<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED APRIL 13, 1994)
$150,000,000
INTERNATIONAL PAPER COMPANY
7 5/8% NOTES DUE 2004
-------------
INTEREST PAYABLE FEBRUARY 1 AND AUGUST 1
--------------
THE NOTES WILL MATURE ON AUGUST 1, 2004.
THE NOTES ARE NOT REDEEMABLE AT ANY TIME PRIOR TO MATURITY AND HAVE NO SINKING
FUND PROVISIONS.
------------------
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 SUPPLEMENT OR THE PROSPECTUS. ANY REPRE-
SENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------
PRICE 99.927% AND ACCRUED INTEREST
--------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC (1) COMMISSIONS (3) COMPANY (1)(2)
----------------- ----------------- -----------------
<S> <C> <C> <C>
PER NOTE.............................................. 99.927% .650% 99.277%
TOTAL................................................. $149,890,500 $975,000 $148,915,500
<FN>
- ---------
(1) PLUS ACCRUED INTEREST, IF ANY, FROM AUGUST 1, 1994.
(2) THE COMPANY HAS AGREED TO INDEMNIFY THE UNDERWRITERS AGAINST CERTAIN
LIABILITIES, INCLUDING LIABILITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. SEE "UNDERWRITING."
(3) BEFORE DEDUCTING EXPENSES PAYABLE BY THE COMPANY ESTIMATED AT $50,000.
</TABLE>
--------------
THE NOTES ARE OFFERED, SUBJECT TO PRIOR SALE, WHEN, AS AND IF ACCEPTED BY
THE UNDERWRITERS NAMED HEREIN, AND SUBJECT TO THE APPROVAL OF CERTAIN LEGAL
MATTERS BY SKADDEN, ARPS, SLATE, MEAGHER & FLOM, COUNSEL FOR THE UNDERWRITERS.
IT IS EXPECTED THAT DELIVERY OF THE NOTES WILL BE MADE ON OR ABOUT AUGUST 11,
1994 AT THE OFFICE OF MORGAN STANLEY & CO. INCORPORATED, NEW YORK, N.Y. AGAINST
PAYMENT THEREFOR IN NEW YORK FUNDS.
--------------
MORGAN STANLEY & CO.
INCORPORATED
CS FIRST BOSTON
MERRILL LYNCH & CO.
AUGUST 4, 1994
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS, AND, IF GIVEN OR MADE, ANY SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY UNDERWRITER, DEALER OR AGENT. THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY THE NOTES BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
USE OF PROCEEDS
The net proceeds to be received by International Paper Company, a New York
corporation (the "Company"), from the sale of the Notes offered hereby will be
used to repay certain short-term indebtedness with interest rates ranging from
4.31% to 5.00%. The short-term indebtedness being repaid was incurred by the
Company during the prior year for general corporate purposes.
CAPITALIZATION
(UNAUDITED)
The following table sets forth the capitalization of the Company as of June
30, 1994 and as adjusted to give effect to the issuance of the Notes offered
hereby, the 7 7/8% Notes Due 2006 offered July 28, 1994 and assuming the
proceeds of both offerings are used to repay short-term indebtedness.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1994
----------------------
ACTUAL AS ADJUSTED
--------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Notes payable and current maturities of long-term debt.................................... $ 2,371 $ 2,071
--------- -----------
Long-Term Debt............................................................................ 3,981 3,981
7 7/8% Notes Due 2006..................................................................... -- 150
Notes offered hereby...................................................................... -- 150
--------- -----------
Total Long-Term Debt, excluding current maturities.................................... 3,981 4,281
--------- -----------
Total Debt.......................................................................... 6,352 6,352
--------- -----------
Common Shareholders' Equity:
Common Stock............................................................................ 127 127
Paid-in capital......................................................................... 1,706 1,706
Retained earnings....................................................................... 4,607 4,607
Less: Treasury stock.................................................................... 126 126
--------- -----------
Total Common Shareholders' Equity..................................................... 6,314 6,314
--------- -----------
Total Capitalization...................................................................... $ 12,666 $ 12,666
--------- -----------
--------- -----------
</TABLE>
S-2
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
(UNAUDITED)
The following table shows the Company's ratio of earnings to fixed charges.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- --------------------
1989 1990 1991 1992 1993 1993 1994
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges...................... 6.34 3.53 2.44 1.42 2.26 2.11 2.14
</TABLE>
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 and the estimated interest factor in
rent expense (which, in the opinion of the Company, approximates one-third of
rent expense), and adjustments for undistributed equity earnings and the
amortization of capitalized interest. Fixed charges include interest incurred
(including amounts capitalized) and the estimated interest factor in rent
expense.
RECENT OPERATING RESULTS
(UNAUDITED)
In the second quarter of 1994, the Company had net earnings of $87 million
or $.70 per share, a 13% increase over 1993 second quarter net earnings of $77
million or $.62 per share. Net earnings for the 1994 second quarter were 21%
higher than the 1994 first quarter net earnings of $72 million or $.58 per
share.
1994 second quarter sales were $3.6 billion, compared to 1993 second quarter
sales of $3.5 billion and 1994 first quarter sales of $3.4 billion.
Strong worldwide demand for containerboard and continued price increases led
to improved earnings in packaging. The Company's forest products business was
again solidly profitable, although earnings were slightly lower for the second
quarter of 1994 as prices eased. Specialty products earnings continued to
increase during the second quarter, up from both the last quarter and
year-earlier levels due to increased demand and prices. In the Company's
printing papers sector, pulp profit improved as prices increased. U.S. and
European demand for uncoated papers strengthened, and higher prices were
implemented through the second quarter.
For the first half of 1994, net earnings were $159 million or $1.28 per
share on sales of $7 billion, a 13% increase over 1993 first half earnings of
$141 million or $1.14 per share on sales of $6.9 billion.
DESCRIPTION OF THE NOTES
GENERAL
The Notes offered hereby will be limited to $150,000,000 aggregate principal
amount, will mature on August 1, 2004, and will bear interest at the rate per
annum stated on the cover page of this Prospectus Supplement. Interest on each
Note will be payable semiannually on February 1 and August 1 of each year,
commencing February 1, 1995, to the person in whose name the Note is registered,
subject to certain exceptions as provided in the Senior Indenture, at the close
of business on January 15 or July 15, as the case may be, immediately preceding
such February 1 or August 1. The Notes will be issued pursuant to the Indenture
relating to Senior Debt Securities, dated as of April 1, 1994 (the "Senior
Indenture"), between the Company and The Chase Manhattan Bank, N.A., as Trustee.
REDEMPTION
The Notes may not be redeemed prior to maturity by the Company.
DEFEASANCE
Under certain circumstances, the Company will be deemed to have discharged
the entire indebtedness on all outstanding Notes by defeasance. See "Description
of Debt Securities -- Defeasance" in the accompanying Prospectus for a
description of the terms of any such defeasance and the tax consequences
thereof.
S-3
<PAGE>
REPURCHASE UPON CHANGE IN CONTROL
The Notes will be subject to repurchase upon a Change in Control (as defined
in the Senior Indenture). See "Description of Debt Securities -- Redemption at
the Option of Holders Upon Change In Control" in the accompanying Prospectus for
a description of the terms of any such repurchase.
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date hereof, the Underwriters named below have severally
agreed to purchase, and the Company has agreed to sell to them, severally, the
respective principal amounts of Notes set forth below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITERS NOTES
- -------------------------------------------------------------------------------------------------- --------------
<S> <C>
Morgan Stanley & Co. Incorporated................................................................. $ 50,000,000
CS First Boston Corporation....................................................................... 50,000,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated................................................ 50,000,000
--------------
Total....................................................................................... $ 150,000,000
--------------
--------------
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Notes are subject to the
approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters are obligated to take and pay for all the Notes
offered hereby if any are taken.
The Underwriters propose to offer all or part of the Notes directly to the
public at the public offering price set forth on the cover page hereof and all
or part to certain dealers at a price which represents a concession not in
excess of .40% of the principal amount of the Notes. The Underwriters may allow,
and any such dealer may reallow, a concession to certain other dealers not in
excess of .25% of the principal amount of the Notes. After the initial offering
of the Notes, the offering price and other selling terms may from time to time
be varied by the Underwriters.
The Company has agreed to indemnify the several Underwriters against certain
civil liabilities, including liabilities under the Securities Act of 1933, as
amended.
The Company does not intend to apply for listing of the Notes on a national
securities exchange, but has been advised by the Underwriters that they
presently intend to make a market in the Notes as permitted by applicable laws
and regulations. The Underwriters are not obligated, however, to make a market
in the Notes, and any such market making may be discontinued at any time at the
sole discretion of the Underwriters. Accordingly, no assurance can be given as
to the liquidity of, or trading markets for, the Notes.
LEGAL OPINIONS
The validity of the Notes will be passed upon for the Company by James W.
Guedry, Esquire, Associate General Counsel, and for the Underwriters by Skadden,
Arps, Slate, Meagher & Flom, New York, New York. Mr. Guedry does not own a
material or significant amount of the outstanding shares of the Company's common
stock. He participates in the Company's Stock Option Plan and its Salaried
Saving Plan, having an interest in a fund under that plan which invests in the
Company's common stock.
S-4
<PAGE>
- --------------------------------------------------------------------------------
PROSPECTUS
---------------------------------------------------------------
[LOGO]
DEBT SECURITIES, PREFERRED STOCK,
COMMON STOCK AND WARRANTS
--------------
International Paper Company (the "Company") may offer from time to time,
together or separately, 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"), including Common Share Purchase Rights to purchase
Common Stock, and (iv) warrants to purchase Debt Securities, Preferred Stock,
Depositary Shares or Common Stock, or any combination thereof, 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, Depositary Shares, Common Stock and
Warrants are collectively called the "Securities."
The Securities may be offered as separate series or issuances at an
aggregate initial offering price not to exceed $2,400,000,000 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.
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
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 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 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;
and (iv) in the case of Warrants, the designation and number, the exercise
price, any listing of the Warrants or the underlying Securities on a securities
exchange and any other terms in connection with the offering, sale and exercise
of the Warrants.
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
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.
--------------
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 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 any dealers or underwriters
are involved in the sale of the Securities in respect of which this Prospectus
is being delivered, the names of such agents, dealers or underwriters and any
applicable commissions or discounts will be set forth in or may be calculated
from the Prospectus Supplement with respect to such Securities. The net proceeds
to the Company from such sale also will be set forth in a Prospectus Supplement.
--------------
The date of this Prospectus is April 13, 1994
<PAGE>
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.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the United
States Securities Exchange Act of 1934 (the "Exchange Act") and in accordance
therewith file reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements, and other
information filed by the Company can be inspected and copied at the public
reference facilities of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of
the Commission: Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511; and 7 World Trade Center, 13th Floor, New York,
New York 10048. Copies of such material may also be obtained from the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Certain securities of the Company
are listed on, and reports, proxy statements and other information concerning
the Company can be inspected at the offices of, the New York Stock Exchange,
Inc. ("New York Stock Exchange"), 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Securities offered hereby (the "Registration Statement"). This Prospectus does
not contain all information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. Reference is made to the Registration Statement and to the exhibits
relating thereto for further information with respect to the Company and the
Securities offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant to
the Exchange Act (File No. 1-3157) are incorporated in this Prospectus by
reference: (a) Annual Report on Form 10-K for the year ended December 31, 1993;
(b) 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 the Company's registration statements on Form S-3, filed January 8, 1992
(No. 33-44855) and December 23, 1993 (No. 33-51447); and (c) the Company's
registration statement on Form 8-A, dated April 17, 1987, as amended December
14, 1989 (relating to the Common Share Purchase Rights) and the related Current
Report on Form 8-K, dated April 17, 1987.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the filing of a post-effective amendment which indicates
the termination of the offering of the Securities made by this Prospectus shall
be deemed to be incorporated by reference in this Prospectus and to be a part of
this Prospectus from the date of filing of such document.
Any statement contained in a document, all or a portion of which is
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 that a 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, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of such person, a
copy of any or all of the documents referred to above which have been or may be
incorporated by reference in this Prospectus (without exhibits to such documents
other than exhibits specifically incorporated by reference into such documents).
Such written or oral request should be directed to International Paper Company,
Two Manhattanville Road, Purchase, New York 10577, Attention: Investor Relations
Department ((914) 397-1632).
--------------
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.$").
2
<PAGE>
THE COMPANY
The Company, a New York corporation incorporated in 1941 as the successor to
the New York corporation of the same name organized in 1898, is a worldwide
producer of printing and writing papers, paperboard and packaging, and wood
products and distributes paper and office supply products in both the United
States and Europe. It also produces pulp, laminated products, and specialty
products, including photosensitive films and papers, nonwovens, chemicals and
minerals.
In the United States, the Company operates 26 pulp and paper mills, 54
converting and packaging plants, 43 wood products facilities, 15 specialty
panels and laminated products plants, six nonwoven products facilities and seven
envelope manufacturing plants. Production facilities in Europe, Asia, Latin
America and Canada include 14 pulp and paper mills, 32 converting and packaging
plants, three wood products facilities, three specialty panels and laminated
products plants and five nonwoven products facilities.
The Company distributes fine paper, printing and industrial products and
building materials, primarily manufactured by other companies, through about 255
distribution branches located principally in the United States. In addition, the
Company produces photosensitive films and papers and photographic equipment
(three United States and six international locations) and specialty chemicals
(seven United States and two international locations), and engages in domestic
oil and gas and real estate activities.
In March 1994, the Company, through a subsidiary, acquired approximately
one-half of Brierley Investments Limited's ("Brierley") holdings in Carter Holt
Harvey Limited ("Carter Holt"), a major New Zealand forest products and paper
company with substantial assets in Chile. The purchase increased the Company's
ownership of Carter Holt to 24% and leaves Brierley with 8%.
In April 1993, the Company acquired certain assets of the Los Angeles-based
Ingram Paper Company, a distributor of industrial and fine printing papers. In
December, JB Papers Inc., a paper distribution company located in Union, New
Jersey, was purchased. Also in December, the assets of the Monsanto Company's
Kentucky-based Fome-Cor division, a manufacturer of polystyrene foam products,
were acquired.
In the first quarter of 1992, the operating assets of Western Paper Company
(Western Pacific), a printing and industrial paper distribution business based
in Portland, Oregon, were purchased. In the second quarter, the Company acquired
an equity interest in Scitex Corporation Ltd., an Israel-based world leader in
color electronic prepress systems for the graphic design, printing and
publishing industries. In the third quarter, Zaklady Celulozowa-Papierniecze
S.A. w Kwidzynie ("Kwidzyn") was acquired from the Government of the Republic of
Poland. Kwidzyn is Poland's largest white paper manufacturer and the only
integrated bleached pulp and paper company in Poland. In the fourth quarter,
certain assets of the chemical division of Norway-based M. Peterson & Son AS
were acquired.
In the first quarter of 1991, the Company purchased certain packaging and
sheeting facilities located in France (the Rhone Valley packaging business) from
the Georgia-Pacific Corporation. In April 1991, the packaging equipment division
of United Dominion Industries, Ltd. (Evergreen Packaging Equipment) was
purchased. Also in April, the Company acquired the common stock of Dillard Paper
Company, a wholesale distributor of printing and industrial papers, packaging
equipment and supplies based in the southern United States. In August 1991, the
Company completed a merger with Leslie Paper Co., a paper distribution firm
headquartered in Minneapolis, Minnesota, using the pooling-of-interests method
of accounting. In November 1991, the Company entered into a joint venture
agreement with Brierley to control 32% of Carter Holt. In December 1991, the
common stock of Scaldia Papier BV, a paper distribution company based in
Nijmegen, Netherlands, was purchased.
All of the 1993, 1992 and 1991 acquisitions, except the merger with Leslie
Paper Co., were accounted for using the purchase method. The effects of these
mergers and acquisitions, individually or in the aggregate, were not significant
to the Company's financial statements.
3
<PAGE>
From 1989 through 1993, the Company's capital expenditures approximated $5.7
billion, excluding mergers and acquisitions. These expenditures reflect
continuing efforts to improve product quality, environmental performance, lower
costs, expand production capacity, and acquire and improve forestlands. Capital
spending in 1993 was $954 million and is expected to exceed $1.1 billion in
1994.
The Company, which owns a majority interest in IP Timberlands, Ltd., a Texas
limited partnership ("IPT"), controlled approximately 6.2 million acres of
forestlands in the United States at December 31, 1993. IPT was formed to succeed
to substantially all of the Company's forest products business for the period
1985 through 2035, unless earlier terminated.
SUPPLEMENTAL INFORMATION
In November 1992, the Company recorded pretax charges of $370 million to
establish a productivity improvement reserve and $28 million for environmental
remediation and clean-up. Of the total productivity improvement charge, $126
million was related to plant shutdowns, $138 million was for plant
consolidations and other asset write-offs, $64 million was for employee
relocation and severance and $42 million was for legal, warranty and
miscellaneous items.
Approximately $250 million of the productivity improvement charge was for
non-cash items, primarily the write-down of fixed assets. The remaining $120
million consisted of cash expenditures. Approximately 40% has been expended in
1993 and, except for legal costs, the Company expects the remainder to be spent
about equally in 1994 and 1995.
The Company originally projected that annual savings would approach $75
million by the end of 1994. The Company realized 45% of that level in 1993, and
expects to reach 85% by the end of 1994 and to exceed $75 million when actions
are completed in 1995. The savings result primarily from lower personnel costs
and depreciation, as well as the elimination of operating losses.
No overall adjustment to the reserve balances are anticipated as of the date
of this Prospectus.
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS
(UNAUDITED)
The following table sets forth the Company's ratio of earnings to fixed
charges and ratio of earnings to combined fixed charges and preferred stock
dividends for the periods indicated.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------
1989 1990 1991 1992 1993
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges........................... 6.34 3.53 2.44 1.42 2.26
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends......................... 5.67 3.53 2.44 1.42 2.26
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, earnings
include pre-tax earnings before an extraordinary charge and the cumulative
effect of an accounting change, interest expense and the estimated interest
factor in rent expense (which, in the opinion of the Company, approximates
one-third of rent expense), and adjustments for undistributed equity earnings
and the amortization of capitalized interest. Fixed charges include interest
incurred (including amounts capitalized) and the estimated interest factor in
rent expense. Dividends on the Company's $4 Preferred Stock ($4 per share per
annum) are insignificant and, as a result, for the years ended December 31, 1990
through 1993, the ratios of earnings to combined fixed charges and preferred
stock dividends were the same as the ratios of earnings to fixed charges.
USE OF PROCEEDS
Except as otherwise described in an accompanying Prospectus Supplement, the
net proceeds to be received from the sale of the Securities offered hereby will
be used for general corporate purposes. The
4
<PAGE>
Company may also apply proceeds to expenditures for plant and equipment, and
possibly for acquisitions of the stock or assets of other companies, for the
repurchase of shares of the Company's Common Stock or to retire other short-term
or long-term indebtedness. The Company expects that it will continue to incur
indebtedness from time to time.
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 an Indenture (the "Senior
Indenture"), to be entered into between the Company and The Chase Manhattan
Bank, N.A., as trustee. The Subordinated Debt Securities will be issued under a
separate Indenture (the "Subordinated Indenture"), to be entered into between
the Company and The Chase Manhattan Bank, N.A., as trustee. 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., 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.
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: (1) the title of the Debt
Securities; (2) whether the Debt Securities are Senior Debt Securities or
Subordinated Debt Securities; (3) any limit on the aggregate principal amount of
the Debt Securities; (4) 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; (5) the
price or prices (expressed as a
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percentage of the aggregate principal amount thereof) at which the Debt
Securities will be issued; (6) the date or dates on which the Debt Securities
will mature; (7) 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;
(8) 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; (9) any mandatory or
optional sinking fund or analogous provisions; (10) 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; (11) 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; (12) 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; (13) the
currency or currency units of payment of principal of and any premium and
interest on the Debt Securities; (14) 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; (15) the terms and
conditions, if any, pursuant to which such Debt Securities are convertible or
exchangeable into a security or securities of the Company; and (16) any other
terms of the Debt Securities not inconsistent with the provisions of the
applicable Indenture. (Section 3.1) 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 Indenture upon the exercise of
Warrants. See "Description of Warrants."
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."
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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 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." 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 the Depository or such
nominee notifies the Company that it is unwilling or unable to continue as
Depository or the Depository ceases to be qualified as required by the
applicable Indenture or the Company instructs the Trustee in accordance with the
applicable Indenture that such Book-Entry Securities shall be so registerable
and exchangeable or there shall have occurred and be continuing an Event of
Default with respect to the Debt Securities evidenced by such Book-Entry
Securities or 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
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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)
In the event of any redemption in part, the Company shall not be required to
(i) 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 (A) if Debt Securities of the series are issuable only as
Registered Securities, the day of mailing of the relevant notice of redemption
and (B) 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; (ii) 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 (iii) 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 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, 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. Unless otherwise
indicated in an applicable Prospectus Supplement, 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)
Unless otherwise indicated in an applicable Prospectus Supplement, 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 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, except that, if Debt Securities of a series
are issuable solely as Registered Securities, the Company will be required to
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maintain a Paying 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 (i) 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 (ii) 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)
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
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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.
CERTAIN COVENANTS OF THE COMPANY
The Company will covenant 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 (a) mortgages on any
property acquired, constructed or improved by the Company or any Subsidiary
after April 1, 1994 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, (b) 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, (c)
mortgages in favor of the Company or any Subsidiary, or (d) 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 (a), (b)
or (c); and except that the following types of transactions, among others, shall
not be deemed to create Debt secured by a mortgage: (x) 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 (y) 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
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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 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 (a) 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 (b) 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
excludable 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 the Prospectus Supplement, the following
provisions will apply to the Subordinated Debt Securities.
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
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payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshalling 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 there shall
have occurred and be continuing a default in any payment with respect to Senior
Indebtedness, or an event of default with respect to any Senior Indebtedness
resulting in the acceleration of the maturity thereof, or 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: (a) indebtedness, obligations and other liabilities (contingent or
otherwise) of the Company for money borrowed, or evidenced by bonds, debentures,
notes or similar instruments; (b) 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; (c) 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; (d) 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 clauses (a) through (c); (e) any
indebtedness described in clauses (a) through (d) 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 (f) 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 clauses (a)
through (e); 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,
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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
Any one of the following events will constitute an Event of Default under
the applicable Indenture with respect to Debt Securities of any series: (a)
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); (b) 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); (c) 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); (d) 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; (e) certain events in
bankruptcy, insolvency or reorganization involving the Company; and (f) 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 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)
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DEFEASANCE
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, (a) the Company has delivered to
the applicable Trustee an Opinion of Counsel to the effect that (i) the Company
has received from, or there has been published by, the Internal Revenue Service
a ruling, or (ii) 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; (b) 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 (c)
in the case of the Subordinated Debt Securities, (x) 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 (y)
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 (i) the
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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 (ii) 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
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 affected by such
modification or amendment unless a greater percentage of such aggregate
principal amount is specified in the applicable Prospectus Supplement; provided,
however, that no such modification or amendment may, without the consent of each
Holder of such Outstanding Debt Security affected thereby, (a) change the Stated
Maturity of the principal of, or any instalment of principal of or interest on,
any such Debt Security, (b) reduce the principal amount of, or any premium or
interest on, any such Debt Security, (c) change any obligation of the Company to
pay additional amounts, (d) reduce the amount of principal of an Original Issue
Discount Security or any other Debt Security payable upon acceleration of the
maturity thereof, (e) change the coin or currency in which any Debt Security or
any premium or interest thereon is payable, (f) impair the right to institute
suit for the enforcement of any payment on or with respect to any such Debt
Security, (g) adversely change the right to convert or exchange, including
decreasing the conversion rate or increasing the conversion price of, such Debt
Security (if applicable), (h) in the case of the Subordinated Indenture, modify
the subordination provisions in a manner adverse to the Holders of the
Subordinated Debt Securities, (i) 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, (j) reduce the requirements contained in the applicable
Indenture for quorum or voting, (k) change any obligations of the Company to
maintain an office or agency in the places and for the purposes required by the
Indentures, or (l) modify any of the above provisions. (Section 9.2)
The Holders of at least 66 2/3% 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 (a) in the payment of principal of, or premium, if any, or any
interest on any Debt Security of such series, and (b) 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)
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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, (i) 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 (ii) 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 (i) above. (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
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
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 (a) 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 (b) 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 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
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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.
MEDIUM-TERM NOTES
The Company may offer from time to time up to $400,000,000 aggregate
principal amount of its medium-term notes (the "Medium-Term Notes"). The
particular terms and provisions of the Medium-Term Notes will be described in
the Prospectus Supplement relating to such Medium-Term Notes. The Medium-Term
Notes will be issued as a series of Senior Debt Securities under an Indenture,
dated as of May 22, 1992, as supplemented by the First Supplemental Indenture,
dated as of June 26, 1992 (the "Medium-Term Note Indenture"), between the
Company and The Bank of New York, as trustee. The terms and provisions of the
Medium-Term Note Indenture are substantially
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similar to those to be contained in the Senior Note Indenture. The Medium-Term
Note Indenture is incorporated by reference as an exhibit to the Registration
Statement of which this Prospectus is a part.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of (i) 400,000,000
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 February 28, 1994, there were outstanding (a) 124,465,467 shares of
Common Stock (as well as the same number of Common Share Purchase Rights to
purchase Common Stock pursuant to the Rights Agreement), (b) employee stock
options to purchase an aggregate of approximately 4,650,000 shares of Common
Stock, (c) 16,017 shares of $4 Preferred Stock and (d) no shares of any series
of Preferred Stock. In addition, approximately 2,900,000 shares of Common Stock
were reserved for issuance upon conversion of the Company's convertible
subordinated debentures.
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
titles; dividend rates; any redemption provisions; special or relative rights in
the event of liquidation, dissolution, distribution or winding up of the
Company; any sinking fund provisions; any conversion provisions; any voting
rights thereof; and 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 (i) 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"); (ii) 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
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parity with such series of Preferred Stock ("Parity Liquidation Securities");
and (iii) 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 (i) 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, (ii) 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
(iii) 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.
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
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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 February 28, 1994, the Company had issued and outstanding 16,017
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 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 (i) increase the
authorized number of $4 Preferred Stock, (ii) 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 (iii) sell, lease or otherwise dispose of all or substantially all of the
assets of the Company, otherwise than by merger or consolidation.
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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), (i) if such
dissolution, liquidation or winding up is voluntary, cash in an amount per share
of $105, and (ii) 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.
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.
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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.
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
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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 (i) all outstanding Depositary Shares have been redeemed; or (ii)
each share of Preferred Stock has been converted into other preferred stock or
Common Stock or has been exchanged for debt securities; or (iii) 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 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
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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: (1) 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; (2) require the affirmative vote of 80% of the outstanding shares of
voting stock to remove any Director except for cause; (3) require the
affirmative vote of (a) 80% of the outstanding shares of voting stock and (b) a
majority of the voting stock not owned by an Interested Stockholder (an owner of
10% or more of 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 (x) 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 (y) 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; (4) 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 clauses (1) and (2)
above; and (5) require the affirmative vote of (x) 80% of the outstanding shares
of voting stock and (y) 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 those provisions of the Company's Restated
Certificate of Incorporation described in clause (3) above, unless such proposal
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.
COMMON SHARE PURCHASE RIGHTS
In April 1987, the Company's Board of Directors authorized the distribution
of one Common Share Purchase Right (a "Right") for each outstanding share of
Common Stock. Pursuant to the terms of the Rights Agreement (as hereinafter
defined), each share of Common Stock issued subsequent to the effective date of
such Agreement and prior to the Distribution Date (as hereinafter defined), has
been and will be accompanied by one Right. Each Right entitles the registered
holder to purchase from the Company one share of Common Stock at an exercise
price of $155, subject to adjustment as provided below (the "Purchase Price").
As distributed, the Rights trade together with the Common Stock. They may be
exercised or traded separately only after the earlier to occur of: (i) the tenth
business day after the commencement of, or first public disclosure of an
intention to commence, a tender or exchange offer by a person or group other
than the Company if, upon consummation of the offer, such person or group has
acquired beneficial ownership of 20% or more of the outstanding Common Stock, or
(ii) the tenth day after the first public announcement that an Acquiring Person
(as such term is defined in the Rights Agreement) has acquired the beneficial
ownership of 20% or more of the shares of Common Stock outstanding (the earlier
of such dates being called the "Distribution Date").
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The Rights will expire on April 29, 1997 (the "Final Expiration Date"),
unless earlier redeemed by the Company as provided below. Until a Right is
exercised, the holder thereof will have no additional rights as a shareholder of
the Company, including, without limitation, the right to vote or to receive
dividends on shares of Common Stock subject to the Rights.
In the event that, following the Distribution Date, the Company (i) engages
in a merger or other business combination transaction with a Principal Party (as
such term is defined in the Rights Agreement) in which the shares of Common
Stock are changed into, or exchanged for, stock or other securities of any other
person or cash or other property, or (ii) sells or transfers 50% or more of its
assets or earnings power to a Principal Party, each holder of a Right (except as
provided below) shall thereafter have the right to receive, upon exercise
thereof at the Purchase Price, Common Stock of such Principal Party having a
value of twice such Purchase Price. In the event that (i) an Acquiring Person
shall acquire beneficial ownership of 20% or more of the shares of Common Stock
outstanding, other than pursuant to an offer for all outstanding shares of
Common Stock which the Continuing Directors (as such term is defined in the
Rights Agreement), determine to be in the best interests of the Company and its
shareholders, (ii) the Company merges with an Acquiring Person and the Company
is the surviving corporation and all shares of Common Stock remain outstanding
and unchanged or (iii) an Acquiring Person engages in one or more "self-dealing"
transactions with the Company, each holder of a Right will be entitled to
purchase, at the Purchase Price, (A) shares of Common Stock of the Company
having a value of twice the Purchase Price or (B) in certain circumstances as
determined by the Continuing Directors, any combination of cash, property,
shares of Common Stock or other securities equal to twice the Purchase Price
(any of the events described in this paragraph being called "Triggering
Events"). Any rights that are or were at any time on or after the earlier of the
Distribution Date or the Stock Acquisition Date (as such term is defined in the
Rights Agreement), beneficially owned by an Acquiring Person will become null
and void upon the occurrence of a Triggering Event and any holder of any such
Right will be unable to exercise such Right after the occurrence of a Triggering
Event.
At any time prior to the earlier of (i) the tenth day following the Stock
Acquisition Date or (ii) the Final Expiration Date, the Board of Directors of
the Company may redeem the Rights in whole, but not in part, at a price of $.05
per Right.
The Purchase Price payable, and the number of shares of Common Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Common
Stock, (ii) upon the grant to holders of Common Stock of certain rights or
warrants to subscribe for shares of Common Stock or convertible securities at
less than the current market price of the Common Stock or (iii) upon the
distribution to holders of Common Stock of evidences of indebtedness,
securities, cash or assets (excluding regular periodic dividends) or of
subscription rights or warrants (other than those referred to above). With
certain exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in the Purchase
Price.
The Rights have certain antitakeover effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board of Directors of the Company. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors of the Company since the Rights may be redeemed at a
price of $.05 per Right prior to the time that a person or group has acquired
beneficial ownership of 20% or more of the outstanding Common Stock.
The Rights Agreement (the "Rights Agreement") dated as of April 14, 1987, as
amended December 14, 1989, between the Company and Chemical Bank (successor to
Manufacturers Hanover Trust Company), as Rights Agent, specifies the terms of
the Rights. The foregoing description of the Rights
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is qualified in its entirety by reference to such Rights Agreement, which is an
exhibit to the Company's registration statement on Form 8-A, dated April 17,
1987, as amended, incorporated by reference herein.
DESCRIPTION OF WARRANTS
The Company may issue Warrants, including Warrants to purchase Debt
Securities ("Debt Warrants"), Preferred Stock, including Preferred Stock
represented by Depositary Shares ("Preferred Stock Warrants"), Common Stock
("Common Stock Warrants"), or any combination thereof. 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:
(1) the title of such Debt Warrants; (2) the aggregate number of such Debt
Warrants; (3) the price or prices at which such Debt Warrants will be issued;
(4) the currency or currencies, including composite currencies or currency
units, in which the price of such Debt Warrants may be payable; (5) 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; (6) 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; (7) 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; (8)
the date, if any, on and after which such Debt Warrants and the related Debt
Securities will be separately transferable; (9) 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; (10) the date on which the right to exercise such Debt Warrants
will commence, and the date on which such right will expire; (11) the maximum or
minimum number of such Debt Warrants which may be exercised at any time; (12) a
discussion of any material federal income tax considerations; and (13) 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
as 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.
PREFERRED STOCK WARRANTS
The applicable Prospectus Supplement will describe the terms of Preferred
Stock Warrants offered thereby, the Warrant Agreement relating to such Preferred
Stock Warrants and the certificates representing such Preferred Stock Warrants,
including the following: (1) the title of such Preferred Stock Warrants; (2) the
aggregate number of such Preferred Stock Warrants; (3) the price or prices at
which such Preferred Stock Warrants will be issued; (4) the currency or
currencies, including composite currencies or currency units, in which the price
of such Preferred Stock Warrants may be payable; (5) the designation, number of
shares and terms (including, among others, dividend, liquidation, redemption and
voting rights) of the Preferred Stock (including Preferred Stock represented by
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Depositary Shares) purchasable upon exercise of such Preferred Stock Warrants,
and the procedures and conditions relating to the exercise of such Preferred
Stock Warrants; (6) the designation and terms of any related Securities of the
Company with which such Warrants are issued, and the number of such Preferred
Stock Warrants issued with each such Security; (7) the date, if any, on and
after which such Preferred Stock Warrants and the related Securities will be
separately transferable; (8) the maximum or minimum number of Preferred Stock
Warrants which may be exercised at any time; (9) if applicable, a discussion of
any material federal income tax considerations; and (10) any other terms of such
Preferred Stock Warrants, including terms, procedures and limitations relating
to the exchange and exercise of such Preferred Stock Warrants.
Certificates representing Preferred Stock Warrants will be exchangeable for
new certificates representing Preferred Stock Warrants of different
denominations, and Preferred Stock Warrants may be exercised at the corporate
trust office of the Warrant Agent or any office indicated in the Prospectus
Supplement. Prior to the exercise of their Preferred Stock Warrants, holders of
such Preferred Stock Warrants will not have any of the rights as holders of the
Preferred Stock purchaseable upon such exercise and will not be entitled to any
dividend payments, liquidation premiums or voting rights of the Preferred Stock
(including Preferred Stock represented by Depositary Shares) purchasable upon
such exercise.
COMMON STOCK WARRANTS
The applicable Prospectus Supplement will describe the terms of any Common
Stock Warrants, the Warrant Agreement relating to such Common Stock Warrants and
the certificates representing such Common Stock Warrants in respect of which
this Prospectus is being delivered which may include: (1) the title of such
Common Stock Warrants; (2) the aggregate number of such Common Stock Warrants;
(3) the price or prices at which such Common Stock Warrants will be issued; (4)
the currency or currencies, including composite currencies or currency units, in
which the price of such Common Stock Warrants may be payable; (5) if applicable,
the designation and terms of any related Security with which such Common Stock
Warrants are issued, and the number of such Common Stock Warrants issued with
each such related Security; (6) if applicable, the date on and after which such
Common Stock Warrants and the related Security will be separately transferable;
(7) the date on which the right to exercise such Common Stock Warrants will
commerce, and the date on which such right will expire, (8) the maximum or
minimum number of such Common Stock Warrants which may be exercised at any time;
(9) if applicable, a discussion of any material federal income tax
considerations; and (10) any other terms of such Common Stock Warrants,
including terms, procedures and limitations relating to the exchange and
exercise of such Common Stock Warrants.
Certificates representing Common Stock Warrants will be exchangeable for new
certificates representing Common Stock Warrants of different denominations, and
Common Stock 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 Common Stock Warrants, holders of Common Stock Warrants
will not have any of the rights as holders of Common Stock purchasable upon such
exercise and will not be entitled to dividend payments, if any, or voting rights
of the Common Stock purchasable upon such exercise.
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.
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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)(1)(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 (i) an individual who is, for
United States federal income tax purposes, a citizen or resident of the United
States, (ii) 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 (iii) 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.
PLAN OF DISTRIBUTION
The Company may sell Securities to or through underwriters or dealers and
also may sell Securities directly to other purchasers or through agents. Any
such underwriter or agent involved in the offer and sale of the Securities will
be named in an applicable Prospectus Supplement.
Underwriters may offer and sell the 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 also may, from time to time, authorize
underwriters acting as the Company's agents to offer and sell the Securities
upon the terms and conditions as
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shall be set forth in any Prospectus Supplement. In connection with the sale of
Securities, underwriters may be deemed to have received compensation from the
Company in the form of underwriting discounts or commissions from purchasers of
Securities for whom they may act as agent. Underwriters may sell 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 to underwriters or agents
in connection with the offering of 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 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 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, to indemnification
against and contribution toward certain civil liabilities, including liabilities
under the Securities Act, and to reimbursement by the Company for certain
expenses.
If so indicated in an applicable Prospectus Supplement, the Company will
authorize dealers acting as the Company's agents to solicit offers by certain
institutions to purchase Debt Securities or Preferred Stock from the Company 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 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. Contracts will not be subject to any conditions
except (i) the purchase by an institution of the 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 (ii)
if the Securities are being sold to underwriters, the Company shall have sold to
such underwriters the amount 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 Securities pursuant to Contracts accepted by the Company.
Each underwriter, dealer and agent participating in the distribution of any
Debt Securities which are issuable in bearer form will agree that it will not
offer, sell or deliver, directly or indirectly, Debt 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). See "Limitations on Issuance
of Bearer Securities."
The Securities may not be offered or sold directly or indirectly in Great
Britain other than to persons whose ordinary business it is to buy or sell
shares or debentures (except in circumstances which do not constitute an offer
to the public within the meaning of the Companies Act of 1985), and this
Prospectus and any Prospectus Supplement or any other offering material relating
to the Securities may not be distributed in or from Great Britain other than to
persons whose business involves the acquisition and disposal, or the holding, of
securities whether as principal or as agent.
Each series of Securities will be a new issue with no established trading
market, other than the Common Stock which is listed on the New York Stock
Exchange. Any Common Stock sold pursuant to a Prospectus Supplement will be
listed on the New York Stock Exchange, subject to official notice of issuance.
Any underwriters to whom Securities are sold by the Company for public offering
and sale may make a market in such 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 Securities.
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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
The validity of the Securities will be passed upon for the Company by James
W. Guedry, Esq., Associate General Counsel and Secretary of the Company, and
certain matters will be passed upon for any underwriters or agents, by Skadden,
Arps, Slate, Meagher & Flom. Mr. Guedry does not own a material or significant
amount of the outstanding shares of the Company's Common Stock. He participates
in the Company's Stock Option Plan and in its Salaried Savings Plan, having an
interest in a fund under that plan which invests in the Company's Common Stock.
EXPERTS
The financial statements and schedules incorporated by reference in this
prospectus and elsewhere in the registration statement, to the extent and for
the periods indicated in their reports, have been audited by Arthur Andersen &
Co., independent public accountants, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said reports.
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