:

  	
  SVP
  Finance & CFO

  
	
   

  	
   

  
	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  ATA
  AIRLINES, INC., an Indiana corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Sean Frick

  
	
   

  	
  Name:

  	
  Sean
  Frick

  
	
   

  	
  Title:

  	
  VP
  & CRO

  
	
   

  	
   

  
	
   

  	
  GUARANTORS:

  
	
   

  	
   

  
	
   

  	
  ATA
  HOLDINGS CORP., an Indiana corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Sean Frick

  
	
   

  	
  Name:

  	
  Sean
  Frick

  
	
   

  	
  Title:

  	
  VP
  & CRO

  
	
   

  	
   

  
	
   

  	
  AMBASSADAIR
  TRAVEL CLUB, INC., an

  Indiana corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Sean Frick

  
	
   

  	
  Name:

  	
  Sean
  Frick

  
	
   

  	
  Title:

  	
  VP
  & CRO

  
	
   

  	
   

  
	
   

  	
  ATA
  LEISURE CORP., an Indiana corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Sean Frick

  
	
   

  	
  Name:

  	
  Sean
  Frick

  
	
   

  	
  Title:

  	
  VP
  & CRO

  
	
   

  	
   

  
	
   

  	
  AMBER
  TRAVEL, INC., an Indiana corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Sean Frick

  
	
   

  	
  Name:

  	
  Sean
  Frick

  
	
   

  	
  Title:

  	
  VP
  & CRO

  

 

11

 

(This page is a continuance of the signature pages to the
Eighth Amendment to Credit Agreement.)

 

	
   

  	
  AMERICAN
  TRANS AIR EXECUJET, INC.,

  an Indiana corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Sean Frick

  
	
   

  	
  Name:

  	
  Sean
  Frick

  
	
   

  	
  Title:

  	
  VP
  & CRO

  
	
   

  	
   

  
	
   

  	
  ATA
  CARGO, INC., a California corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Sean Frick

  
	
   

  	
  Name:

  	
  Sean
  Frick

  
	
   

  	
  Title:

  	
  VP
  & CRO

  
	
   

  	
   

  
	
   

  	
  C8
  AIRLINES, INC. formerly named

  CHICAGO EXPRESS AIRLINES, INC., a

  Georgia corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Brian T. Hunt

  
	
   

  	
  Name:

  	
  Brian
  T. Hunt

  
	
   

  	
  Title:

  	
  Secretary

  

 

12

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