SAPPI LIMITED

annum (if the utilization is between 25% and 50%) or 1.00% per annum (if the utilization is greater than
50%) on the amount of the new revolving credit facility that is used. This facility is to be used for general
corporate purposes and was undrawn at the end of September 2010. The new revolving credit facility
contains an interest coverage covenant (2.00 to 1 for all quarters ending from September 27, 2009 to
July 3, 2011, 2.25 to 1 for all quarters ending from October 2, 2011 to April 1, 2012 and 2.50 to 1 for the
quarters ending July 1, 2012 and 30 September 2012) and a leverage covenant (6.00 to 1 for the quarters
ending September 27, 2009 and December 27, 2009, 5.50 to 1 for the quarter ending March 28, 2010,
5.25 to 1 for the quarter ending June 27, 2010, 5.00 to 1 for all quarters ending from September 26, 2010
to July 3, 2011, 4.50 to 1 for the quarter ending October 2, 2011, 4.25 to 1 for all quarters ending from
January 1, 2012 to July 1, 2012 and 4.00 to 1 for the quarter ending September 30, 2012), in each case
measured at the Sappi Limited consolidated level. Subject in each case to certain customary exceptions
and materiality thresholds, the new revolving credit facility contains customary negative covenants and
restrictions, including (among others) restrictions on dividend distributions, the granting of security,
incurrence of indebtedness, the provision of loans and guarantees, a change of business of the Group,
acquisitions or participations in joint ventures and mergers and disposals. In addition, in case any
person acquires more than 35% of the voting rights of Sappi Limited or in case of a sale of all or
substantially all of the assets of the Group, the commitments of the lenders under the new revolving
credit facility will be cancelled and all outstanding borrowings, together with accrued interest and all
other amounts accrued, immediately become due and payable. For further information, see note 20 to
our Group Annual Financial Statements included elsewhere in this Annual Report; ‘‘Item 5—Operating
and Financial Review and Prospects’’; and ‘‘Item 19—Exhibits’’.
On August 27, 2009, Sappi refinanced its existing e 500,106,406 term loan facility with
Oesterreichische Kontrollbank Aktiengesellschaft (‘‘OeKB’’) arranged in May 2003 and previously due in
2010 by entering into a e 400 million term loan facility maturing on April 30, 2014. SPH remains the
borrower under the new OeKB term loan facility which was arranged by UniCredit Bank Austria AG and is
supported by a syndicate of financial institutions. J.P. Morgan Europe Limited is acting as the security
agent. The new OeKB term loan facility is guaranteed by Sappi Limited and the same subsidiaries that
are guarantors (other than SPH) under the new revolving credit facility. The obligations under the new
OeKB term loan facility are secured by substantially the same collateral that secures the obligations
under the new revolving credit facility and the Notes. The annual interest rate on borrowings is calculated
based on the OeKB financing rate plus a margin depending on the credit rating assigned to the senior
secured debt of Sappi Limited (4.00% at BBB�/Baa3 or higher, 5.00% at BB+/Ba1, 5.50% at BB/Ba2,
6.25% at BB�/Ba3 and 7.50% at B+/B1 or lower), plus certain mandatory costs. Initially, the margin is
6.25% per annum. The other material terms of the new OeKB term loan facility, including the financial
covenants, the undertakings and the events of default are substantially the same as the terms of the new
revolving credit facility. For further information, see note 20 to our Group Annual Financial Statements
included elsewhere in this Annual Report; ‘‘Item 5—Operating and Financial Review and Prospects’’;
and ‘‘Item 19—Exhibits’’.
On August 27, 2009, Sappi Limited, SPH, the subsidiary guarantors, the Issuer and the other
obligors entered into an intercreditor agreement with, among others, J.P. Morgan Europe Limited as
security agent, the agent under the new revolving credit facility, the agent under the new OeKB term loan
facility and The Bank of New York Mellon as trustee for the Notes. The intercreditor agreement includes
terms that establish the basis on which the security agent is appointed to hold the collateral created by
the security documents and securing Sappi’s obligations under the Notes, the new revolving credit
facility and the new OeKB term loan facility, under what circumstances the security documents may be
enforced, the application of proceeds from an enforcement in respect of the collateral, and under which
circumstances the collateral may be shared on a pari passu basis with additional third party creditors.
The intercreditor agreement ranks the secured debt pari passu without any preference between any
class of secured debt. Only the security agent has the right to enforce the security documents. The
classes of secured creditors that are permitted to instruct the security agent to enforce the security
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