SAPPI LIMITED

SAPPI
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (Continued)
for the year ended September 2010
28. SHARE-BASED PAYMENTS (Continued)
options be exercised by the participants, Scheme shares released from the Scheme to participants and
Allocation shares delivered to participants. For allocations prior to November 2004, the Share options,
Scheme shares and Allocation shares vested in blocks of 20% per annum on the anniversary date of the
offer and expired 10 years after the offer date.
The Scheme rules provide that appropriate adjustments are to be made to the rights of participants
in the event that the company inter alia, undertakes a rights offer, a capitalization issue, or consolidation
of ordinary shares or any reduction in its ordinary share capital.
The Sappi Limited Performance Share Incentive Trust (‘‘Plan’’)
Under the rules of the Plan, participants who are officers and other employees of the company, may
be awarded conditional contracts to acquire ordinary shares for no cash consideration. The conditional
contracts are subject to performance criteria being met or exceeded after the fourth anniversary date, for
ordinary shares to be allotted or transferred to the participants of the Plan. Should the performance
criteria not be met, then the number of shares allotted are adjusted downwards from 100% to 75%, or
50%, or none depending on the degree of not meeting the criteria. The performance criteria, which
entails a benchmarking of the company’s performance against an appropriate peer group of companies,
is set by the board at the offer date, for each conditional share award.
The Plan rules provide that appropriate adjustments are to be made to the rights of participants in
the event that the company, inter alia, undertakes: a rights offer, or is a party to a scheme of arrangement
affecting the structuring of its issued share capital or reduces its share capital.
The Plan rules also provide that if:
(a) the company undergoes a change in control after an allocation date other than a change in control
initiated by the board itself; or
(b) the persons who have control of the company as at an allocation date, take any decision, pass any
resolution or take any action the effect of which is to delist the company from the JSE Limited and
the company becomes aware of such decision, resolution, or action;
then the company is obligated to notify every Participant thereof on the basis that such Participant may
within a period of one month (or such longer period as the board may permit) take delivery of those
shares which they would have been entitled to had the Performance Criteria been achieved.
Rights offer
Following the December 2008 rights offer and in accordance with the provisions of the Scheme and
the Plan, adjustments were made in fiscal 2009 to the rights of the Participants so that they were neither
better nor worse off than prior to the rights offer. This resulted in additional offers being made to
Participants in respect of all outstanding offers at the time of the rights offer. As in the case of
shareholders that exercised their rights, the Participants of the Plan will be required to pay the rights offer
price of ZAR20.27 per share should the shares vest. Similarly, the Participants of the Scheme may only
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