THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IS
NOT COMPLETE AND MAY BE CHANGED. NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE
ACCOMPANYING PROSPECTUS IS AN OFFER TO SELL THESE SECURITIES AND NEITHER IS
SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR
SALE IS NOT PERMITTED.
Filed pursuant to Rule 424(b)(3)
Registration No. 333-62661
SUBJECT TO COMPLETION, DATED AUGUST 22, 2001
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 22, 2001)
[INTERNATIONAL PAPER LOGO]
$
INTERNATIONAL PAPER COMPANY
% NOTES DUE
--------------
The notes bear interest at the rate of % per year. Interest on the notes
is payable on and of each year, beginning on , 2002.
The notes will mature on . The notes may be redeemed at any time, in
whole or in part, at the redemption prices discussed under the caption
'Description of Notes -- Optional Redemption.' The notes do not have the benefit
of any sinking fund.
The notes will be our senior obligations and will rank equally with all of
our other unsecured senior indebtedness.
--------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
--------------
PER NOTE TOTAL
-------- --------
Public Offering Price....................................... % $
Underwriting Discount....................................... % $
Proceeds to International Paper (before expenses)........... % $
Interest on the notes will accrue from , 2001 to the date of
delivery.
--------------
The underwriters expect that the notes will be ready for delivery in
book-entry form only through The Depository Trust Company, on or about
, 2001.
--------------
MERRILL LYNCH & CO. SALOMON SMITH BARNEY
BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANC ALEX. BROWN
, 2001
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. WE HAVE
NOT, AND THE UNDERWRITERS HAVE NOT, AUTHORIZED ANY OTHER PERSON TO PROVIDE YOU
WITH DIFFERENT INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR
INCONSISTENT INFORMATION, YOU SHOULD NOT RELY ON IT. WE ARE NOT, AND THE
UNDERWRITERS ARE NOT, MAKING AN OFFER TO SELL THESE SECURITIES IN ANY
JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. YOU SHOULD ASSUME THAT
THE INFORMATION APPEARING IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS, AS WELL AS INFORMATION WE PREVIOUSLY FILED WITH THE SEC AND
INCORPORATED BY REFERENCE, IS ACCURATE AS OF THE DATE ON THE FRONT COVER OF THIS
PROSPECTUS SUPPLEMENT ONLY. OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF
OPERATIONS AND PROSPECTS MAY HAVE CHANGED SINCE THAT DATE.
--------------
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
Forward-Looking Statements.................................. S-3
Summary..................................................... S-4
Use of Proceeds............................................. S-5
Selected Consolidated Financial Data........................ S-6
Capitalization.............................................. S-8
Description of Notes........................................ S-9
Underwriters................................................ S-11
Validity of Securities...................................... S-12
Experts..................................................... S-12
PROSPECTUS
Available Information....................................... 4
Incorporation of Certain Documents by Reference............. 4
Ratio of Earnings to Fixed Charges and Ratio of Earnings to
Combined Fixed Charges and Preferred Stock Dividends...... 6
International Paper Company................................. 7
The IPC Trusts.............................................. 7
Use of Proceeds............................................. 8
Description of Debt Securities.............................. 9
Description of Capital Stock................................ 25
Description of Preferred Stock.............................. 25
Description of Depositary Shares............................ 29
Description of Common Stock................................. 31
Description of Warrants..................................... 32
Limitations on Issuance of Bearer Securities................ 34
Description of Trust Preferred Securities and Trust
Guarantees................................................ 34
Plan of Distribution........................................ 38
Validity of Securities...................................... 39
Experts..................................................... 39
-------------------
THESE OFFERING MATERIALS CONSIST OF TWO DOCUMENTS: (a) THIS PROSPECTUS
SUPPLEMENT, WHICH DESCRIBES THE TERMS OF THE NOTES THAT WE ARE CURRENTLY
OFFERING, AND (b) THE ACCOMPANYING PROSPECTUS, WHICH PROVIDES GENERAL
INFORMATION ABOUT OUR DEBT SECURITIES, SOME OF WHICH MAY NOT APPLY TO THE NOTES
THAT WE ARE CURRENTLY OFFERING. THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT
SUPERSEDES ANY INCONSISTENT INFORMATION INCLUDED IN THE ACCOMPANYING PROSPECTUS.
IN VARIOUS PLACES IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS, WE REFER YOU TO OTHER SECTIONS OF SUCH DOCUMENTS FOR ADDITIONAL
INFORMATION BY INDICATING THE CAPTION HEADING OF SUCH OTHER SECTIONS. THE PAGE
ON WHICH EACH PRINCIPAL CAPTION INCLUDED IN THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS CAN BE FOUND IS LISTED IN THE TABLE OF CONTENTS ABOVE.
ALL SUCH CROSS REFERENCES IN THIS PROSPECTUS SUPPLEMENT ARE TO CAPTIONS
CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND NOT IN THE ACCOMPANYING PROSPECTUS,
UNLESS OTHERWISE STATED.
S-2
FORWARD-LOOKING STATEMENTS
This prospectus supplement and the accompanying prospectus includes
forward-looking statements. We have based these forward-looking statements on
our current expectations and projections about future events. These
forward-looking statements are subject to risks, uncertainties, and assumptions
about International Paper, including, among other things:
o whether our initiatives relating to balancing our internal supply with
demand will be successful;
o whether anticipated savings from restructuring activities and facility
rationalizations can be achieved;
o whether our divestiture program will achieve anticipated proceeds;
o changes in domestic or foreign competition;
o changes in the cost or availability of raw materials;
o cost of compliance with environmental laws and regulations;
o competitive pressure among companies in our industry may increase
significantly;
o adverse changes in the interest rate environment may reduce interest
margins or adversely affect our asset values;
o relative adverse changes in exchange rates of the currencies in which we
transact business;
o general economic conditions, whether nationally or in the geographic
market areas in which we conduct business, may be less favorable than
expected;
o legislation or regulatory changes may adversely affect the businesses in
which we are engaged; or
o adverse changes may occur in the securities markets.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties, and assumptions, the forward-looking
events discussed in this prospectus supplement and the accompanying prospectus
might not occur.
S-3
SUMMARY
TERMS OF THE NOTES:
Aggregate principal amount............... $
Interest rate............................ % per year.
Maturity date............................
Interest payment dates................... and of each year, beginning , 2002.
Ranking.................................. The notes will be senior unsecured debt and will rank
equally with all of our existing and future senior
unsecured debt. The notes will be effectively
subordinated to all of our existing and future
secured debt to the extent of the assets securing
that indebtedness.
Optional Redemption...................... We may redeem all or a portion of the notes at any
time, at our option, at a redemption price equal to
the greater of (1) 100% of the aggregate principal
amount of the notes being redeemed, plus accrued and
unpaid interest to the date of redemption or (2) the
sum of the present values of the remaining scheduled
payments of principal and interest in respect of the
notes being redeemed (not including any portion of
the payments of interest accrued as of the date of
redemption) discounted to the redemption date, on a
semi-annual basis, at the treasury rate plus basis
points, plus accrued and unpaid interest to the date
of redemption. See 'Description of Notes -- Optional
Redemption.'
Sinking Fund............................. None.
Form of Note............................. One or more global notes, held in the name of The
Depository Trust Company.
Use of Proceeds.......................... We estimate that the net proceeds from the offering
will be approximately $ million. We intend to use
the proceeds from the offering of the notes to repay
current maturities of long-term debt and for general
corporate purposes.
Tax Consequences......................... Each investor is urged to consult its own tax advisor
as to particular tax consequences to it of
purchasing, holding and disposing of the notes,
including the applicability and effect of any state,
local or foreign tax laws, and of any proposed
changes in applicable laws.
S-4
USE OF PROCEEDS
The net proceeds from the sale of the notes offered hereby are estimated to
be approximately $ million. We intend to use the net proceeds from the sale of
the notes to refinance current maturities of long-term debt and for general
corporate purposes. The indebtedness bears interest at a weighted average
interest rate of LIBOR plus 80 basis points and matures in July, 2002. Pending
application of the proceeds, we plan to invest the proceeds in short-term high
investment grade securities.
S-5
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected financial data for each of the five years in the
period ended December 31, 2000 have been derived from our consolidated financial
statements, which have been audited by Arthur Andersen LLP, independent public
accountants. The financial data as of June 30, 2001 and 2000, and for each of
the six-month periods then ended, have been derived from our unaudited condensed
consolidated financial statements which include, in the opinion of management,
all adjustments, consisting of normal recurring adjustments, necessary to
present fairly our results of operations and financial position for the periods
and dates presented. This data should be read in conjunction with our audited
and unaudited consolidated financial statements, including the notes thereto,
incorporated herein by reference.
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
JUNE 30, DECEMBER 31,
---------------------------- -----------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
---- ---- ---- ---- ---- ---- ----
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
EARNINGS DATA:
Net Sales..................... $13,580 $13,151 $28,180 $24,573 $23,979 $24,556 $24,182
Earnings (loss) before income
taxes, minority interest,
extraordinary items and
accounting change............ (345)(a)(b) 915(d)(e) 723(g) 448(i) 429(k) 143 (l) 939(m)
Net earnings (loss)........... (357)(a)(b)(c) 648(d)(e)(f) 142(g)(h) 183(i)(j) 247(k) (80)(l) 379(m)
CONSOLIDATED BALANCE SHEET
DATA:
Total assets.................. 39,325 44,456 42,109 30,268 31,466 31,971 33,357
Notes payable and current
maturities of long-term
debt......................... 1,271 3,147 2,115 920 1,418 2,465 3,578
Long term debt................ 12,787 12,933 12,648 7,520 7,697 8,521 7,943
Common shareholders' equity... 11,229 13,041 12,034 10,304 10,738 10,647 11,349
PER SHARE DATA:
Net earnings (loss) per common
share before extraordinary
items and accounting change.. $ (0.61)(a)(b) $ 1.23(d)(e) $ 0.82(g) $ 0.48(i) $ 0.60(k) $ (0.20)(l) $ 0.95(m)
Net earnings (loss) per common
share........................ $ (0.74)(a)(b)(c) $ 1.55(d)(e)(f) $ 0.32(g)(h) $ 0.44(i)(j) $ 0.60(k) $ (0.20)(l) $ 0.95(m)
Cash dividend per share(n).... $ 0.50 $ 0.50 $ 1.00 $ 1.01 $ 1.05 $ 1.05 $ 1.05
---------
(a) Includes a $42 million pre-tax charge ($28 million after taxes) for
Champion merger-related costs.
(b) Includes a charge of $465 million before taxes and minority interest ($300
million after taxes and minority interest) for facility closures,
administration realignment and related severence reserves, and a charge of
$85 million ($55 million after taxes) for impairment losses on assets of
businesses held for sale.
(c) Includes a $25 million pre-tax charge ($16 million after taxes and minority
interest) for the cumulative effect of adopting the provisions of SFAS
No. 133, 'Accounting for Derivative Instruments and Hedging Activities', as
amended by SFAS No. 138, and a $73 million pre-tax extraordinary charge
($46 million after taxes) for an adjustment to the expected loss on the
sale of the Masonite business and the loss on the sale of oil and gas
interests.
(d) Includes a $12 million pre-tax charge ($8 million after taxes) for
merger-related costs.
(e) Includes a charge of $71 million before taxes and minority interest ($42
million after taxes and minority interest) for asset shutdowns of excess
internal capacity and cost reduction actions.
(f) Includes a $385 million extraordinary gain ($134 million after taxes and
minority interest) on the sale of our investment in Scitex and Carter Holt
Harvey's sale of its share of COPEC.
(g) Includes a $54 million pre-tax charge ($33 million after taxes) for merger
related expenses, a $125 million pre-tax charge ($80 million after taxes)
for additional Masonite legal reserves, an $824 million charge before taxes
and minority interest ($509 million after taxes and minority
(footnotes continued on next page)
S-6
(footnotes continued from previous page)
interest) for asset shutdowns and a $34 million pre-tax credit ($21 million
after taxes) for the reversals of reserves no longer required.
(h) Includes an extraordinary gain of $385 million before taxes and minority
interest ($134 million after taxes and minority interest) on the sale of
International Paper's investment in Scitex and Carter Holt Harvey's sale of
its share of COPEC, an extraordinary loss of $460 million before taxes
($310 million after taxes) related to the impairment of the Zanders and
Masonite businesses to be sold, an extraordinary gain before taxes and
minority interest of $368 million ($183 million after taxes and minority
interest) related to the sale of Bush Boake Allen, an extraordinary loss of
$5 million before taxes and minority interest ($2 million after taxes and
minority interest) related to Carter Holt Harvey's sale of its Plastics
division, and an extraordinary pre-tax charge of $373 million ($231 million
after taxes) related to impairments of the Argentine investments, as well
as the Chemical Cellulose pulp business and Fine Papers businesses to be
sold.
(i) Includes a $148 million pre-tax charge ($97 million after taxes) for Union
Camp merger-related termination benefits, a $107 million pre-tax charge
($78 million after taxes) for merger-related expenses, a $298 million
pre-tax charge ($180 million after taxes and minority interest) for asset
shutdowns of excess internal capacity and cost reduction actions, a $10
million pre-tax charge ($6 million after taxes) to increase existing
environmental remediation reserves related to certain former Union Camp
facilities, a $30 million pre-tax charge ($18 million after taxes) to
increase existing legal reserves and a $36 million pre-tax credit ($27
million after taxes) for the reversals of reserves that were no longer
required.
(j) Includes an extraordinary loss of $26 million before taxes ($16 million
after taxes) for the extinguishment of high-interest debt that was assumed
in the merger with Union Camp.
(k) Includes a $20 million pre-tax gain ($12 million after taxes) on the sale
of the Veratec nonwovens business, an $83 million pre-tax credit ($50
million after taxes) from the reversals of previously established reserves
that were no longer required, a $111 million pre-tax charge ($68 million
after taxes) for the impairment of oil and gas reserves due to low prices,
a $145 million pre-tax restructuring and asset impairment charge ($82
million after taxes and minority interest expense) and $16 million of
pre-tax charges ($10 million after taxes) related to International Paper's
share of charges taken by Scitex, a 13% investee company, for the write-
off of in-process research and development related to an acquisition and
costs to exit the digital video business.
(l) Includes a pre-tax business improvement charge of $535 million ($385
million after taxes), a $150 million pre-tax provision for legal reserve
($93 million after taxes), a pretax charge of $125 million ($80 million
after taxes) for anticipated losses associated with the sale of the Imaging
businesses, and a pre-tax gain of $170 million ($97 million after taxes and
minority interest) from the redemption of certain retained West Coast
partnership interests and the release of a related debt guaranty.
(m) Includes a pre-tax restructuring and asset impairment charge of $554 million
($386 million after taxes), a $592 million pre-tax gain on the sale of a
West Coast partnership interest ($336 million after taxes and minority
interest), a $155 million pre-tax charge ($99 million after taxes) for the
write-down of the investment in Scitex and a $10 million pre-tax charge ($6
million after taxes) for International Paper's share of a restructuring
charge announced by Scitex in November 1996.
(n) The International Paper dividend has remained at $1.00 per share since
1996. However, dividends on a per share basis have been restated to include
dividends paid by Union Camp which merged with International Paper during
1999 in a transaction accounted for as a pooling-of-interests.
S-7
CAPITALIZATION
Set forth below is our (i) actual unaudited consolidated capitalization as
of June 30, 2001 and (ii) unaudited consolidated capitalization as of June 30,
2001, adjusted to give effect to the issuance of the notes. This information
should be read in conjunction with the audited and unaudited financial
statements, including the notes thereto, and other financial information
pertaining to us incorporated herein by reference.
AS OF
JUNE 30, 2001
---------------------
ACTUAL AS ADJUSTED
------ -----------
(UNAUDITED)
(IN MILLIONS)
INDEBTEDNESS:
Notes payable and current maturities of long-term
debt.................................................. $ 1,271 $ (a)
------- -------
Total short-term debt............................... 1,271
Notes offered hereby.................................... --
Long-term debt, excluding current maturities............ 12,787 (a)
------- -------
Total Indebtedness.......................................... 14,058
International Paper -- Obligated Mandatorily Redeemable
Preferred Securities of Subsidiaries Holding International
Paper Debentures.......................................... 1,805
COMMON SHAREHOLDERS' EQUITY:
Common stock............................................ 484
Paid-in capital......................................... 6,443
Retained earnings....................................... 5,711
Accumulated other comprehensive income (loss)........... (1,358)
Less: Common stock held in treasury, at cost............ 51
------- -------
TOTAL COMMON SHAREHOLDERS' EQUITY........................... 11,229
------- -------
TOTAL CAPITALIZATION........................................ $27,092 $
------- -------
------- -------
---------
(a) Represents the issuance of the notes which are being used to repay current
maturities of long-term debt.
S-8
DESCRIPTION OF NOTES
The following description of the particular terms of the notes supplements
the description of the general terms and provisions of the Debt Securities set
forth under the heading 'Description of Debt Securities' in the accompanying
prospectus. If a particular term is inconsistent with the more general term
described in the prospectus, the particular term replaces the more general term.
GENERAL
We will issue the notes under an indenture dated as of April 12, 1999
between us and The Bank of New York, as Trustee, as supplemented by a
supplemental indenture, to be dated as of , 2001, between us and the
Trustee. We refer to the indenture, as supplemented, as the Indenture.
The notes will initially be limited to $ aggregate principal amount.
We may, without notice to or the consent of the holders of the notes, issue
additional notes of the same tenor as the notes, so that such additional notes
and the notes offered hereby shall form a single series, and references herein
to the notes shall include (unless the context otherwise requires) any further
notes issued as described in this paragraph.
The notes will mature on . The notes will bear interest from
, 2001 at the rate per annum of %, payable semiannually on
and of each year, commencing , 2002, to the
persons in whose names such notes are registered, subject to certain exceptions,
at the close of business on or , as the case may be, next
preceding such interest payment date.
The notes have no sinking fund provisions.
OPTIONAL REDEMPTION
We may redeem all or a portion of the notes at any time as set forth below.
We will mail notice to registered holders of the notes of our intent to redeem
on not less than 30 nor more than 60 days' notice. We may redeem the notes at a
redemption price equal to the greater of:
o 100% of the principal amount plus accrued interest to the redemption date;
or
o the sum of the present values of the remaining scheduled payments of
principal and interest (exclusive of interest accrued to the date of
redemption) discounted to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate plus basis points, plus accrued interest on the principal
amount being redeemed to the redemption date.
'Business Day' means any calendar day that is not a Saturday, Sunday or
legal holiday in New York, New York and on which commercial banks are open for
business in New York, New York.
'Comparable Treasury Issue' means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term ('Remaining Life') of the notes to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the notes.
'Comparable Treasury Price' means, with respect to any redemption date,
(A) the average of four Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if the Independent Investment Banker obtains fewer than four
such Reference Treasury Dealer Quotations, the average of all such Quotations.
'Independent Investment Banker' means either one of the Reference Treasury
Dealers or an independent investment banking institution of national standing
appointed by us.
'Reference Treasury Dealer' means (i) each of Merrill Lynch, Pierce, Fenner
& Smith Incorporated and Salomon Smith Barney Inc. and their respective
successors, provided, however,
S-9
that if any of the foregoing shall cease to be a primary U.S. Government
securities dealer in New York City (a 'Primary Treasury Dealer'), we will
substitute therefor another Primary Treasury Dealer and (ii) any other Primary
Treasury Dealer selected by us.
'Reference Treasury Dealer Quotations' means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Independent Investment Banker, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Independent Investment Banker by such Reference
Treasury Dealer at 5:00 p.m. on the third Business Day preceding such redemption
date.
'Treasury Rate' means, with respect to any redemption date, (i) the yield,
under the heading which represents the average for the immediately preceding
week, appearing in the most recently published statistical release designated
'H.15(519)' or any successor publication which is published weekly by the Board
of Governors of the Federal Reserve System and which establishes yields on
actively traded United States Treasury securities adjusted to constant maturity
under the caption 'Treasury Constant Maturities,' for the maturity corresponding
to the Comparable Treasury Issue (if no maturity is within three months before
or after the Remaining Life, yields for the two published maturities most
closely corresponding to the Comparable Treasury Issue shall be determined and
the Treasury Rate shall be interpolated or extrapolated from such yields on a
straight line basis, rounding to the nearest month) or (ii) if such release (or
any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semiannual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date. The Treasury Rate shall be calculated on the third
Business Day preceding the redemption date.
MODIFICATION
The Indenture will provide that modifications and amendments of the
Indenture may be made by us and the Trustee under the Indenture only with the
consent of the holders of not less than a majority in aggregate principal amount
of the notes issued under the Indenture and affected by such modification or
amendment.
No such modification or amendment may, without the consent of each holder of
the notes affected thereby:
o change the maturity of the principal of, or any instalment of principal of
or interest on, any such note,
o reduce the principal amount of, or any premium or interest on, any such
note,
o change any obligation of ours to pay additional amounts,
o change the coin or currency in which any note or any premium or interest
thereon is payable,
o impair the right to institute suit for the enforcement of any payment on
or with respect to any such note,
o reduce the percentage in principal amount of outstanding notes, the
consent of whose holders is required for modification or amendment of the
Indenture or for waiver of compliance with certain provisions of the
Indenture or for waiver of certain defaults,
o reduce the requirements contained in the Indenture for quorum or voting,
o change any obligations of ours to maintain an office or agency in the
places and for the purposes required by the indenture, or
o modify any of the above provisions.
TAX CONSEQUENCES
Each investor is urged to consult its own tax advisor as to particular tax
consequences to it of purchasing, holding and disposing of the notes, including
the applicability and effect of any state, local or foreign tax laws, and of any
proposed changes in applicable laws.
S-10
UNDERWRITERS
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney
Inc. are acting as representatives of the underwriters named below.
Subject to the terms and conditions stated in the underwriting agreement
dated the date of this prospectus supplement, each underwriter named below has
agreed to purchase, and we have agreed to sell to that underwriter, the
principal amount of notes set forth opposite the underwriter's name.
PRINCIPAL
AMOUNT
UNDERWRITER OF NOTES
----------- ------------
Merrill Lynch, Pierce, Fenner & Smith Incorporated.... $
Salomon Smith Barney Inc..............................
Banc of America Securities LLC........................
Deutsche Banc Alex. Brown Inc.........................
------------
Total............................................. $
------------
------------
The underwriting agreement provides that the obligations of the underwriters
to purchase the notes included in this offering are subject to approval of legal
matters by counsel and to other conditions. The underwriters are obligated to
purchase all the notes if they purchase any of the notes.
The underwriters propose to offer some of the notes directly to the public
at the public offering price set forth on the cover page of this prospectus
supplement and some of the notes to dealers at the public offering price less a
concession not to exceed % of the principal amount of the notes. The
underwriters may allow, and dealers may reallow a concession not to exceed %
of the principal amount of the notes on sales to other dealers. After the
initial offering of the notes to the public, the representatives may change the
public offering price and concessions.
In connection with the offering the underwriters may purchase and sell notes
in the open market. These transactions may include over-allotment, syndicate
covering transactions and stabilizing transactions. Over-allotment involves
syndicate sales of notes in excess of the principal amount of notes to be
purchased by the underwriters in the offering, which creates a syndicate short
position. Syndicate covering transactions involve purchases of the notes in the
open market after the distribution has been completed in order to cover
syndicate short positions. Stabilizing transactions consist of certain bids or
purchases of notes made for the purpose of preventing or retarding a decline in
the market price of the notes while the offering is in progress.
The underwriters also may impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when the
underwriters, in covering syndicate short positions or making stabilizing
purchases, repurchase notes originally sold by that syndicate member.
Any of these activities may have the effect of preventing or retarding a
decline in the market price of the notes. They may also cause the price of the
notes to be higher than the price that otherwise would exist in the open market
in the absence of these transactions. The underwriters may conduct these
transactions in the over-the-counter market or otherwise. If the underwriters
commence any of these transactions, they may discontinue them at any time.
We estimate that our total expenses for this offering will be $ .
S-11
VALIDITY OF SECURITIES
Certain legal matters with respect to the notes offered hereby will be
passed upon for us by Davis Polk & Wardwell and Barbara Smithers, our Vice
President and Corporate Secretary. Skadden, Arps, Slate, Meagher & Flom LLP, New
York, New York, will pass upon certain legal matters for the underwriters.
EXPERTS
See 'Experts' in the accompanying prospectus.
S-12
PROSPECTUS
$2,075,775,000
[INTERNATIONAL PAPER LOGO]
DEBT SECURITIES, PREFERRED STOCK, COMMON STOCK AND WARRANTS
INTERNATIONAL PAPER CAPITAL TRUST III
INTERNATIONAL PAPER CAPITAL TRUST IV
TRUST PREFERRED SECURITIES FULLY AND UNCONDITIONALLY
GUARANTEED BY INTERNATIONAL PAPER COMPANY
-------------------
International Paper Company, a New York corporation (the 'Company' or
'International Paper'), may issue from time to time, together or separately up
to an aggregate initial offering price of $2,075,775,000 of its (i) debt
securities (the 'Debt Securities'), which may be either senior debt securities
(the 'Senior Debt Securities') or subordinated debt securities (the
'Subordinated Debt Securities'), consisting of notes, debentures or other
unsecured evidences of indebtedness in one or more series, (ii) shares of its
serial preferred stock, par value $1.00 per share (the 'Preferred Stock'),
which, for any or all series of Preferred Stock, may be issued in the form of
depositary shares evidenced by depositary receipts (the 'Depositary Shares');
(iii) shares of its common stock, par value $1.00 per share (the 'Common
Stock'), and shares issuable upon conversion of securities which are, pursuant
to the terms thereof, convertible into shares of Common Stock; and
(iv) warrants to purchase securities of the Company as shall be designated by
the Company at the time of the offering (the 'Warrants') in amounts, at prices
and on terms to be determined at the time of the offering. The Debt Securities,
Preferred Stock, Common Stock and Warrants may be offered independently or
together in any combination for sale directly to purchasers or through dealers,
underwriters or agents designated and in amounts, at prices and on terms to be
determined by market conditions at the time of the offering. The Debt
Securities, Preferred Stock, Depositary Shares, Common Stock and Warrants are
referred to herein collectively as the 'Company Securities.'
International Paper Capital Trust III and International Paper Capital Trust
IV (each, an 'IPC Trust' and collectively, the 'IPC Trusts'), statutory business
trusts formed under Delaware law, may offer, from time to time, preferred
securities (the 'Trust Preferred Securities') with the payment of dividends and
payments on liquidation or redemption of the Trust Preferred Securities issued
by each IPC Trust guaranteed on a subordinated basis by the Company (the 'Trust
Guarantees') to the extent described herein and in an accompanying prospectus
supplement (the 'Prospectus Supplement'). The Company will be the owner of the
trust interests represented by common securities (the 'Trust Common Securities')
to be issued by each IPC Trust. Unless indicated otherwise in a Prospectus
Supplement, each IPC Trust exists for the sole purpose of issuing its trust
interests and investing the proceeds thereof in Subordinated Debt Securities.
The Company Securities and the Trust Preferred Securities are referred to herein
collectively as the 'Offered Securities.'
The Offered Securities may be offered as separate series or issuances at an
aggregate initial offering price not to exceed $2,075,775,000 or, if applicable,
the equivalent thereof in one or more foreign currencies, currency units,
composite currencies or in amounts determined by reference to an index as shall
be designated by the Company, in amounts, at prices and on terms to be
determined in light of market conditions at the time of sale and set forth in a
Prospectus Supplement or Prospectus Supplements. The Offered Securities may be
offered separately or as units with other Offered Securities, in separate series
in amounts, at prices and on terms to be determined at or prior to the time of
sale.
Unless otherwise specified in a Prospectus Supplement, the Senior Debt
Securities, when issued, will be unsecured and will rank on a parity with all
other unsecured and unsubordinated indebtedness of the Company. The Subordinated
Debt Securities, when issued, will be subordinated in right of payment to all
Senior Indebtedness of the Company. Certain specific terms of the particular
Offered Securities in respect of which this Prospectus is being delivered are
set forth in the Prospectus Supplement, including, where applicable, (i) in the
case of Debt Securities, the title, aggregate principal amount, denominations,
maturity, any interest rate (which may be fixed or variable) and time of payment
of any interest, any terms for redemption at the option of the Company or the
holder, any terms for sinking fund payments, any terms for conversion or
exchange into other Offered Securities, currency or currencies of denomination
and payment, if other than U.S. dollars, any listing on a securities exchange
and any other terms in connection with the offering and sale of the Debt
Securities in respect of which this Prospectus is delivered, as well as the
initial public offering price; (ii) in the case of Preferred Stock, the specific
title, the aggregate amount, any dividend (including the method of calculating
payment of dividends), seniority, liquidation, redemption, voting and other
rights, any terms for any conversion or exchange into other Offered Securities,
any listing on a securities exchange, the initial public offering price and any
other terms; (iii) in the case of Common Stock, the number of shares of Common
Stock and the terms of offering thereof; (iv) in the case of Warrants, the
designation and number, the exercise price, any listing of the Warrants or the
underlying Offered Securities on a securities exchange and any other terms in
connection with the offering, sale and exercise of the Warrants; (v) in the case
of Trust Preferred Securities, the designation, number of shares, liquidation
amount per share, initial public offering price, dividend rate (or method of
calculation thereof), dates on which dividends shall be payable and dates from
which dividends shall accrue, any redemption or sinking fund provisions and any
conversion or exchange provisions; and (vi) in the case of all Offered
Securities, whether such Offered Securities will be offered separately or as a
unit with other Offered Securities. The Prospectus Supplement will also contain
information, where applicable, about certain United States Federal income tax
considerations relating to, and any listing on a securities exchange of, the
Offered Securities covered by the Prospectus Supplement.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The Offered Securities may be sold directly, through agents, underwriters or
dealers as designated from time to time, or through a combination of such
methods. See 'Plan of Distribution.' If agents of the Company or the IPC Trusts
or any dealers or underwriters are involved in the sale of the Offered
Securities in respect of which this Prospectus is being delivered, the names of
such agents, dealers or underwriters and any applicable agent's commission,
dealer's purchase price or underwriter's discount will be set forth in or may be
calculated from the Prospectus Supplement with respect to such Offered
Securities. The net proceeds to the Company or the IPC Trusts from such sale
also will be set forth in a Prospectus Supplement.
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement.
THE DATE OF THIS PROSPECTUS IS AUGUST 22, 2001
The Debt Securities may be issued in registered form or, subject to certain
limitations set forth herein, bearer form with coupons, or both. In addition,
all or a portion of the Debt Securities of a series may be issuable in temporary
or permanent global form and may be issued in the name of a depository
institution as book-entry securities. Subject to certain exceptions, Debt
2
Securities in bearer form may not be offered or sold to persons within the
United States or its possessions or to United States persons. See 'Limitations
on Issuance of Bearer Securities.'
The Company's Common Stock is listed on the New York Stock Exchange under
the trading symbol 'IP.' Any Common Stock sold pursuant to a Prospectus
Supplement will be listed on such exchange, subject to official notice of
issuance.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE ACCOMPANYING
PROSPECTUS SUPPLEMENT OR THE DOCUMENTS INCORPORATED OR DEEMED INCORPORATED BY
REFERENCE HEREIN, AND ANY INFORMATION OR REPRESENTATIONS NOT CONTAINED HEREIN OR
THEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY
ANY AGENT, DEALER OR UNDERWRITER. THIS PROSPECTUS OR PROSPECTUS SUPPLEMENT DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT AT ANY TIME DOES
NOT IMPLY THAT THE INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
3
AVAILABLE INFORMATION
The Company and the IPC Trusts have filed with the Securities and Exchange
Commission (the 'Commission') a joint registration statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
'Registration Statement') under the Securities Act of 1933, as amended (the
'Securities Act') with respect to the securities offered hereby. This
Prospectus, which forms a part of the Registration Statement, does not contain
all of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company, the IPC Trusts
and the securities offered hereby, reference is made to the Registration
Statement and to the exhibits thereto. Any statements made in this Prospectus
concerning the provisions of certain documents are not necessarily complete and,
in each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
International Paper is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the 'Exchange Act'), and in
accordance therewith files reports and other information with the Commission.
The Registration Statement, the exhibits forming a part thereof and the reports
and other information filed by the Company with the Commission may be inspected
and copies may be obtained at the principal office of the Commission at 450
Fifth Street, N.W., Washington D.C. 20549, and at the following regional offices
of the Commission: 500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
and 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such
materials can be obtained from the Public Reference Room of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Information on
the operation of the Public Reference Room may be obtained by calling the
Commission at 1-800-SEC-0330. Such materials may also be accessed electronically
by means of the Commission's home page on the Internet at (http://www.sec.gov.).
Reports and other information concerning the Company can also be inspected at
the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005.
No separate financial statements of the IPC Trusts have been included or
incorporated by reference herein. Neither the IPC Trusts nor the Company
considers such financial statements material to holders of Trust Preferred
Securities because (i) all of the voting securities of each of the IPC Trusts
will be owned, directly or indirectly, by the Company, a reporting company under
the Exchange Act, (ii) each of the IPC Trusts has no independent operations but
rather exists for the purpose of issuing securities representing undivided
beneficial interests in the assets of each such IPC Trust and investing the
proceeds thereof in Subordinated Debt Securities, and (iii) the obligations of
the IPC Trusts under the Trust Preferred Securities issued by such trust are
fully and unconditionally guaranteed on a subordinated basis by the Company to
the extent set forth herein. See 'The IPC Trusts' and 'Description of Trust
Preferred Securities and Trust Guarantees -- Trust Guarantees.'
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
International Paper has filed with the Commission, pursuant to the Exchange
Act:
o (File No. 1-3157), an Annual Report on Form 10-K for the fiscal year ended
December 31, 2000, filed on March 26, 2001 (the 'International Paper 2000
Form 10-K');
o Quarterly Reports on Form 10-Q for the quarter ended March 31, 2001, filed
on May 14, 2001 and for the quarter ended June 30, 2001, filed on
August 14, 2001; and
o Current Reports on Form 8-K, dated January 24, 2001 (filed on January 25,
2001), April 18, 2001 (filed on April 19, 2001), June 14, 2001 (filed on
June 14, 2001) and July 17, 2001 (filed on July 17, 2001).
The information incorporated by reference is deemed to be part of this
document except for any information superseded by information in this document.
Statements contained in any such documents as to the contents of any contract or
other document referred to therein are not necessarily complete and, in each
instance, reference is made to the copy of such contract or other
4
document filed with the Commission, each such statement being qualified in all
respects by such reference.
The following documents filed by the Company with the Commission pursuant to
the Exchange Act (File No. 1-3157) are also incorporated in this Prospectus by
reference: (i) the description of the Company's capital stock which is contained
in the Company's registration statement on Form 8-A, dated July 20, 1976, as
amended, and (ii) the Company's registration statements on Form S-3, filed
January 8, 1992 (No. 33-44855) and December 23, 1993 (No. 33-51447).
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Offered Securities shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated, or deemed to be incorporated, by reference herein or contained in
this Prospectus shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent any statement contained herein or in any
subsequently filed document which also is, or is deemed to be, incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed to constitute a part hereof except as
so modified or superseded. This Prospectus does not contain all the information
set forth in the Registration Statement of which this Prospectus forms a part
which the Company has filed with the Commission and to which reference is hereby
made.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF
THIS PROSPECTUS HAS BEEN DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF SUCH
PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS WHICH ARE INCORPORATED HEREIN BY
REFERENCE, OTHER THAN EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS). REQUESTS FOR SUCH
COPIES SHOULD BE DIRECTED TO INTERNATIONAL PAPER COMPANY, 400 ATLANTIC STREET,
STAMFORD, CONNECTICUT 06921, ATTENTION: INVESTOR RELATIONS DEPARTMENT
(TELEPHONE: (203) 541-8000).
Unless otherwise indicated, currency amounts in this Prospectus and any
Prospectus Supplement are stated in United States dollars ('$,' 'dollars,' 'U.S.
dollars' or 'U.S.$').
5
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
The following table sets forth our ratio of earnings to fixed charges on a
historical basis for each of the five years in the period ended December 31,
2000, and for the six-month periods ended June 30, 2001 and June 30, 2000.
FOR THE SIX MONTHS
ENDED FOR THE YEAR ENDED
JUNE 30, DECEMBER 31,
------------------- --------------------------------
2001 2000 2000 1999 1998 1997 1996
---- ---- ---- ---- ---- ---- ----
(UNAUDITED)
--(1) 2.77 1.42 1.27 1.38 --(1) 1.83
---------
(1) Our deficiency in earnings necessary to cover fixed charges was $407.5
million for the six months ended June 30, 2001 and $72.0 million for the
year ended December 31, 1997.
For purposes of computing the ratio of earnings to fixed charges, earnings
include pre-tax earnings before extraordinary charges and the cumulative effect
of accounting changes, interest expense, the estimated interest factor in rent
expense (which, in our opinion, approximates one-third of rent expense) and
preferred dividends of subsidiaries, and adjustments for undistributed equity
earnings and the amortization of capitalized interest. Fixed charges include
interest incurred (including amounts capitalized), the estimated interest factor
in rent expense and preferred dividends of subsidiaries.
6
INTERNATIONAL PAPER COMPANY
We are a global forest products, paper and packaging company that is
complemented by an extensive distribution system, with primary markets and
manufacturing operations in the United States, Canada, Europe, the Pacific Rim,
and South America. Substantially all of our businesses have experienced, and are
likely to continue to experience, cycles relating to available industry capacity
and general economic conditions. We are a New York corporation and were
incorporated in 1941 as the successor to the New York corporation of the same
name organized in 1898.
In the United States at December 31, 2000, we operated 35 pulp, paper and
packaging mills, 105 converting and packaging plants, 46 wood products
facilities, seven specialty panels and laminated products plants and eight
specialty chemicals plants. Production facilities at December 31, 2000 in
Europe, Asia, Latin America, South America and Canada included 15 pulp, paper
and packaging mills, 48 converting and packaging plants, 15 wood products
facilities, three specialty panels and laminated products plants and seven
specialty chemicals plants. We distribute printing, packaging, graphic arts,
maintenance and industrial products through over 300 distribution branches
located primarily in the United States. At December 31, 2000, we owned or
managed approximately 12 million acres of forestlands in the United States,
mostly in the South, 1.5 million acres in Brazil and had, through licenses and
forest management agreements, harvesting rights on government-owned timberlands
in Canada.
At December 31, 2000, through Carter Holt Harvey, a New Zealand company
which is approximately 50.4% owned by International Paper, we operated five
mills producing pulp, paper, packaging and tissue products, 26 converting and
packaging plants and 56 wood products manufacturing and distribution facilities,
primarily in New Zealand and Australia. Carter Holt Harvey distributes paper and
packaging products through seven distribution branches located in New Zealand
and Australia. In New Zealand, Carter Holt Harvey owns approximately 820,000
acres of forestlands.
Our principal executive offices are located at 400 Atlantic Street,
Stamford, Connecticut 06921 and our telephone number is (203) 541-8000.
THE IPC TRUSTS
International Paper Capital Trust III and International Paper Capital
Trust IV (each, an 'IPC Trust' and collectively, the 'IPC Trusts') are statutory
business trusts each formed under Delaware law pursuant to (i) a separate
Declaration of Trust (a 'Declaration') executed by the Company, as sponsor for
such IPC Trusts, and the Trustees (as defined herein) of such IPC Trust and
(ii) the filing of a certificate of trust with the Delaware Secretary of State.
Unless an accompanying Prospectus Supplement provides otherwise, each IPC Trust
exists for the sole purposes of (i) issuing the Trust Preferred Securities and
investing the proceeds thereof in a specific series of Subordinated Debt
Securities, (ii) issuing and selling Common Securities to the Company in
exchange for cash and investing the proceeds thereof in additional Subordinated
Debt Securities, and (iii) engaging in such other activities as are necessary,
convenient or incidental thereto. Each IPC Trust shall not borrow money, issue
debt or reinvest proceeds derived from investments, pledge any of its assets, or
otherwise undertake (or permit to be undertaken) any activity that would cause
such IPC Trust not to be classified for United States Federal income tax
purposes as a grantor trust. All of the Trust Common Securities of each IPC
Trust will be owned by the Company. The Trust Common Securities will rank pari
passu, and payments will be made thereon pro rata, with the Trust Preferred
Securities, except that upon the occurrence and continuance of an event of
default under the Declaration, the rights of the holders of the Trust Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Trust Preferred Securities. The Company will acquire Trust Common Securities
having an aggregate liquidation amount equal to a minimum of 3% of the total
capital of each IPC Trust. Each IPC Trust will have a term of 40 years, but may
terminate earlier as provided in the Declaration of such IPC Trust. Each IPC
Trust's business and affairs will be conducted by the Trustees of such IPC
Trust. The holder of the Trust Common Securities of each IPC Trust will be
entitled to appoint, remove or replace any of,
7
or increase or reduce the number of, the Trustees of such IPC Trust. The duties
and obligations of the Trustees of each IPC Trust shall be governed by the
Declaration of such IPC Trust. At least one of the Trustees of each IPC Trust
will be a person who is an employee or officer of or who is affiliated with the
Company (a 'Regular Trustee'). One Trustee of each IPC Trust will be a financial
institution that is not affiliated with the Company, which shall act as property
trustee and as indenture trustee for the purposes of the Trust Indenture Act of
1939, as amended (the 'Trust Indenture Act'), pursuant to the terms set forth in
a Prospectus Supplement (the 'Property Trustee'). In addition, unless the
Property Trustee of each IPC Trust maintains a principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
one Trustee of each IPC Trust will be a legal entity having a principal place of
business in, or an individual resident of, the State of Delaware (the 'Delaware
Trustee' and, together with the Regular Trustee and the Property Trustee, the
'Trustees'). The Company will pay all fees and expenses related to each IPC
Trust and the offering of the Trust Preferred Securities of such IPC Trust.
Unless otherwise indicated in an applicable Prospectus Supplement, the Property
Trustee will be The Bank of New York, and the Delaware Trustee will be The Bank
of New York (Delaware). Unless otherwise indicated in an applicable Prospectus
Supplement, the office of the Delaware Trustee in the State of Delaware is White
Clay Center, Route 273, Newark, Delaware 19711. The principal place of business
of each IPC Trust is c/o International Paper Company, 400 Atlantic Street,
Stamford, Connecticut 06921. Telephone: (203) 541-8000.
USE OF PROCEEDS
Unless otherwise specified in the Prospectus Supplement, the net proceeds
from the sale of the Company Securities offered hereby will be used for general
corporate purposes. Unless otherwise specified in the Prospectus Supplement, the
IPC Trusts will use all proceeds from the sale of Trust Preferred Securities to
purchase Subordinated Debt Securities of the Company. Additional information on
the use of net proceeds from the sale of the Offered Securities offered hereby
may be set forth in the Prospectus Supplement relating to such Offered
Securities.
8
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions of
the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement and
the extent, if any, to which such general provisions may not apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating to
such Debt Securities.
The Senior Debt Securities will be issued under one of two identical
Indentures (each, a 'Senior Indenture'), the forms of which have been filed with
the Commission as exhibits to, or incorporated by reference in, the Registration
Statement of which this Prospectus forms a part, to be entered into between the
Company and The Chase Manhattan Bank, N.A., as trustee, or such other trustee as
shall be named in a Prospectus Supplement. The Subordinated Debt Securities will
be issued under one of two separate identical Indentures (each, a 'Subordinated
Indenture'), the forms of which have been filed with the Commission as exhibits
to, or incorporated by reference in, the Registration Statement of which this
Prospectus forms a part, to be entered into between the Company and The Chase
Manhattan Bank, N.A., as trustee, or such other trustee as shall be named in a
Prospectus Supplement. The Senior Indenture and the Subordinated Indenture are
sometimes referred to collectively as the 'Indentures.' Copies of the Senior
Indenture and the Subordinated Indenture have been filed as exhibits to the
Registration Statement. The Chase Manhattan Bank, N.A., or such other trustee as
shall be named in a Prospectus Supplement, as trustee under the Senior Indenture
and under the Subordinated Indenture, is referred to herein as the 'Trustee.'
The following summaries of certain provisions of the Senior Debt Securities,
the Subordinated Debt Securities and the Indentures do not purport to be
complete and are subject to, and qualified in their entirety by reference to,
all the provisions of the Indenture applicable to a particular series of Debt
Securities, including the definitions therein of certain terms. Wherever
particular Sections, Articles or defined terms of the Indentures are referred to
herein or in a Prospectus Supplement, it is intended that such Sections,
Articles or defined terms shall be incorporated by reference herein or therein,
as the case may be. Section and Article references used herein are references to
the applicable Indenture. Except as otherwise indicated, the terms of the Senior
Indenture and the Subordinated Indenture are identical. Capitalized terms not
otherwise defined herein shall have the meanings given to them in the applicable
Indenture.
GENERAL
The Indentures will not limit the aggregate principal amount of Debt
Securities which may be issued thereunder, and each Indenture provides that Debt
Securities may be issued thereunder from time to time in one or more series up
to the aggregate amount from time to time authorized by the Company for each
series. Unless otherwise specified in the Prospectus Supplement, the Senior Debt
Securities when issued will be unsecured and unsubordinated obligations of the
Company and will rank equally and ratably with all other unsecured and
unsubordinated indebtedness of the Company. The Subordinated Debt Securities
when issued will be subordinated in right of payment to the prior payment in
full of all Senior Indebtedness (as defined in the Subordinated Indenture) of
the Company as described in the Prospectus Supplement applicable to the offering
of Subordinated Debt Securities.
Concurrently with the issuance of Trust Preferred Securities, the IPC Trusts
will invest the proceeds thereof and the consideration paid by the Company for
the related Trust Common Securities in Subordinated Debt Securities. The
Subordinated Debt Securities will be in the principal amount equal to the
aggregate stated liquidation preference of the Trust Preferred Securities plus
the Company's concurrent investment in the related Trust Common Securities.
Reference is made to the Prospectus Supplement relating to the particular
series of Debt Securities offered thereby for a description of the following
terms or additional provisions of the Debt Securities:
o the title of the Debt Securities;
9
o whether the Debt Securities are Senior Debt Securities or Subordinated
Debt Securities;
o any limit on the aggregate principal amount of the Debt Securities;
o whether the Debt Securities are to be issuable as Registered Securities or
Bearer Securities or both, whether any of the Debt Securities shall be
issuable in whole or in part in temporary or permanent global form or in
the form of Book-Entry Securities and, if so, the circumstances under
which any such global security or global securities or Book-Entry
Securities may be exchanged for Debt Securities registered in the name of,
and any transfer of such global or Book-Entry Securities may be registered
to, a Person other than the depository for such temporary or permanent
global securities or Book-Entry Securities or its nominee;
o the price or prices (expressed as a percentage of the aggregate principal
amount thereof) at which the Debt Securities will be issued;
o the date or dates on which the Debt Securities will mature;
o the rate or rates per annum at which the Debt Securities will bear
interest, if any, and the date from which any such interest will accrue;
o the Interest Payment Dates on which any such interest on the Debt
Securities will be payable, the Regular Record Date for any interest
payable on any Debt Securities which are Registered Securities on any
Interest Payment Date and the extent to which, or the manner in which, any
interest payable on a temporary global Security on an Interest Payment
Date will be paid if other than in the manner described under 'Temporary
Global Securities' below;
o any mandatory or optional sinking fund or analogous provisions;
o each office or agency where, subject to the terms of the applicable
Indenture as described below under 'Payment and Paying Agents,' the
principal of and any premium and interest on the Debt Securities will be
payable and each office or agency where, subject to the terms of the
applicable Indenture as described below under 'Form, Exchange,
Registration and Transfer,' the Debt Securities may be presented for
registration of transfer or exchange;
o the date, if any, after which and the price or prices at which the Debt
Securities may, pursuant to any optional or mandatory redemption
provisions, be redeemed, in whole or in part, and the other detailed terms
and provisions of any such optional or mandatory redemption provisions,
which may include with respect to a particular series or particular Debt
Securities within a series, a redemption option of Holders upon certain
conditions, as defined in the applicable Indenture;
o the denominations in which any Debt Securities which are Registered
Securities will be issuable, if other than denominations of $1,000 and any
integral multiple thereof, and the denomination or denominations in which
any Debt Securities which are Bearer Securities will be issuable, if other
than the denomination of $5,000;
o the currency or currency units of payment of principal of and any premium
and interest on the Debt Securities;
o any index used to determine the amount of payments of principal of and any
premium and interest on the Debt Securities and the manner in which such
amounts shall be determined;
o the terms and conditions, if any, pursuant to which such Debt Securities
are convertible or exchangeable into a security or securities of the
Company;
o any other terms of the Debt Securities not inconsistent with the
provisions of the applicable Indenture; and (Section 3.1)
o any such Prospectus Supplement will also describe any special provisions
for the payment of additional amounts with respect to the Debt Securities.
Debt Securities may also be issued under the Indentures upon the exercise of
Warrants. See 'Description of Warrants.'
10
Debt Securities may be issued as Original Issue Discount Securities. An
Original Issue Discount Security is a Debt Security, including any Zero-Coupon
Security, which is issued at a price lower than the amount payable upon the
Stated Maturity thereof and which provides that upon redemption or acceleration
of the maturity, an amount less than the amount payable upon the Stated
Maturity, determined in accordance with the terms of such Debt Security, shall
become due and payable.
Certain special United States federal income tax considerations applicable
to Debt Securities sold at an original issue discount will be described in the
Prospectus Supplement relating thereto. In addition, certain special United
States federal income tax or other considerations applicable to any Debt
Securities which are denominated in a currency or currency unit other than
United States dollars may be described in the applicable Prospectus Supplement
relating thereto.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
Debt Securities of a series may be issuable in definitive form solely as
Registered Securities, solely as Bearer Securities or as both Registered
Securities and Bearer Securities. Unless otherwise indicated in an applicable
Prospectus Supplement, Bearer Securities will have interest coupons attached.
(Section 2.1) The Indentures also will provide that Debt Securities of a series
may be issuable in temporary or permanent global form and may be issued as
Book-Entry Securities that will be deposited with, or on behalf of, The
Depository Trust Company (the 'Depository') or another depository named by the
Company and identified in a Prospectus Supplement with respect to such series.
(Sections 2.1 and 2.4) See ' -- Global and Book-Entry Debt Securities.'
In connection with its original issuance, no Bearer Security (including a
Debt Security exchangeable for a Bearer Security or a Debt Security in global
form that is either a Bearer Security or exchangeable for Bearer Securities)
shall be mailed or otherwise delivered to any location in the United States (as
defined under 'Limitations on Issuance of Bearer Securities') and a Bearer
Security may be delivered in connection with its original issuance only if the
Person entitled to receive such Bearer Security furnishes written certification
of the beneficial ownership of the Bearer Security as required by Treasury
Regulation Section 1.163-5(c)(2)(i)(D)(3). In the case of a Bearer Security in
permanent global form, such certification must be given in connection with
notation of a beneficial owner's interest therein in connection with the
original issuance of such Debt Security. (Section 3.3) See ' -- Global and
Book-Entry Debt Securities' and 'Limitations on Issuance of Bearer Securities.'
Registered Securities of any series will be exchangeable for other
Registered Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations. In addition, if Debt
Securities of any series are issuable as both Registered Securities and Bearer
Securities, at the option of the Holder upon request confirmed in writing, and
subject to the terms of the applicable Indenture, Bearer Securities (with all
unmatured coupons, except as provided below, and all matured coupons in default)
of such series will be exchangeable into Registered Securities of the same
series of any authorized denominations and of a like aggregate principal amount
and tenor.
Bearer Securities surrendered in exchange for Registered Securities between
a Regular Record Date or a Special Record Date and the relevant date for payment
of interest shall be surrendered without the coupon relating to such date for
payment of interest and interest accrued as of such date will not be payable in
respect of the Registered Security issued in exchange for such Bearer Security,
but will be payable only to the Holder of such coupon when due in accordance
with the terms of the applicable Indenture. Bearer Securities will not be issued
in exchange for Registered Securities. (Section 3.5) Each Bearer Security, and
any coupon attached thereto, other than a temporary global Bearer Security will
bear the following legend:
'Any United States person who holds this obligation will be subject to
limitations under the United States income tax laws, including the
limitations provided in Sections 165(j) and 1287(a) of the United
States Internal Revenue Code.'
11
A Book-Entry Security may not be registered for transfer or exchange (other
than as a whole by the Depository to a nominee or by such nominee to such
Depository) unless:
o the Depository or such nominee notifies the Company that it is unwilling
or unable to continue as Depository
o the Depository ceases to be qualified as required by the applicable
Indenture
o the Company instructs the Trustee in accordance with the applicable
Indenture that such Book-Entry Securities shall be so registrable and
exchangeable
o there shall have occurred and be continuing an Event of Default with
respect to the Debt Securities evidenced by such Book-Entry Securities or
o there shall exist such other circumstances, if any, as may be specified in
the applicable Prospectus Supplement. (Section 3.5)
Debt Securities may be presented for exchange as provided above, and
Registered Securities may be presented for registration of transfer (with the
form of transfer endorsed thereon duly executed), at the office of the Security
Registrar or at the office of any transfer agent designated by the Company for
such purpose with respect to any series of Debt Securities and referred to in an
applicable Prospectus Supplement, without service charge and upon payment of any
taxes and other governmental charges as described in the applicable Indenture.
Such transfer or exchange will be effected upon the Security Registrar or such
transfer agent, as the case may be, being satisfied with the documents of title
and identity of the person making the request.
The Company has appointed the Trustee as Security Registrar. (Section 3.5)
If a Prospectus Supplement refers to any transfer agents (in addition to the
Security Registrar) initially designated by the Company with respect to any
series of Debt Securities, the Company may at any time rescind the designation
of any such transfer agent or approve a change in the location through which any
such transfer agent acts, except that, if Debt Securities of a series are
issuable solely as Registered Securities, the Company will be required to
maintain a transfer agent in each Place of Payment for such series and, if Debt
Securities of a series are issuable as Bearer Securities, the Company will be
required to maintain (in addition to the Security Registrar) a transfer agent in
a Place of Payment for such series located outside the United States. The
Company may at any time designate additional transfer agents with respect to any
series of Debt Securities. (Section 10.2)
Unless otherwise indicated an applicable Prospectus Supplement, in the event
of any redemption in part, the Company shall not be required to:
o issue, register the transfer of or exchange Debt Securities of any series
during a period beginning at the opening of business 15 days before any
selection of Debt Securities of that series to be redeemed and ending at
the close of business on:
-- if Debt Securities of the series are issuable only as Registered
Securities, the day of mailing of the relevant notice of redemption and
-- if Debt Securities of the series are issuable as Bearer Securities,
the day of the first publication of the relevant notice of
redemption or, if Debt Securities of the series are also issuable
as Registered Securities and there is no publication, the mailing
of the relevant notice of redemption;
o register the transfer of or exchange any Registered Security, or portion
thereof, called for redemption, except the unredeemed portion of any
Registered Security being redeemed in part; or
o exchange any Bearer Security called for redemption, except to exchange
such Bearer Security for a Registered Security of that series and like
tenor which is immediately surrendered for redemption. (Section 3.5)
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of, premium, if any, and interest on Bearer Securities will be
payable, subject to any applicable laws
12
and regulations, at the offices of such Paying Agents outside the United States
as the Company may designate from time to time, at the option of the Holder, by
check or by transfer to an account maintained by the payee with a bank located
outside the United States.
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of interest on Bearer Securities on any Interest Payment Date will be made only
against surrender to the Paying Agent of such coupon relating to such Interest
Payment Date. (Section 10.1) No payment with respect to any Bearer Security will
be made at any office or agency of the Company in the United States or by check
mailed to any address in the United States or by transfer to an account
maintained with a bank located in the United States. Notwithstanding the
foregoing, payments of principal of, and premium, if any, and interest on Bearer
Securities denominated and payable in U.S. dollars will be made at the office of
the Company's Paying Agent in the Borough of Manhattan, The City of New York, if
(but only if) payment of the full amount thereof in U.S. dollars at all offices
or agencies outside the Untied States is illegal or effectively precluded by
exchange controls or other similar restrictions. (Section 10.2)
Unless otherwise indicated in an applicable Prospectus Supplement:
o payment of principal of, premium, if any, and interest on Registered
Securities will be made at the office of such Paying Agent or Paying
Agents as the Company may designate from time to time, except that at the
option of the Company payment of any interest may be made by check mailed
to the address of the person entitled thereto as such address shall appear
in the Security Register;
o payment of any instalment of interest on Registered Securities will be
made to the Person in whose name such Registered Security is registered at
the close of business on the Regular Record Date for such interest
(Section 3.7);
o the Corporate Trust Office of the Trustee in The City of New York will be
designated as a Paying Agent for the Company for payments with respect to
Debt Securities which are issuable solely as Registered Securities and
o the Company will maintain a Paying Agent outside of the United States for
payments with respect to Debt Securities (subject to the limitations
described above in the case of Bearer Securities) which are issuable
solely as Bearer Securities or as both Registered Securities and Bearer
Securities.
Any Paying Agents outside the United States and any other Paying Agent in
the United States initially designated by the Company for the Debt Securities
will be named in an applicable Prospectus Supplement. The Company may at any
time designate additional Paying Agents or rescind the designation of any Paying
Agent or approve a change in the office through which any Paying Agent acts.
If Debt Securities of a series are issuable solely as Registered Securities,
the Company will be required to maintain a Paying Agent in each Place of Payment
for such series.
If Debt Securities of a series are issuable as Bearer Securities, the
Company will be required to maintain:
o a Paying Agent in the Borough of Manhattan, The City of New York for
payments with respect to any Registered Securities of the series (and for
payments with respect to Bearer Securities of the series in the
circumstances described above, but not otherwise), and
o a Paying Agent in a Place of Payment located outside the United States
where Debt Securities of such series and any coupons appertaining thereto
may be presented and surrendered for payment; provided that if the Debt
Securities of such series are listed on The Stock Exchange of the United
Kingdom and the Republic of Ireland or the Luxembourg Stock Exchange or
any other stock exchange located outside the United States and such stock
exchange shall so require, the Company will maintain a Paying Agent in
London or Luxembourg or any other required city located outside the United
States, as the case may be, for the Debt Securities of such series.
(Section 10.2)
13
Payments of principal of, premium, if any, and interest on Book-Entry
Securities registered in the name of any Depository or its nominee will be made
to the Depository or its nominee, as the case may be, as the registered owner of
the global security representing such Book-Entry Securities. The Company expects
that the Depository, upon receipt of any payment of principal, premium or
interest, will credit immediately participants' accounts with payments in
amounts proportionate to their respective beneficial interests as shown on the
records of such Depository or its nominee.
Neither the Company, the Trustee, any Paying Agent nor the Securities
Registrar for such Debt Securities will have any responsibility or liability for
any aspects of the records relating to, or payments made on account of, such
beneficial ownership interests in the Book-Entry Securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
All moneys paid by the Company to a Paying Agent for the payment of
principal of, premium, if any, or interest on any Debt Securities which remain
unclaimed at the end of two years after such principal, premium or interest
shall have become due and payable will be repaid to the Company and the Holder
of such Debt Security or any coupon will thereafter look only to the Company for
payment thereof. (Section 10.3)
GLOBAL AND BOOK-ENTRY DEBT SECURITIES
If so specified in an applicable Prospectus Supplement, the portion of the
Debt Securities of a series which are issuable as Bearer Securities will
initially be represented by one or more temporary or permanent global Debt
Securities, without interest coupons, to be deposited with a common depositary
in London for the Euro-clear System ('Euro-clear') and CEDEL S.A. ('CEDEL') for
credit to the designated accounts. Unless otherwise indicated by an applicable
Prospectus Supplement, on or after 40 days following its issuance, each such
temporary global Debt Security will be exchangeable for definitive Bearer
Securities, definitive Registered Securities or all or a portion of a permanent
global Debt Security, or any combination thereof, as specified in an applicable
Prospectus Supplement, only upon written certification in the form and to the
effect described under 'Form, Exchange, Registration and Transfer.' No Bearer
Security (including a Debt Security in permanent global form) delivered in
exchange for a portion of a temporary or permanent global Debt Security shall be
mailed or otherwise delivered to any location in the United States in connection
with such exchange. (Sections 3.4 and 3.5)
A Person having a beneficial interest in a permanent global Debt Security
will, except with respect to payment of principal of, premium, if any, and
interest on such permanent global Debt Security, be treated as a Holder of such
principal amount of Outstanding Debt Securities represented by such permanent
global Debt Security as shall be specified in a written statement of the Holder
of such permanent global Debt Security or, in the case of a permanent global
Debt Security in bearer form, of the operator of Euro-clear or CEDEL which is
provided to the Trustee by such Person. (Section 2.3)
If Debt Securities to be sold in the United States are designated by the
Company in a Prospectus Supplement as Book-Entry Securities, a global security
representing the Book-Entry Securities will be deposited in the name of Cede &
Co., as nominee for the Depository representing the Debt Securities to be sold
in the United States. Upon such deposit of the Book-Entry Securities, the
Depository shall credit an account maintained or designated by an institution to
be named by the Company or any purchaser of the Debt Securities represented by
the Book-Entry Securities with an aggregate amount of Debt Securities equal to
the total number of Debt Securities that have been so purchased. The specific
terms of any depository arrangement with respect to any portion of a series of
Debt Securities to be represented by one or more global securities will be
described in the applicable Prospectus Supplement. Beneficial interests in such
Debt Securities will only be evidenced by, and transfers thereof will only be
effected through, records maintained by the Depository and the institutions that
are Depository participants.
14
CERTAIN COVENANTS OF THE COMPANY WITH RESPECT TO THE SENIOR DEBT SECURITIES
Unless otherwise indicated in an applicable Prospectus Supplement, with
respect to the Senior Debt Securities the Company will covenant in the Senior
Indenture that it will not, nor will it permit any Subsidiary (as hereinafter
defined), to issue, assume or guarantee any debt for money borrowed ('Debt') if
such Debt is secured by a mortgage, pledge, security interest or lien (a
'mortgage' or 'mortgages') upon any Forestlands or Principal Manufacturing
Facility (as hereinafter defined), now owned or hereafter acquired, without in
any such case effectively providing that the Senior Debt Securities shall be
secured equally and ratably with (or prior to) such Debt, except that the
foregoing restrictions shall not apply to:
o mortgages on any property acquired, constructed or improved by the Company
or any Subsidiary after April 12, 1999 which are created within 180 days
after such acquisition (or in the case of property constructed or
improved, after the completion and commencement of commercial operation of
such property, whichever is later) to secure or provide for the payment of
the purchase price or cost thereof, or existing mortgages on property
acquired, provided such mortgages shall not apply to any property
theretofore owned by the Company or any Subsidiary other than theretofore
unimproved real property,
o mortgages on any property acquired from a corporation which is merged with
or into the Company or a Subsidiary or mortgages outstanding at the time
any corporation becomes a Subsidiary,
o mortgages in favor of the Company or any Subsidiary, or
o any extension, renewal or replacement (or successive extensions, renewals
or replacements), in whole or in part, of any mortgage referred to in the
foregoing clauses.
The following types of transactions, among others, shall not be deemed to
create Debt secured by a mortgage:
o the sale, mortgage or other transfer of timber in connection with an
arrangement under which the Company or a Subsidiary is obligated to cut
such timber or a portion thereof in order to provide the transferee with a
specified amount of money however determined and
o mortgages in favor of governmental bodies of the United States to secure
advance, progress or other payments pursuant to any contract or statute or
to secure indebtedness incurred to finance the purchase price or cost of
constructing or improving the property subject to such mortgages.
(Section 10.7 of Senior Indenture)
Notwithstanding the foregoing, the Company and any Subsidiary may, without
securing the Senior Debt Securities, issue, assume or guarantee secured Debt
(which would otherwise be subject to the foregoing restrictions) in an aggregate
amount which, together with all other such Debt and the Attributable Debt (as
hereinafter defined) in respect of Sale and Lease-Back Transactions (as
hereinafter defined) of the Company and its Subsidiaries existing at such time
(other than Sale or Lease-Back Transactions the proceeds of which have been
applied to the retirement of Funded Debt (as hereinafter defined)), does not at
the time exceed 10% of the net tangible assets of the Company and its
consolidated Subsidiaries as of the latest fiscal year. (Section 10.7 of Senior
Indenture)
'Net tangible assets' is defined as the aggregate amount of assets (less
applicable reserves and other properly deductible items) after deducting
therefrom (a) all current liabilities and (b) all goodwill, tradenames,
trademarks, patents, unamortized debt discount and expense (to the extent
included in said aggregate amount of assets) and other like intangibles, all as
set forth on the most recent consolidated balance sheet of the Company and its
consolidated Subsidiaries and computed in accordance with generally accepted
accounting principles.
The Company will not, nor will it permit any Subsidiary to, enter into any
arrangement with any person providing for the leasing to the Company or a
Subsidiary of any Forestlands or any Principal Manufacturing Facility (except
for temporary leases for a term of not more than three years), which property
has been owned and, in the case of any such Principal Manufacturing Facility,
has been placed in commercial operation more than 180 days by the Company or
such
15
Subsidiary and has been or is said to be sold or transferred by the Company or
such Subsidiary to such person (herein referred to as a 'Sale and Lease-Back
Transaction'), unless either:
o the Company or such Subsidiary would be entitled to incur Debt secured by
a mortgage on the property to be leased in an amount equal to the
Attributable Debt with respect to such Sale and Lease-Back Transaction
without equally and ratably securing the Senior Debt Securities or
o the Company shall, and in any such case the Company will covenant that it
will, apply an amount equal to the fair value (as determined by its Board
of Directors) of the property so leased to the retirement, within 180 days
of the effective date of any such Sale and Lease-Back Transaction, of Debt
Securities or of Funded Debt of the Company which ranks on a parity with
the Senior Debt Securities. (Section 10.8 of Senior Indenture)
The term 'Forestlands' shall mean at any time property in the United States
which contains standing timber which is, or upon completion of a growth cycle
then in process is expected to become, of a commercial quantity and of
merchantable quality, excluding from the term 'Forestlands,' however, any land
which at the time is held by, or has been or is after the date of this
Prospectus transferred to, a Subsidiary primarily for development and/or sale,
and not primarily for the production of any lumber or other timber products.
(Section 1.1 of Senior Indenture)
The term 'Principal Manufacturing Facility' shall mean any paperboard, paper
or pulp mill or any paper converting plant of the Company or any Subsidiary
which is located within the United States other than any such mill or plant or
portion thereof (i) which is financed by obligations issued by a State, a
Territory, or a possession of the United States, or any political subdivision of
any of the foregoing, or the District of Columbia, the interest on which is
excludible from gross income of the holders thereof pursuant to the provisions
of Section 103(a) of the Internal Revenue Code (or any successor to such
provision) as in effect at the time of issuance of such obligations, or
(ii) which, in the opinion of the Board of Directors of the Company, is not of
material importance to the total business conducted by the Company and its
Subsidiaries as an entirety. (Section 1.1 of Senior Indenture)
The term 'Subsidiary' shall mean any corporation of which at least a
majority of the outstanding stock having by the terms thereof ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned or
controlled by the Company, or by any one or more Subsidiaries, or by the Company
and one or more Subsidiaries. (Section 1.1 of Senior Indenture)
The term 'Attributable Debt' shall mean, at the time of determination, the
present value (discounted at the interest rate, compounded semiannually, equal
to the weighted average Yield to Maturity of the Senior Debt Securities then
Outstanding, such average being weighted by the principal amount of the Senior
Debt Securities of each series or, in the case of Original Issue Discount
Securities, such amount to be determined as provided in the definition of
'Outstanding' in the Senior Indenture) of the obligation of a lessee for net
rental payments during the remaining term of any lease (including any period for
which such lease has been extended) entered into in connection with a sale and
leaseback transaction. (Section 1.1 of Senior Indenture)
The term 'Funded Debt' shall mean Debt which by its terms matures at, or is
extendible or renewable at the option of the obligor to, a date more than twelve
months after the date of the creation of such Debt. (Section 1.1 of Senior
Indenture)
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
Unless otherwise indicated in an applicable Prospectus Supplement, the
following provisions will apply to the Subordinated Debt Securities.
16
The Subordinated Debt Securities will, to the extent set forth in the
Subordinated Indenture, be subordinate in right of payment to the prior payment
in full of all Senior Indebtedness. Upon any payment or distribution of assets
to creditors upon any liquidation, dissolution, winding up, reorganization,
assignment for the benefit of creditors, marshaling of assets or any bankruptcy,
insolvency, debt restructuring or similar proceedings in connection with any
insolvency or bankruptcy proceeding of the Company, the Holders of Senior
Indebtedness will first be entitled to receive payment in full of principal of,
and premium, if any, and interest, if any, on such Senior Indebtedness before
the Holders of the Subordinated Debt Securities will be entitled to receive or
retain any payment in respect of the principal of, and premium, if any, or
interest, if any, on the Subordinated Debt Securities. (Section 16.2 of
Subordinated Indenture) By reason of such subordination, in the event of
liquidation or insolvency, creditors of the Company may recover less, ratably,
than Holders of Senior Indebtedness and may recover more, ratably, than the
Holders of the Subordinated Debt Securities.
In the event of the acceleration of the maturity of any Subordinated Debt
Securities, the Holders of all Senior Indebtedness outstanding at the time of
such acceleration will first be entitled to receive payment in full of all
amounts due thereon before the Holders of the Subordinated Debt Securities will
be entitled to receive any payment upon the principal of (or premium, if any) or
interest, if any, on the Subordinated Debt Securities. (Section 16.3 of
Subordinated Indenture)
No payments on account of principal, or premium, if any, or interest, if
any, in respect of the Subordinated Debt Securities may be made if:
o there shall have occurred and be continuing a default in any payment with
respect to Senior Indebtedness;
o an event of default with respect to any Senior Indebtedness resulting in
the acceleration of the maturity thereof; or
o if any judicial proceeding shall be pending with respect to any such
default. (Section 16.4 of Subordinated Indenture)
For purposes of the subordination provisions, the payment, issuance and
delivery of cash, property or securities (other than stock and certain
subordinated securities of the Company) upon conversion of a Subordinated Debt
Security will be deemed to constitute payment on account of the principal of
such Subordinated Debt Security.
The Subordinated Indenture does not limit or prohibit the incurrence of
additional Senior Indebtedness, which may include indebtedness that is senior to
the Subordinated Debt Securities, but subordinate to other obligations of the
Company. The Senior Debt Securities constitute Senior Indebtedness under the
Subordinated Indenture.
'Senior Indebtedness' is defined to include all amounts due on and
obligations in connection with any of the following, whether outstanding at the
date of execution of the Subordinated Indenture or thereafter incurred or
created:
o indebtedness, obligations and other liabilities (contingent or otherwise)
of the Company for money borrowed, or evidenced by bonds, debentures,
notes or similar instruments;
o reimbursement obligations and other liabilities (contingent or otherwise)
of the Company with respect to letters of credit, bankers' acceptances
issued for the account of the Company or with respect to interest rate
protection agreements or currency exchange or purchase agreements;
o obligations and liabilities (contingent or otherwise) in respect of leases
by the Company as lessee which, in conformity with generally accepted
accounting principles, are accounted for as capitalized lease obligations
on the balance sheet of the Company;
o all direct or indirect guarantees or similar agreements in respect of, and
obligations or liabilities (contingent or otherwise) to purchase or
otherwise acquire or otherwise to assure a creditor against loss of the
Company in respect of, indebtedness, obligations or liabilities of another
Person described in any of the three immediately preceding provisions;
17
o any indebtedness described in any of the four immediately preceding
provisions secured by any mortgage, pledge, lien or other encumbrance
existing on property which is owned or held by the Company, regardless of
whether the indebtedness secured thereby shall have been assumed by the
Company; and
o any and all deferrals, renewals, extensions and refundings of, or
amendments, modifications or supplements to, any indebtedness, obligation
or liability of the kind described in any of the five immediately
preceding provisions
unless in any case in the instrument creating or evidencing such indebtedness,
obligation, liability, guaranty, assumption, deferral, renewal, extension or
refunding, it is provided that such indebtedness, obligation, liability,
guaranty, assumption, deferral, renewal, extension or refunding involved is not
senior in right of payment to the Subordinated Debt Securities or that such
indebtedness is pari passu with or junior to the Subordinated Debt Securities.
(Section 1.1 of Subordinated Indenture)
The Prospectus Supplement may further describe the provisions, if any,
applicable to the subordination of the Subordinated Debt Securities of a
particular series.
CONVERSION RIGHTS
The terms on which Debt Securities of any series are convertible into or
exchangeable for Common Stock or other securities of the Company will be set
forth in the Prospectus Supplement relating thereto. Such terms will include
provisions as to whether conversion or exchange is mandatory, at the option of
the Holder or at the option of the Company, and may include provisions pursuant
to which the number of shares of Common Stock or other securities of the Company
to be received by the Holders of Debt Securities would be subject to adjustment.
EVENTS OF DEFAULT
Unless otherwise indicated in an applicable Prospectus Supplement, any one
of the following events will constitute an Event of Default under the applicable
Indenture with respect to Debt Securities of any series:
o failure to pay any interest on any Debt Security of that series when due,
continued for 30 days (in the case of the Subordinated Indenture, whether
or not such payment is prohibited by the subordination provisions);
o failure to pay principal of or premium, if any, on any Debt Security of
that series when due (in the case of the Subordinated Indenture, whether
or not such payment is prohibited by the subordination provisions);
o failure to deposit any sinking fund payment, when due, in respect of any
Debt Security of that series (in the case of the Subordinated Indenture,
whether or not such deposit is prohibited by the subordination
provisions);
o failure to perform any other covenant of the Company in the applicable
Indenture or such Debt Security (other than a covenant included in the
applicable Indenture solely for the benefit of a series of Debt Securities
other than that series), continued for 60 days after written notice has
been given as provided in the applicable Indenture;
o certain events in bankruptcy, insolvency or reorganization involving the
Company; and
o any other Event of Default provided with respect to the Debt Securities of
that series. (Section 5.1)
If an Event of Default with respect to the Debt Securities of any series at
the time Outstanding occurs and is continuing, either the Trustee or the Holders
of at least 25% in aggregate principal amount of the Outstanding Debt Securities
of that series by notice as provided in the applicable Indenture may declare the
principal amount of the Debt Securities of that series (or, in the case of any
Debt Security that is an Original Issue Discount Security or the principal
amount of which is not then determinable, such portion of the principal amount
of such Debt
18
Security, or such other amount in lieu of such principal amount, as may be
specified in the terms of such Debt Security) to be due and payable immediately.
At any time after a declaration of acceleration with respect to Debt Securities
of any series has been made, but before a judgment or decree for payment of
money has been obtained by the Trustee, the Holders of a majority in aggregate
principal amount of the Outstanding Debt Securities of that series may, under
certain circumstances, rescind and annul such acceleration. (Section 5.2)
The Indentures will provide that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the applicable
Indenture at the request or direction of any of the Holders, unless such Holders
shall have offered to the Trustee reasonable indemnity. (Sections 6.1, 6.3)
Subject to such provisions for the indemnification of the Trustee, the Holders
of a majority in aggregate principal amount of the Outstanding Debt Securities
of any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, with respect to the Debt Securities
of that series. (Section 5.12)
The Company will be required to furnish to the applicable Trustee annually a
statement as to the performance of certain of its obligations under the
applicable Indenture and as to any default in such performance. (Section 10.9)
DEFEASANCE
Unless otherwise indicated in an applicable Prospectus Supplement, if so
specified with respect to any particular series of Debt Securities, the Company
may discharge its indebtedness and its obligations or certain of its obligations
under the applicable Indenture with respect to such series by depositing funds
or obligations issued or guaranteed by the United States of America with the
applicable Trustee.
Defeasance and Discharge. The Indentures will provide that, if so specified
with respect to the Debt Securities of any series, the Company will be
discharged from any and all obligations in respect of the Debt Securities of
such series (including, in the case of Subordinated Debt Securities, the
subordination provisions described under 'Subordination of Subordinated Debt
Securities' herein and except for certain obligations relating to temporary Debt
Securities and exchange of Debt Securities, registration of transfer or exchange
of Debt Securities of such series, replacement of stolen, lost or mutilated Debt
Securities of such series, maintenance of paying agencies, to hold monies for
payment in trust and payment of additional amounts, if any, required in
consequence of United States withholding taxes imposed on payments to non-United
States persons) upon the deposit with the applicable Trustee, in trust, of money
and/or U.S. Government Obligations which through the payment of interest and
principal in respect thereof in accordance with their terms will provide money
in an amount sufficient to pay the principal of (and premium, if any), each
instalment of interest on, and any sinking fund payments on, the Debt Securities
of such series on the Stated Maturity of such payments in accordance with the
terms of the applicable Indenture and the Debt Securities of such series.
Such a trust may only be established if, among other things:
o the Company has delivered to the applicable Trustee an Opinion of Counsel
to the effect that
-- the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or
-- since the date of the applicable Indenture there has been a change
in applicable federal income tax law, in either case to the effect
that, and based thereon such Opinion of Counsel shall confirm that,
the Holders of Debt Securities of such series will not recognize
income, gain or loss for federal income tax purposes as a result of
such deposit, defeasance and discharge, and will be subject to
federal income tax on the same amounts and in the same manner and
at the same times as would have been the case if such deposit,
defeasance and discharge had not occurred;
19
o the Debt Securities of such series, if then listed on any domestic or
foreign securities exchange, will not be delisted as a result of such
deposit, defeasance and discharge; and
o in the case of the Subordinated Debt Securities,
-- no default in the payment of principal of, or premium, if any, or any
interest on any Senior Indebtedness beyond any applicable grace period
shall have occurred and be continuing, or
-- no other default with respect to any Senior Indebtedness shall have
occurred and be continuing and shall have resulted in the
acceleration of such Senior Indebtedness. (Section 4.3)
In the event of any such defeasance and discharge of Debt Securities of such
series, Holders of Debt Securities of such series would be able to look only to
such trust fund for payment of principal of and any premium and any interest on
their Debt Securities until Maturity.
Defeasance of Certain Obligations. The Senior Indenture will provide that,
if so specified with respect to the Senior Debt Securities of any series, the
Company may omit to comply with the restrictive covenants described under
'Certain Covenants of the Company' above and any other covenants applicable to
such Senior Debt Securities which are subject to covenant defeasance and any
such omission shall not be an Event of Default with respect to the Debt
Securities of such series, upon the deposit with the Trustee, in trust, of money
and/or U.S. Government Obligations which through the payment of interest and
principal in respect thereof in accordance with their terms will provide money
in an amount sufficient to pay the principal of (and premium, if any), each
instalment of interest on and any sinking fund payments on the Senior Debt
Securities of such series on the Stated Maturity of such payments in accordance
with the terms of the Senior Indenture and the Senior Debt Securities of such
series. The obligations of the Company under the Senior Indenture and the Senior
Debt Securities of such series other than with respect to such covenant shall
remain in full force and effect.
Such a trust may be established only if, among other things, the Company has
delivered to the Trustee an Opinion of Counsel to the effect that:
o the Holders of the Senior Debt Securities of such series will not
recognize income, gain or loss for federal income tax purposes as a result
of such deposit and defeasance of certain obligations and will be subject
to federal income tax on the same amounts and in the same manner and at
the same times as would have been the case if such deposit and defeasance
has not occurred and
o the Senior Debt Securities of such series, if then listed on any domestic
or foreign securities exchange, will not be delisted as a result of such
deposit and defeasance. (Section 10.11 of Senior Indenture)
In the event the Company exercises its option to omit compliance with the
covenants described under 'Certain Covenants of the Company' above with respect
to the Senior Debt Securities of any series as described above and the Senior
Debt Securities of such series are declared due and payable because of the
occurrence of any Event of Default, then the amount of money and U.S. Government
Obligations on deposit with the Trustee will be sufficient to pay amounts due on
the Senior Debt Securities of such series at the time of their Stated Maturity
but may not be sufficient to pay amounts due on the Senior Debt Securities of
such series at the time of the acceleration resulting from such Default. The
Company shall in any event remain liable for such payments as provided in the
Senior Indenture.
MEETINGS, MODIFICATION AND WAIVER
Unless otherwise indicated in an applicable Prospectus Supplement,
modifications and amendments of the Indentures may be made by the Company and
the Trustee under the applicable Indenture only with the consent of the Holders
of not less than 66 2/3% aggregate principal amount of the Outstanding Debt
Securities issued under the applicable Indenture and
20
affected by such modification or amendment unless a greater percentage of such
aggregate principal amount is specified in the applicable Prospectus Supplement.
No such modification or amendment may, without the consent of each Holder of
such Outstanding Debt Security affected thereby:
o change the Stated Maturity of the principal of, or any instalment of
principal of or interest on, any such Debt Security,
o reduce the principal amount of, or any premium or interest on, any such
Debt Security,
o change any obligation of the Company to pay additional amounts,
o reduce the amount of principal of an Original Issue Discount Security or
any other Debt Security payable upon acceleration of the maturity thereof,
o change the coin or currency in which any Debt Security or any premium or
interest thereon is payable,
o impair the right to institute suit for the enforcement of any payment on
or with respect to any such Debt Security,
o adversely change the right to convert or exchange, including decreasing
the conversion rate or increasing the conversion price of, such Debt
Security (if applicable),
o in the case of the Subordinated Indenture, modify the subordination
provisions in a manner adverse to the Holders of the Subordinated Debt
Securities,
o reduce the percentage in principal amount of Outstanding Debt Securities
of any series, the consent of whose Holders is required for modification
or amendment of the applicable Indenture or for waiver of compliance with
certain provisions of the applicable Indenture or for waiver of certain
defaults,
o reduce the requirements contained in the applicable Indenture for quorum
or voting,
o change any obligations of the Company to maintain an office or agency in
the places and for the purposes required by the Indentures, or
o modify any of the above provisions. (Section 9.2)
The Holders of at least a majority in aggregate principal amount of the
Outstanding Debt Securities of each series may, on behalf of the Holders of all
the Debt Securities of that series, waive, insofar as that series is concerned,
compliance by the Company with certain restrictive provisions of the applicable
Indenture and, if applicable, such Debt Securities, unless a greater percentage
of such aggregate principal amount is specified in the applicable Prospectus
Supplement. (Section 10.10) The Holders of not less than a majority in aggregate
principal amount of the Outstanding Debt Securities of each series may, on
behalf of all Holders of Debt Securities of that series and any coupons
pertaining thereto, waive any past default under the applicable Indenture,
except a default:
o in the payment of principal of, or premium, if any, or any interest on any
Debt Security of such series, and
o in respect of a covenant or provision of the applicable Indenture and, if
applicable, such Debt Securities which cannot be modified or amended
without the consent of the Holder of each Outstanding Debt Security of
such series affected. (Section 5.13)
The applicable Indenture will provide that in determining whether the
Holders of the requisite principal amount of the Outstanding Debt Securities
have given any request, demand, authorization, direction, notice, consent or
waiver thereunder or are present at a meeting of Holders of Debt Securities for
quorum purposes;
o the principal amount of an Original Issue Discount Security that shall be
deemed to be Outstanding shall be the amount of the principal thereof that
would be due and payable as of the date of such determination upon
acceleration of the Maturity thereof, and
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o the principal amount of a Debt Security denominated in a foreign currency
or currency units shall be the U.S. dollar equivalent, determined on the
date of original issuance of such Debt Security, of the principal amount
of such Debt Security or, in the case of an Original Issue Discount
Security, the U.S. dollar equivalent, determined on the date of original
issuance of such Debt Security, of the amount determined as provided in
the immediately preceding provision. (Section 1.1)
The applicable Indenture will contain provisions for convening meetings of
the Holders of Debt Securities of a series if Debt Securities of that series are
issuable as Bearer Securities. (Section 13.1) A meeting may be called at any
time by the Trustee, and also, upon request, by the Company or the Holders of at
least 10% in principal amount of the Outstanding Debt Securities of such series,
in any such case upon notice given in accordance with 'Notices' below.
(Section 13.2)
Except for any consent which must be given by the Holder of each Outstanding
Debt Security affected thereby, as described above, any resolution presented at
a meeting or adjourned meeting at which a quorum is present may be adopted by
the affirmative vote of the Holders of a majority in principal amount of the
Outstanding Debt Securities of that series; provided, however, that, except for
any consent which must be given by the Holder of each Outstanding Debt Security
affected thereby, as described above, any resolution with respect to any consent
or waiver which may be given by the Holders of not less than 66 2/3% in
principal amount of the Outstanding Debt Securities of a series may be adopted
at a meeting or an adjourned meeting at which a quorum is present only by the
affirmative vote of 66 2/3% in principal amount of the Outstanding Debt
Securities of that series; and provided, further, that, except for any consent
which must be given by the Holder of each Outstanding Debt Security affected
thereby, as described above, any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action which may be
made, given or taken by the Holders of a specified percentage, which is less
than a majority, in principal amount of the Outstanding Debt Securities of a
series may be adopted at a meeting or adjourned meeting duly reconvened at which
a quorum is present by the affirmative vote of the Holders of such specified
percentage in the principal amount of the Outstanding Debt Securities of that
series. Any resolution passed or decision taken at any meeting of Holders of
Debt Securities of any series duly held in accordance with the applicable
Indenture will be binding on all Holders of Debt Securities of that series and
the related coupons. The quorum at any meeting called to adopt a resolution, and
at any reconvened meeting, will be persons holding or representing a majority in
principal amount of the Outstanding Debt Securities of a series; provided,
however, that if any action is to be taken at such meeting with respect to a
consent or waiver which may be given by the Holders of not less than 66 2/3% in
principal amount of the Outstanding Debt Securities of a series, the persons
holding or representing 66 2/3% in principal amount of the Outstanding Debt
Securities of such series will constitute a quorum. (Section 13.4)
CONSOLIDATION, MERGER AND SALE OF ASSETS
Unless otherwise indicated in an applicable Prospectus Supplement, the
Company, without the consent of the Holders of any of the Outstanding Debt
Securities under the applicable Indenture, may consolidate or merge with or
into, sell, lease, transfer or otherwise dispose of its assets substantially as
an entirety to, any Person which is a corporation, partnership or trust
organized and validly existing under the laws of any domestic jurisdiction, or
may permit any such Person to consolidate or merge with or into the Company or
sell, lease, transfer or otherwise dispose of its assets substantially as an
entirety to the Company, provided that any successor Person assumes the
Company's obligations on the Debt Securities and under the applicable Indenture,
that after giving effect to the transaction no Event of Default, and no event
which, after notice or lapse of time, would become an Event of Default, shall
have occurred and be continuing, and that certain other conditions are met.
(Section 8.1)
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REDEMPTION AT THE OPTION OF HOLDERS UPON CHANGE IN CONTROL
Unless otherwise indicated in an applicable Prospectus Supplement, in the
event of any Change in Control (as hereinafter defined) of the Company, prior to
maturity of the Debt Securities, that has not been approved by the Continuing
Directors (as hereinafter defined) of the Company, Debt Securities may be
submitted for redemption, on and after the Exchange Date in the case of Debt
Securities of any series issuable as Bearer Securities or at any time in the
case of all other Debt Securities, at the option of the Holders, unless, prior
to the expiration of ten days following such Change in Control, the Company, if
permitted to do so by the terms of the Debt Securities of a series, shall have
called all of the Debt Securities of such series for redemption. Bearer
Securities may be so redeemed only in whole and Registered Securities in whole
or in part in increments of $1,000. Any Debt Securities to be so submitted must
be submitted during a period (the 'Exercise Period') commencing on the date of
the Company's notice described below to Holders of such Change in Control and
expiring on the 20th business day after such notice is given.
Debt Securities submitted for redemption will be redeemed on a Redemption
Date that will be the 15th day after expiration of the Exercise Period, at a
redemption price of 100% of the principal amount of the Debt Security, plus
accrued interest to the Redemption Date. Exercise of this redemption option by
the Holder of a Debt Security will be irrevocable.
On or before the tenth day after a Change in Control, the Company is
obligated, unless the Continuing Directors have approved such Change in Control
prior to such date, to give notice to Holders as set forth under 'Notices'
below, and written notice to the Trustee, regarding the Change in Control, the
date of expiration of the Exercise Period, the applicable Redemption Date, the
redemption price and the procedure which the Holder must follow to exercise this
option. To exercise this option, the Holder must deliver on or before the
expiration of the Exercise Period to one of the Paying Agents referred to below
written notice of the Holder's exercise of such option, together with the Debt
Securities with respect to which the option is being exercised, duly endorsed
(in the case of Registered Securities) for transfer. Each Bearer Security
delivered for redemption must be delivered with all coupons maturing after the
Redemption Date. If the Redemption Date falls between any Regular Record Date
and the next succeeding Payment Date, Registered Securities must be accompanied
by payment of an amount equal to the interest thereon which the registered
Holder is to receive on such Interest Payment Date.
As used herein, a 'Change in Control' of the Company shall be deemed to have
occurred at such time or times as:
o the Company determines that any person or related group of persons is the
beneficial owner, directly or indirectly, of 20% or more of the
outstanding Common Stock or
o individuals who constitute the Continuing Directors cease for any reason
to constitute at least a majority of the Company's directors. 'Continuing
Director' means any director who is a director on the date hereof and any
director who is nominated or elected by a majority of Continuing Directors
who are then directors.
The Company could, in the future, enter into certain transactions, including
certain recapitalizations or leveraged transactions of the Company, that would
not constitute a Change in Control or would constitute a Change of Control but
would not trigger the Change of Control purchase feature of the Debt Securities
if approved by the Continuing Directors and would increase the amount of the
Company's indebtedness outstanding at such time. However, the Senior Indenture
contains covenants of the Company limiting its ability to mortgage or sell
Principal Manufacturing Facilities or Forestlands.
If a Change in Control were to occur, there can be no assurance that the
Company would have sufficient funds to pay the Change in Control purchase price
for all Debt Securities tendered by the Holders thereof. In addition, the
Company's ability to purchase Debt Securities with cash may be limited by the
terms of its then-existing borrowing agreements. A default by the Company on its
obligation to pay the Change in Control purchase price or a breach of its
covenant would result in an Event of Default and could result in acceleration of
the maturity of other
23
indebtedness of the Company at the time outstanding pursuant to cross-default
provisions. The Company will comply with the provisions of Rule 13e-4,
Rule 14e-1 and any other tender offer rules under the Exchange Act which may
then be applicable and will file a Schedule 13E-4 or any other schedule required
thereunder and will otherwise comply with all federal or state securities laws,
as required, in connection with any of the Debt Securities providing for
redemption at the option of Holders.
NOTICES
Except as otherwise provided in the applicable Indenture, notices to Holders
of Bearer Securities will be given by publication at least twice in a daily
newspaper in The City of New York and in such other city or cities as may be
specified in such Debt Securities. Notices to Holders of Registered Securities
will be given by mail to the address of such Holders as they appear in the
Security Register. (Sections 1.1, 1.6)
TITLE
Title to any temporary global Debt Security, any Bearer Securities
(including Bearer Securities in permanent global form) and any coupons
appertaining thereto will pass by delivery. The Company, the Trustee and any
agent of the Company or the Trustee may treat the bearer of any Bearer Security
and the bearer of any coupon and the registered owner of any Registered Security
as the absolute owner thereof (whether or not such Debt Security or coupon shall
be overdue and notwithstanding any notice to the contrary) for the purpose of
making payment and for all other purposes. (Section 3.8)
REPLACEMENT OF DEBT SECURITIES AND COUPONS
Any mutilated Debt Security or a Debt Security with a mutilated coupon
appertaining thereto will be replaced by the Company at the expense of the
Holder upon surrender of such Debt Security to the Trustee. Debt Securities or
coupons that became destroyed, stolen or lost will be replaced by the Company at
the expense of the Holder upon delivery of the Trustee of the Debt Security and
coupons or evidence of the destruction, loss or theft thereof satisfactory to
the Company and the Trustee; in the case of any coupon which becomes destroyed,
stolen or lost, such coupon will be replaced by issuance of a new Debt Security
in exchange for the Debt Security to which such coupon appertains. In the case
of a destroyed, lost or stolen Debt Security or coupon, an indemnity
satisfactory to the Trustee and the Company may be required at the expense of
the Holder of such Debt Security or coupon before a replacement Debt Security
will be issued. (Section 3.6)
GOVERNING LAW
The Indentures, the Debt Securities and the coupons will be governed by, and
construed in accordance with, the laws of the State of New York without regard
to principles of conflicts of laws. (Section 1.13)
REGARDING THE TRUSTEE
The Indentures contain limitations on the right of the Trustee, as a
creditor of the Company, to obtain payment of claims in certain cases or to
realize on certain property received in respect of any such claim as security or
otherwise. In addition, the Trustee may be deemed to have a conflicting interest
and may be required to resign as Trustee if at the time of a default under one
of the Indentures it is a creditor of the Company. The Chase Manhattan Bank,
N.A. also acts as trustee under various indentures and the Company and certain
subsidiaries from time to time maintain deposit accounts and conduct their
banking transactions with The Chase Manhattan Bank, N.A. in the ordinary course
of their business. The applicable Prospectus Supplement will describe
24
any such relationships between the Company and/or certain or its subsidiaries
and any other trustee named in such Prospectus Supplement.
EXPENSES OF THE IPC TRUSTS
Unless otherwise indicated in an applicable Prospectus Supplement, pursuant
to the Subordinated Indenture or a supplement thereto, the Company will agree to
pay all of the costs, expenses or liabilities of the IPC Trusts, other than
obligations of the IPC Trusts to pay to the holders of any Trust Preferred
Securities or Trust Common Securities the amounts due such holders pursuant to
the terms of the Trust Preferred Securities or Trust Common Securities.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of (i) 990,850,000
shares of common stock, $1.00 par value per share (the 'Common Stock'),
(ii) 400,000 shares of cumulative $4 preferred stock, without par value (the '$4
Preferred Stock'), and (iii) 8,750,000 shares of serial preferred stock, $1.00
par value per share (the 'Preferred Stock').
At July 31, 2001, there were outstanding (a) 483,150,673 shares of Common
Stock, (b) employee stock options to purchase an aggregate of approximately
28,159,382 shares of Common Stock, (c) 15,696 shares of $4 Preferred Stock and
(d) no shares of any series of Preferred Stock. In addition, approximately
8,330,285 shares of Common Stock were reserved for issuance upon conversion of
International Paper-obligated mandatorily redeemable preferred securities of a
subsidiary trust.
DESCRIPTION OF PREFERRED STOCK
The following summary contains a description of certain general terms of the
Company's Preferred Stock to which any Prospectus Supplement may relate. Certain
terms of any series of Preferred Stock offered by any Prospectus Supplement will
be described in the Prospectus Supplement relating thereto. If so indicated in
the Prospectus Supplement, the terms of any series may differ from the terms set
forth below. The description of certain provisions of the Company's Preferred
Stock does not purport to be complete and is subject to and qualified in its
entirety by reference to the provisions of the Company's Restated Certificate of
Incorporation (the 'Restated Certificate of Incorporation'), and the Certificate
of Designation (the 'Certificate of Designation') relating to each particular
series of Preferred Stock which will be filed or incorporated by reference, as
the case may be, as an exhibit to the Registration Statement of which this
Prospectus is a part at or prior to the time of the issuance of such Preferred
Stock.
GENERAL
Under the Company's Restated Certificate of Incorporation, the Board of
Directors of the Company is authorized, without further stockholder action, to
provide for the issuance of up to 8,750,000 shares of Preferred Stock. The
Preferred Stock may be issued in one or more series, with such designations of:
o titles;
o dividend rates;
o any redemption provisions;
o special or relative rights in the event of liquidation, dissolution,
distribution or winding up of the Company;
o any sinking fund provisions;
o any conversion provisions;
o any voting rights thereof; and
25
o any other preferences, privileges, powers, rights, qualifications,
limitations and restrictions, as shall be set forth as and when
established by the Board of Directors of the Company.
The shares of any series of Preferred Stock will be, when issued, fully paid
and non-assessable and holders thereof will have no preemptive rights in
connection therewith.
So long as any shares of $4 Preferred Stock are outstanding, the
preferences, privileges and voting powers, if any, of the shares of Preferred
Stock of any series, and the restrictions or qualifications thereof, shall be
subject to the preferences, privileges and voting powers, if any, of the shares
of $4 Preferred Stock and the restrictions and qualifications thereof.
RANK
Any series of Preferred Stock will, with respect to rights on liquidation,
winding up and dissolution, rank:
o senior to all classes of Common Stock and to all equity securities issued
by the Company, the terms of which specifically provide that such equity
securities will rank junior to such series of Preferred Stock (the 'Junior
Liquidation Securities');
o on a parity with all equity securities issued by the Company, the terms of
which specifically provide that such equity securities will rank on a
parity with such series of Preferred Stock ('Parity Liquidation
Securities'); and
o junior to all equity securities issued by the Company, the terms of which
specifically provide that such equity securities will rank senior to such
series of Preferred Stock, including the $4 Preferred Stock (the 'Senior
Liquidation Securities').
In addition, any series of Preferred Stock will, with respect to dividend
rights, rank
o senior to all equity securities issued by the Company, the terms of which
specifically provide that such equity securities will rank junior to such
series of Preferred Stock and, to the extent provided in the applicable
Certificate of Designation, to Common Stock,
o on a parity with all equity securities issued by the Company, the terms of
which specifically provide that such equity securities will rank on a
parity with such series of Preferred Stock and, to the extent provided in
the applicable Certificate of Designation, to Common Stock ('Parity
Dividend Securities') and
o junior to all equity securities issued by the Company, the terms of which
specifically provide that such equity securities will rank senior to such
series of Preferred Stock, including the $4 Preferred Stock. As used in
any Certificate of Designation for these purposes, the term 'equity
securities' will not include debt securities convertible into or
exchangeable for equity securities.
DIVIDENDS
Holders of each series of Preferred Stock will be entitled to receive, when,
as and if declared by the Board of Directors of the Company out of funds legally
available therefor, cash dividends at such rates and on such dates as are set
forth in the Prospectus Supplement relating to such series of Preferred Stock.
Dividends will be payable to holders of record of Preferred Stock as they appear
on the books of the Company (or, if applicable, the records of the Depositary
referred to below under 'Description of Depositary Shares') on such record dates
as shall be fixed by the Board of Directors. Dividends on any series of
Preferred Stock may be cumulative or non-cumulative.
No full dividends may be declared or paid on funds set apart for the payment
of dividends on any series of Preferred Stock unless dividends shall have been
paid or set apart for such payment on the Parity Dividend Securities. If full
dividends are not so paid, such series of Preferred Stock shall share dividends
pro rata with the Parity Dividend Securities.
26
CONVERSION AND EXCHANGE
The Prospectus Supplement for any series of Preferred Stock will state the
terms, if any, on which shares of that series are convertible into shares of
another series of Preferred Stock or Common Stock or exchangeable for another
series of Preferred Stock, Common Stock or Debt Securities of the Company. The
Common Stock of the Company is described below under 'Description of Common
Stock.'
REDEMPTION
A series of Preferred Stock may be redeemable at any time, in whole or in
part, at the option of the Company or the holder thereof and may be subject to
mandatory redemption pursuant to a sinking fund or otherwise upon terms and at
the redemption prices set forth in the Prospectus Supplement relating to such
series.
In the event of partial redemptions of Preferred Stock, whether by mandatory
or optional redemption, the shares to be redeemed will be determined by lot or
pro rata, as may be determined by the Board of Directors of the Company, or by
any other method determined to be equitable by the Board of Directors. On and
after a redemption date, unless the Company defaults in the payment of the
redemption price, dividends will cease to accrue on shares of Preferred Stock
called for redemption and all rights of holders of such shares will terminate
except for the right to receive the redemption price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the Company, holders of each series of Preferred Stock that ranks senior to the
Junior Liquidation Securities will be entitled to receive out of assets of the
Company available for distribution to shareholders, before any distribution is
made on any Junior Liquidation Securities, including Common Stock, distributions
upon liquidation in the amount set forth in the Prospectus Supplement relating
to such series of Preferred Stock, plus an amount equal to any accrued and
unpaid dividends. If, upon any voluntary or involuntary liquidation, dissolution
or winding up of the Company, the amounts payable with respect to the Preferred
Stock of any series and any other Parity Liquidation Securities are not paid in
full, the holders of the Preferred Stock of such series and the Parity
Liquidation Securities will share ratably in any such distribution of assets of
the Company in proportion to the full liquidation preferences to which each is
entitled. After payment of the full amount of the liquidation preference to
which they are entitled, the holders of such series of Preferred Stock will not
be entitled to any further participation in any distribution of assets of the
Company.
VOTING RIGHTS
Except as indicated below or in the Prospectus Supplement relating to a
particular series of Preferred Stock or except as expressly required by
applicable law, the holders of shares of Preferred Stock will have no voting
rights.
PREFERRED STOCK OUTSTANDING
As of July 31, 2001, the Company had issued and outstanding 15,696 shares
without par value of $4 Preferred Stock, which is senior to the Common Stock and
the Preferred Stock as to the payment of dividends and distributions of assets
on liquidation, dissolution or winding up of the Company. The $4 Preferred Stock
bears a dividend of $4.00 per share per annum from the surplus or net profits of
the Company, but only when and as declared by the Board of Directors. Dividends
on the $4 Preferred Stock are cumulative. Such dividends are payable quarterly
in each year on such dates as from time to time may be fixed by the Board of
Directors. Accumulation of dividends do not bear interest.
If dividends in full on all outstanding shares of the $4 Preferred Stock for
all past quarterly dividend periods and for the then current quarterly period
have not been paid or declared and set
27
apart for payment, no dividends (other than dividends payable in stock ranking
junior to the $4 Preferred Stock) will be declared or paid or set apart for
payment on, nor will any distribution be made to, any class of stock ranking
junior to the $4 Preferred Stock.
Holders of the $4 Preferred Stock have no general voting rights but have the
right to vote in certain specified circumstances.
If at the time of any annual meeting of shareholders, dividends have not
been paid on the shares of the $4 Preferred Stock in an aggregate amount equal
to four full quarterly dividends (whether consecutive or not), then at such
annual meeting, the holders of the $4 Preferred Stock will have the sole right,
to the exclusion of all other classes of stock, to vote for and elect one-third
(or the nearest whole number thereto) of the total number of directors to be
elected at the meeting and thereafter at all meetings for the election of
directors until all arrearages of dividends accumulated on the $4 Preferred
Stock for all preceding dividend periods shall have been paid or declared and
set apart for payment. Whenever all arrearages of dividends have been paid or
declared and set apart for payment, all powers of the holders of the $4
Preferred Stock to vote for directors will terminate, and the tenure of all
Directors elected by them will automatically end.
So long as any shares of the $4 Preferred Stock are outstanding, the
Company, without first obtaining a majority vote of the holders of the
outstanding shares of the $4 Preferred Stock, may not:
o increase the authorized number of $4 Preferred Stock,
o authorize, create or issue stock of any class ranking, as to the payment
of dividends or distributions upon dissolution, liquidation or winding up,
on a parity with the $4 Preferred Stock, or
o sell, lease or otherwise dispose of all or substantially all of the assets
of the Company, otherwise than by merger or consolidation.
In addition, so long as any shares of $4 Preferred Stock are outstanding,
the Company may not, without first obtaining the vote of holders of at least
two-thirds of the outstanding shares of $4 Preferred Stock, authorize, create or
issue stock of any class ranking, as to the payment of dividends or distribution
upon dissolution, liquidation or winding up, senior to the $4 Preferred Stock.
The Company's Restated Certificate of Incorporation provides that for so
long as any shares of Preferred Stock are outstanding, the Company will not
issue any shares of the $4 Preferred Stock without first obtaining the
affirmative vote of the holders of at least a majority of the outstanding shares
of Preferred Stock.
Upon the dissolution, liquidation or winding up of the Company, the holders
of the $4 Preferred Stock will be entitled to receive out of the net assets of
the Company (whether represented by capital or surplus),
o if such dissolution, liquidation or winding up is voluntary, cash in an
amount per share of $105, and
o if such dissolution, liquidation or winding up is involuntary, cash in the
amount of $100 per share.
In addition, such holders will be entitled to receive, in each case, an
amount equal to all dividends accrued and unpaid on such share up to and
including the date fixed for distribution, whether or not earned or declared
and, in either case, before any distribution of the assets to be distributed is
made to the holders of stock ranking junior to the $4 Preferred Stock.
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DESCRIPTION OF DEPOSITARY SHARES
The description set forth below of certain provisions of the Deposit
Agreement (as defined below) and of the Depositary Shares and Depositary
Receipts (as defined below) does not purport to be complete and is subject to
and qualified in its entirety by reference to the forms of Deposit Agreement and
Deposit Receipt relating to the Preferred Stock, included as exhibits to the
Registration Statement of which this Prospectus is a part.
GENERAL
The Company may, at its option, elect to offer fractional shares of
Preferred Stock, rather than full shares of Preferred Stock. In the event such
option is exercised, the Company will issue receipts for Depositary Shares, each
of which will represent a fraction (to be set forth in the Prospectus Supplement
relating to a particular series of Preferred Stock) of a share of a particular
series of Preferred Stock as described below.
The shares of any series of Preferred Stock represented by Depositary Shares
will be deposited under a Deposit Agreement (the 'Deposit Agreement') between
the Company and a bank or trust company selected by the Company having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000 (the 'Depositary'). Subject to the terms of the Deposit
Agreement, each owner of a Depositary Share will be entitled, in proportion to
the applicable fraction of a share of Preferred Stock represented by such
Depositary Share, to all the rights and preferences of the Preferred Stock
represented thereby (including dividend, voting, redemption, conversion and
liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement (the 'Depositary Receipts'). Depositary
Receipts will be distributed to those persons purchasing the fractional shares
of Preferred Stock in accordance with the terms of the offering.
Pending the preparation of definitive Depositary Receipts, the Depositary
may, upon the written order of the Company or any holder of deposited Preferred
Stock, execute and deliver temporary Depositary Receipts which are substantially
identical to, and entitle the holders thereof to all the rights pertaining to,
the definitive Depositary Receipts. Depositary Receipts will be prepared
thereafter without unreasonable delay, and temporary Depositary Receipts will be
exchangeable for definitive Depositary Receipts at the Company's expense.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the deposited Preferred Stock to the record
holders of Depositary Shares relating to such Preferred Stock in proportion to
the numbers of such Depositary Shares owned by such holders.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto. If the Depositary determines that it is not feasible to make
such distribution, it may, with the approval of the Company, sell such property
and distribute the net proceeds from such sale to such holders.
REDEMPTION OF STOCK
If a series of Preferred Stock represented by Depositary Shares is to be
redeemed, the Depositary Shares will be redeemed from the proceeds received by
the Depositary resulting from the redemption, in whole or in part, of such
series of Preferred Stock held by the Depositary. The Depositary Shares will be
redeemed by the Depositary at a price per Depositary Share equal to the
applicable fraction of the redemption price per share payable in respect of the
shares of Preferred Stock so redeemed. Whenever the Company redeems shares of
Preferred Stock held by the Depositary, the Depositary will redeem as of the
same date the number of Depositary Shares representing shares of Preferred Stock
so redeemed. If fewer than all the Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed will be selected by the Depositary by lot or
pro rata or by any other equitable method as may be determined by the
Depositary.
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WITHDRAWAL OF STOCK
Any holder of Depositary Shares may, upon surrender of the Depositary
Receipts at the corporate trust office of the Depositary (unless the related
Depositary Shares have previously been called for redemption), receive the
number of whole shares of the related series of Preferred Stock and any money or
other property represented by such Depositary Receipts. Holders of Depositary
Shares making such withdrawals will be entitled to receive whole shares of
Preferred Stock on the basis set forth in the related Prospectus Supplement for
such series of Preferred Stock, but holders of such whole shares of Preferred
Stock will not thereafter be entitled to deposit such Preferred Stock under the
Deposit Agreement or to receive Depositary Receipts therefor. If the Depositary
Shares surrendered by the holder in connection with such withdrawal exceed the
number of Depositary Shares that represent the number of whole shares of
Preferred Stock to be withdrawn, the Depositary will deliver to such holder at
the same time a new Depositary Receipt evidencing such excess number of
Depositary Shares.
VOTING DEPOSITED PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of any series of
deposited Preferred Stock are entitled to vote, the Depositary will mail the
information contained in such notice of meeting to the record holders of the
Depositary Shares relating to such series of Preferred Stock. Each record holder
of such Depositary Shares on the record date (which will be the same date as the
record date for the relevant series of Preferred Stock) will be entitled to
instruct the Depositary as to the exercise of the voting rights pertaining to
the amount of the Preferred Stock represented by such holder's Depositary
Shares. The Depositary will endeavor, insofar as practicable, to vote the amount
of such series of Preferred Stock represented by such Depositary Shares in
accordance with such instructions, and the Company will agree to take all
reasonable actions that may be deemed necessary by the Depositary in order to
enable the Depositary to do so. The Depositary will abstain from voting shares
of the Preferred Stock to the extent it does not receive specific instructions
from the holder of Depositary Shares representing such Preferred Stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Depositary. However, any amendment which materially
and adversely alters the rights of the holders of the Depositary Shares
representing Preferred Stock of any series will not be effective unless such
amendment has been approved by the holders of at least the amount of the
Depositary Shares then outstanding representing the minimum amount of Preferred
Stock of such series necessary to approve any amendment that would materially
and adversely affect the rights of the holders of the Preferred Stock of such
series. Every holder of an outstanding Depositary Receipt at the time any such
amendment becomes effective, or any transferee of such holder, shall be deemed,
by continuing to hold such Depositary Receipt, or by reason of the acquisition
thereof, to consent and agree to such amendment and to be bound by the Deposit
Agreement as amended thereby. The Deposit Agreement automatically terminates if:
o all outstanding Depositary Shares have been redeemed; or
o each share of Preferred Stock has been converted into other preferred
stock or Common Stock or has been exchanged for debt securities; or
o there has been a final distribution in respect of the Preferred Stock in
connection with any liquidation, dissolution or winding up of the Company
and such distribution has been distributed to the holders of Depositary
Shares.
CHARGES OF DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay all charges of the
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Depositary in connection with the initial deposit of the relevant series of
Preferred Stock and any redemption of such Preferred Stock. Holders of
Depositary Receipts will pay other transfer and other taxes and governmental
charges and such other charges or expenses as are expressly provided in the
Deposit Agreement to be for their accounts.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to the Company notice of
its election to do so, and the Company may at any time remove the Depositary,
any such resignation or removal to take effect upon the appointment of a
successor Depositary and its acceptance of such appointment. Such successor
Depositary must be appointed within 60 days after delivery of the notice of
resignation or removal and must be a bank or trust company having its principal
office in the United States and having a combined capital and surplus of at
least $50,000,000.
MISCELLANEOUS
The Depositary will forward all reports and communications from the Company
which are delivered to the Depositary and which the Company is required to
furnish to the holders of the deposited Preferred Stock.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstances beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and the
Depositary under the Deposit Agreement will be limited to performance in good
faith of their duties thereunder and they will not be obligated to prosecute or
defend any legal proceeding in respect of any Depositary Shares, Depositary
Receipts or shares of Preferred Stock unless satisfactory indemnity is
furnished. They may rely upon written advice of counsel or accountants, or upon
information provided by holders of Depositary Receipts or other persons believed
to be competent and on documents believed to be genuine.
DESCRIPTION OF COMMON STOCK
GENERAL
Subject to the rights of the Holders of any shares of the Company's
Preferred Stock or $4 Preferred Stock which may at the time be outstanding,
holders of Common Stock are entitled to receive such dividends as may be
declared from time to time by the Board of Directors out of funds legally
available therefor.
The holders of Common Stock are entitled to one vote per share on all
matters submitted to a vote of shareholders and do not have cumulative voting
rights. Holders of Common Stock are entitled to receive, upon any liquidation of
the Company, all remaining assets available for distribution to shareholders
after satisfaction of the Company's liabilities and the preferential rights of
any preferred stock that may then be issued and outstanding. The outstanding
shares of Common Stock are, and the shares offered hereby will be, fully paid
and nonassessable. The holders of Common Stock have no preemptive, conversion or
redemption rights. The Common Stock is listed on the New York Stock Exchange.
The registrar and transfer agent for the Common Stock is Chemical Bank.
CERTAIN PROVISIONS
The Company's Restated Certificate of Incorporation contains provisions
which:
o divide the Board of Directors into three classes of as nearly equal size
as possible, with Directors in each class being elected for terms of three
years;
o require the affirmative vote of 80% of the outstanding shares of voting
stock to remove any Director except for cause;
o require the affirmative vote of 80% of the outstanding shares of voting
stock and a majority of the voting stock not owned by an Interested
Stockholder (an owner of 10% or more of
31
voting power) to approve any Business Combination (as such term is defined
in the Company's Restated Certificate of Incorporation) with an Interested
Stockholder unless
-- the Business Combination shall have been approved by the Board of
Directors at a time when Disinterested Directors (those directors
unaffiliated with an Interested Stockholder who were either on the
Board of Directors prior to the time the Interested Stockholder became
an Interested Stockholder or succeeded a Disinterested Director and
were recommended for a nomination or election by a majority of the
Disinterested Directors) constitute a majority of the entire Board of
Directors or
-- in the case of a Business Combination involving the payment of
consideration to holders of capital stock, certain conditions
concerning the adequacy of the consideration are met;
o require the affirmative vote of 80% of the outstanding shares of voting
stock to amend or repeal those provisions of the Company's Restated
Certificate of Incorporation described in the two immediately preceding
bullets; and
o require the affirmative vote of
-- 80% of the outstanding shares of voting stock and
-- a majority of the voting stock not owned by an Interested
Stockholder, to approve any proposal made by such Interested
Stockholder to amend or repeal is recommended by the Board of
Directors at a time when Disinterested Directors constitute a
majority of the entire Board of Directors.
The overall effect of these provisions may be to deter or discourage hostile
takeover attempts by making it more difficult for a person who has gained a
substantial equity interest in the Company effectively to exercise control.
DESCRIPTION OF WARRANTS
The Company may issue Warrants, including Warrants to purchase Debt
Securities ('Debt Warrants'), as well as other types of Warrants to purchase
Securities. Warrants may be issued independently or together with any Securities
and may be attached to or separate from such Securities. The Warrants are to be
issued under warrant agreements (each a 'Warrant Agreement') to be entered into
between the Company and a bank or trust company, as warrant agent (the 'Warrant
Agent'), all as shall be set forth in the Prospectus Supplement relating to
Warrants being offered pursuant thereto.
DEBT WARRANTS
The applicable Prospectus Supplement will describe the terms of Debt
Warrants offered thereby, the Warrant Agreement relating to such Debt Warrants
and the certificates representing such Debt Warrants, including the following:
o the title of such Debt Warrants;
o the aggregate number of such Debt Warrants;
o the price or prices at which such Debt Warrants will be issued;
o the currency or currencies, including composite currencies or currency
units, in which the price of such Debt Warrants may be payable;
o the designation, aggregate principal amount and terms of the Debt
Securities purchasable upon exercise of such Debt Warrants, and the
procedures and conditions relating to the exercise of such Debt Warrants;
o the designation and terms of any related Debt Securities with which such
Debt Warrants are issued, and the number of such Debt Warrants issued with
each such Debt Security;
o the currency or currencies, including composite currencies or currency
units, in which the principal of or any premium or interest on the Debt
Securities purchasable upon exercise of such Debt Warrants will be
payable;
32
o the date, if any, on and after which such Debt Warrants and the related
Debt Securities will be separately transferable;
o the principal amount of Debt Securities purchasable upon exercise of each
Debt Warrant, and the price at which and the currency or currencies,
including composite currencies or currency units, in which such principal
amount of Debt Securities may be purchased upon such exercise;
o the date on which the right to exercise such Debt Warrants will commence,
and the date on which such right will expire;
o the maximum or minimum number of such Debt Warrants which may be exercised
at any time;
o a discussion of any material federal income tax considerations; and
o any other terms of such Debt Warrants and terms, procedures and
limitations relating to the exercise of such Debt Warrants.
Certificates representing Debt Warrants will be exchangeable for new
certificates representing Debt Warrants of different denominations, and Debt
Warrants may be exercised at the corporate trust office of the Warrant Agent or
any other office indicated in the Prospectus Supplement. Prior to the exercise
of their Debt Warrants, holders of Debt Warrants will not have any of the rights
of holders of the Debt Securities purchasable upon such exercise and will not be
entitled to payment of principal of or any premium or interest on the Debt
Securities purchasable upon such exercise.
OTHER WARRANTS
The company may issue other warrants. The applicable Prospectus Supplement
will describe the following terms of any such other Warrants in respect of which
this Prospectus is being delivered:
o the title of such Warrants;
o the Securities (which may include Preferred Stock or Common Stock) for
which such Warrants are exercisable;
o the price or prices at which such Warrants will be issued;
o the currency or currencies, including composite currencies or currency
units, in which the price of such Warrants may be payable;
o if applicable, the designation and terms of the Preferred Stock or Common
Stock with which such Warrants are issued, and the number of such Warrants
issued with each such share of Preferred Stock or Common Stock;
o if applicable, the date on and after which such Warrants and the related
Preferred Stock or Common Stock will be separately transferable;
o if applicable, a discussion of any material federal income tax
considerations; and
o any other terms of such Warrants, including terms, procedures and
limitations relating to the exchange and exercise of such Warrants.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder to purchase for cash such principal
amount of Debt Securities or number of shares of Preferred Stock or Common Stock
at such exercise price as shall in each case be set forth in, or be determinable
as set forth in, the Prospectus Supplement relating to the Warrants offered
thereby. Warrants may be exercised at any time up to the close of business on
the expiration date set forth in the Prospectus Supplement relating to the
Warrants offered thereby. After the close of business on the expiration date,
unexercised Warrants will become void.
33
Warrants may be exercised as set forth in the Prospectus Supplement relating
to the Warrants offered thereby. Upon receipt of payment and the certificate
representing the Warrant properly completed and duly executed at the corporate
trust office of the Warrant Agent or any other office indicated in the
Prospectus Supplement, the Company will, as soon as practicable, forward the
Securities purchasable upon such exercise. If less than all of the Warrants
represented by such certificate are exercised, a new certificate will be issued
for the remaining Warrants.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
In compliance with United States federal tax laws and regulations, Bearer
Securities (including Debt Securities that are exchangeable for Bearer
Securities and Debt Securities in permanent global form that are either Bearer
Securities or exchangeable for Bearer Securities) may not be offered, sold,
resold or delivered in connection with their original issuance in the United
States or to United States persons (each as defined below) except as otherwise
permitted by Treasury Regulation Section 1.163-5(c)(2)(i)(D) including offers
and sales to offices located outside the United States of United States
financial institutions (as defined in Treasury Regulation Section
1.165-12(c)(l)(v)) which agree in writing to comply with the requirements of
Section 165(j)(3)(A),(B) or (C) of the Code, as defined below, and the
regulations thereunder, and any underwriters, agents and dealers participating
in the offering of Debt Securities must agree in writing that they will not
offer, sell or resell any Bearer Securities to persons within the United States
or to United States persons (except as described above) nor deliver Bearer
Securities within the United States. In addition, any such underwriters, agents
and dealers must represent in writing that they have in effect, in connection
with the offer and sale of the Debt Securities, procedures reasonably designed
to ensure that their employees or agents who are directly engaged in selling the
Debt Securities are aware that Bearer Securities cannot be offered or sold to a
person who is within the United States or is a United States person except as
otherwise permitted by Treasury Regulation Section 1.163-5(c)(2)(i)(D).
Furthermore, the owner of the obligation (or the financial institution or
clearing organization through which the owner holds the obligation) must certify
to the Company that the owner is not a United States Person. Bearer Securities
and any coupons attached hereto will bear the following legend: 'Any United
States person who holds this obligation will be subject to limitations under the
United States income tax laws, including the limitations provided in Sections
165(j) and 1287(a) of the United States Internal Revenue Code.'
Purchasers of Bearer Securities may be affected by certain limitations under
United States tax laws. The applicable Prospectus Supplement or Prospectus
Supplements will describe such limitations for any Bearer Securities relating
thereto.
As used herein, 'United States person' means
o an individual who is, for United States federal income tax purposes, a
citizen or resident of the United States,
o a corporation, partnership or other entity created or organized in or
under the laws of the United States or of any political subdivision
thereof, or
o an estate or trust the income of which is subject to United States federal
income taxation regardless of its source, and 'United States' means the
United States of America (including the States and the District of
Columbia), its territories and its possessions.
DESCRIPTION OF TRUST PREFERRED SECURITIES AND TRUST GUARANTEES
TRUST PREFERRED SECURITIES
The Declaration pursuant to which each IPC Trust is organized will be
replaced by an Amended and Restated Declaration of Trust (the 'Amended
Declaration') which will authorize the Trustees of each IPC Trust to issue on
behalf of such IPC Trust one series of Trust Preferred Securities and one series
of Trust Common Securities (together, the 'Trust Securities'). The Trust
Preferred Securities will be issued to the public pursuant to the Registration
Statement of which
34
this Prospectus forms a part, and the Trust Common Securities will be issued
directly or indirectly to the Company.
The Trust Preferred Securities will have such terms, including dividends,
redemption, voting, conversion, liquidation rights and such other preferred,
deferred or other special rights or such restrictions as shall be set forth in
the applicable Amended Declaration or made part of such Amended Declaration by
the Trust Indenture Act. Reference is made to the applicable Prospectus
Supplement relating to the Trust Preferred Securities of such IPC Trust for
specific terms, including:
o the distinctive designation of Trust Preferred Securities,
o the number of Trust Preferred Securities issued by such IPC Trust,
o the annual dividend rate (or method of determining such rate) for Trust
Preferred Securities issued by such IPC Trust and the date or dates upon
which such dividends shall be payable,
o whether dividends on Trust Preferred Securities issued by such IPC Trust
shall be cumulative, and, in the case of Trust Preferred Securities having
such cumulative dividend rights, the date or dates or method of
determining the date or dates from which dividends on Trust Preferred
Securities issued by such IPC Trust shall be cumulative,
o the amount or amounts which shall be paid out of the assets of such IPC
Trust to the holders of Trust Preferred Securities of such IPC Trust upon
voluntary or involuntary dissolution, winding-up or termination of such
IPC Trust,
o the terms and conditions, if any, under which Trust Preferred Securities
of such IPC Trust may be converted into shares of capital stock of the
Company, including the conversion price per share and the circumstances,
if any, under which any such conversion right shall expire,
o the terms and conditions, if any, upon which the related series of the
Subordinated Debt Securities of the Company may be distributed to holders
of Trust Preferred Securities of such IPC Trust,
o the obligation, if any, of such IPC to purchase or redeem Trust Preferred
Securities issued by such IPC Trust and the price or prices at which, the
operiod or periods within which and the terms and conditions upon which
Trust Preferred Securities issued by such IPC shall be purchased or
redeemed, in whole or in part, pursuant to such obligation,
o the voting rights, if any, of Trust Preferred Securities issued by such
IPC Trust in addition to those required by law, including the number of
votes per Trust Preferred Security and any requirement for the approval
by the holders of Trust Preferred Securities, as a condition to specified
action or amendments to the applicable Amended Declaration of such IPC
Trust and
o any other relevant rights, preferences, privileges, limitations or
restrictions of Trust Preferred Securities issued by such IPC consistent
with the applicable amended Declaration of such IPC Trust or with
applicable law.
Pursuant to the applicable Amended Declaration of such IPC Trust, the
Property Trustee will own the Subordinated Debt Securities of the Company
purchased by the applicable IPC Trust for the benefit of the holders of the
Trust Preferred Securities and the Trust Common Securities. The payment of
dividends out of money held by the IPC Trusts, and payments upon redemption of
Trust Preferred Securities or liquidation of any IPC Trust, will be guaranteed
by the Company to the extent described under ' -- Trust Guarantees.'
Certain United States Federal income tax considerations applicable to an
investment in Trust Preferred Securities will be described in the Prospectus
Supplement relating thereto.
In connection with the issuance of Trust Preferred Securities, each IPC
Trust will also issue one series of Trust Common Securities. Each Amended
Declaration will authorize the Regular Trustees of an IPC Trust to issue on
behalf of such IPC Trust one series of Trust Common Securities having such
terms, including dividends, conversion, redemption, voting, liquidation rights
35
or such restrictions as shall be set forth therein. Except as otherwise provided
in the Prospectus Supplement relating to the Trust Preferred Securities, the
terms of the Trust Common Securities issued by such IPC Trust will be
substantially identical to the terms of the Trust Preferred Securities issued by
such IPC Trust, and the Trust Common Securities will rank pari passu, and
payments will be made thereon pro rata with the Trust Preferred Securities,
except that, upon an event of default under the applicable Amended Declaration
of such IPC Trust, the rights of the holders of the Trust Common Securities to
payment in respect of dividends and payments upon liquidation, redemption and
otherwise will be subordinated to the rights of the holders of the Trust
Preferred Securities. Except in certain limited circumstances, the Trust Common
Securities will also carry the right to vote and appoint, remove or replace any
of the Trustees of the related IPC Trust. All of the Trust Common Securities of
each IPC Trust will be directly or indirectly owned by the Company.
The applicable Prospectus Supplement will describe whether the Company
and/or certain of its subsidiaries maintain deposit accounts and conduct other
banking transactions, including borrowings in the ordinary course of business,
with the Property Trustee.
TRUST GUARANTEES
Set forth below is a summary of information concerning the Trust Guarantees
which will be executed and delivered by the Company, from time to time, for the
benefit of the holders of Trust Preferred Securities. The accompanying
Prospectus Supplement will describe any significant differences between the
actual terms of the Trust Guarantees and the summary below. The following
summary does not purport to be complete and is subject in all respects to the
provisions of, and is qualified in its entirety by reference to, the Trust
Guarantees, which is filed with the Commission and incorporated by reference as
an exhibit to the Registration Statement of which this Prospectus forms a part.
General. The Company will irrevocably and unconditionally agree, to the
extent set forth in the Trust Guarantees, to pay in full, to the holders of
Trust Preferred Securities of each IPC Trust, the Trust Guarantee Payments (as
defined below) (except to the extent paid by such IPC Trust), as and when due,
regardless of any defense, right of set-off or counterclaim which such IPC Trust
may have or assert. The following payments with respect to the Trust Preferred
Securities to the extent not paid by the applicable IPC Trust (the 'Trust
Guarantee Payments') will be subject to the Trust Guarantees (without
duplication):
o any accrued and unpaid dividends which are required to be paid on the
Trust Preferred Securities of such IPC Trust, to the extent such IPC Trust
shall have funds legally available therefor,
o the redemption price, including all accrued and unpaid dividends (the
'Redemption Price'), payable out of funds legally available therefor, with
respect to any Trust Preferred Securities called for redemption by such
IPC Trust and
o upon a liquidation of such IPC Trust (other than in connection with the
distribution of Subordinated Debt Securities of the Company to the holders
of the Trust Preferred Securities or the redemption of all of the Trust
Preferred Securities issued by such IPC Trust), the lesser of
-- the aggregate of the liquidation preference and all accrued and unpaid
dividends on the Trust Preferred Securities of such IPC Trust to the
date of payment and
-- the amount of assets of such IPC Trust remaining available for
distribution to holders of Trust Preferred Securities of such IPC
Trust in liquidation of such IPC Trust.
The Company's obligation to make a Trust Guarantee Payment may be satisfied by
direct payment of the required amounts by the Company to the holders of Trust
Preferred Securities or by causing the applicable IPC Trust to pay such amounts
to such holders.
Covenants of the Company. In each Trust Guarantee, the Company will covenant
that, so long as any Trust Preferred Securities issued by the applicable IPC
Trust remain outstanding, if there
36
shall have occurred any event that would constitute an event of default under
such Trust Guarantee or the Amended and Restated Declaration of such IPC Trust,
then:
o the Company shall not declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase or acquire or make a
liquidation payment with respect to, any of its capital stock (other than
stock dividends paid by the Company which consist of the stock of the same
class as that on which any dividend is being paid),
o the Company shall not make any payment of principal or premium, if any, on
or repay, repurchase or redeem any debt securities issued by the Company
which rank pari passu with or junior to the Subordinated Debt Securities,
and
o the Company shall not make any guarantee payments with respect to the
foregoing (other than pursuant to the Trust Guarantees).
Amendment and Assignment. Except with respect to any changes which do not
adversely affect the rights of holders of Trust Preferred Securities of any IPC
Trust (in which case no vote will be required), the Trust Guarantees with
respect to the Trust Preferred Securities may be changed only with the prior
approval of the holders of not less than a majority in liquidation preference of
the outstanding Trust Preferred Securities of such IPC Trust. The manner of
obtaining any such approval of holders of the Trust Preferred Securities of such
IPC Trust will be as set forth in an accompanying Prospectus Supplement. All
guarantees and agreements contained in the Trust Guarantees shall bind the
successors, assigns, receivers, trustees and representatives of the Company and
shall inure to the benefit of the holders of the Trust Preferred Securities then
outstanding.
Termination of the Trust Guarantees. Each Trust Guarantee will terminate as
to the Trust Preferred Securities issued by the applicable IPC Trust upon:
o full payment of the redemption price of all Trust Preferred Securities of
such IPC Trust,
o distribution of the Subordinated Debt Securities of the Company held by
such IPC Trust to the holders of the Trust Preferred Securities of such
IPC Trust or
o full payment of the amounts payable in accordance with the Amended and
Restated Declaration upon liquidation of such IPC Trust.
Each Trust Guarantee will continue to be effective or will be reinstated, as
the case may be, if at any time any holder of Trust Preferred Securities issued
by applicable IPC Trust must restore payment of any sums paid under such Trust
Preferred Securities or such Trust Guarantee.
The subordination provisions of the Subordinated Debt Securities and the
Trust Guarantees, respectively, will provide that in the event payment is made
on the Subordinated Debt Securities or the Trust Guarantees in contravention of
such provisions, such payments will be paid over to the holders of Senior
Indebtedness.
Ranking of the Trust Guarantees. Each Trust Guarantee will constitute an
unsecured obligation of the Company and will rank:
o subordinate and junior in right of payment to all other liabilities of the
Company, except any liabilities that may be made pari passu expressly by
their terms,
o pari passu with the most senior preferred or preference stock now or
hereafter issued by the Company and with any guarantee now or hereafter
entered into by the Company in respect of any preferred or preference
stock or interests of any affiliate of the Company and
o senior to the Company's Common Stock.
Each Amended Restated Declaration will provide that each holder of Trust
Preferred Securities by acceptance thereof agrees to the subordination
provisions and other terms of the applicable Trust Guarantee.
Each Trust Guarantee will constitute a guarantee of payment and not of
collection. Each Trust Guarantee will be deposited with the Property Trustee to
be held for the benefit of the Trust Preferred Securities of the applicable IPC
Trust. The Property Trustee will have the right to
37
enforce the Trust Guarantees on behalf of the holders of the Trust Preferred
Securities of the applicable IPC Trust. The holders of not less than a majority
in aggregate liquidation preference of the Trust Preferred Securities of the
applicable IPC Trust will have the right to direct the time, method and place of
conducting any proceeding for any remedy available in respect of the applicable
Trust Guarantee, including the giving of directions to the Property Trustee.
If the Property Trustee fails to enforce a Trust Guarantee as above
provided, any holder of Trust Preferred Securities of the applicable IPC Trust
may institute a legal proceeding directly against the Company to enforce its
rights under such Trust Guarantee, without first instituting a legal proceeding
against the applicable IPC Trust, or any other person or entity. Each Trust
Guarantee will not be discharged except by payment of the Trust Guarantee
Payments in full to the extent not paid by the applicable IPC Trust, and by
complete performance of all obligations under such Trust Guarantee.
Governing Law. Each Trust Guarantee will be governed by, and construed in
accordance with, the laws of the State of New York.
PLAN OF DISTRIBUTION
The Company and/or the IPC Trusts, as the case may be, may sell Offered
Securities in any of the following ways:
o to or through underwriters or dealers
o by itself directly to other purchasers or
o through agents.
Any such underwriter or agent involved in the offer and sale of the Offered
Securities will be named in an applicable Prospectus Supplement.
Underwriters may offer and sell the Offered Securities at a fixed price or
prices, which may be changed, or from time to time at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Company and/or the IPC Trust, as the case may be, also
may, from time to time, authorize underwriters acting as the Company's and/or
the IPC Trust's agents to offer and sell the Offered Securities upon the terms
and conditions as shall be set forth in any Prospectus Supplement.
In connection with the sale of Offered Securities, underwriters may be
deemed to have received compensation from the Company and/or the IPC Trusts in
the form of underwriting discounts or commissions from purchasers of Offered
Securities for whom they may act as agent. Underwriters may sell Offered
Securities to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions from the underwriters and/or
commissions (which may be changed from time to time) from the purchasers for
whom they may act as agent.
Any underwriting compensation paid by the Company and/or the IPC Trusts to
underwriters or agents in connection with the offering of Offered Securities,
and any discounts, concessions or commissions allowed by underwriters to
participating dealers, will be set forth in an applicable Prospectus Supplement.
Underwriters, dealers and agents participating in the distribution of the
Offered Securities may be deemed to be underwriters, and any discounts and
commissions received by them and any profit realized by them on resale of the
Offered Securities may be deemed to be underwriting discounts and commissions
under the Securities Act. Underwriters, dealers and agents may be entitled,
under agreements with the Company and/or the IPC Trusts, to indemnification
against and contribution toward certain civil liabilities, including liabilities
under the Securities Act, and to reimbursement by the Company and/or the IPC
Trusts for certain expenses.
If so indicated in an applicable Prospectus Supplement, the Company and/or
the IPC Trusts will authorize dealers acting as the Company's and/or the IPC
Trust's agents to solicit offers by certain institutions to purchase Offered
Securities from the Company and/or the IPC Trusts at the public offering price
set forth in such Prospectus Supplement pursuant to Delayed Delivery Contracts
('Contracts') providing for payment and delivery on the date or dates stated in
such
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Prospectus Supplement. Each Contract will be for an amount specified in the
applicable Prospectus Supplement. Institutions with whom Contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and other institutions, but will in all cases be subject to the
approval of the Company and/or the IPC Trusts.
Contracts will not be subject to any conditions except:
o the purchase by an institution of the Offered Securities covered by its
Contracts shall not at the time of delivery be prohibited under the laws
of any jurisdiction in the United States to which such institution is
subject, and
o if the Offered Securities are being sold to underwriters, the Company
and/or the IPC Trusts shall have sold to such underwriters the amount of
the Offered Securities specified in the applicable Prospectus Supplement.
Agents and underwriters will have no responsibility in respect of the
delivery or performance of Contracts. A commission as indicated in the
applicable Prospectus Supplement will be paid to underwriters and agents
soliciting purchases of Offered Securities pursuant to Contracts accepted by the
Company and/or the IPC Trusts.
Each underwriter, dealer and agent participating in the distribution of any
Offered Securities which are issuable in bearer form will agree that it will not
offer, sell or deliver, directly or indirectly, Offered Securities in bearer
form in the United States or to United States persons except as otherwise
permitted by Treasury Regulation Section 1.163-5(c)(2)(i)(D).
Any underwriters to whom Offered Securities are sold by the Company and/or
the IPC Trusts for public offering and sale may make a market in such Offered
Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for any Offered Securities. The
applicable Prospectus Supplement will describe whether certain of the
underwriters or agents and their associates may be customers of, engage in
transactions with and perform services for the Company in the ordinary course of
business.
VALIDITY OF SECURITIES
Unless otherwise indicated in the applicable Prospectus Supplement, the
validity of the Company Securities will be passed upon for the Company by
Barbara Smithers, Vice President and Corporate Secretary. The validity of the
Trust Preferred Securities will be passed upon for the IPC Trusts by Skadden,
Arps, Slate, Meagher & Flom LLP, New York, New York, special counsel to the IPC
Trusts. The validity of the Offered Securities will be passed upon for any
underwriters or agents by Skadden, Arps, Slate, Meagher & Flom LLP, New York,
New York. Ms. Smithers does not own a material or significant amount of the
outstanding shares of International Paper Common Stock. She participates in
International Paper's Stock Option Plan and in its Performance Share Plan,
having an interest in a fund under that plan which invests in International
Paper Common Stock.
EXPERTS
The audited financial statements and schedules incorporated by reference in
prospectus and elsewhere in the Registration Statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
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[INTERNATIONAL PAPER LOGO]
Printed on Hammermill Papers, Accent Opaque 40 lbs.
Hammermill Papers is a division of International Paper.