<PAGE>
File Pursuant to Rule 424(b)(5)
Registration Statement No. 333-62661
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED APRIL 7, 1999)
$200,000,000
INTERNATIONAL PAPER COMPANY
6 7/8% DEBENTURES DUE 2029
---------------------
INTEREST PAYABLE ON APRIL 15 AND OCTOBER 15
------------------------
THE COMPANY MAY REDEEM AT ANY TIME, IN WHOLE OR IN PART, THE DEBENTURES AT THE
REDEMPTION PRICE DESCRIBED HEREIN.
------------------------
PRICE 98.501% AND ACCRUED INTEREST, IF ANY
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS COMPANY
------------------------ ------------------------ ------------------------
<S> <C> <C> <C>
PER DEBENTURE.................... 98.501% .875% 97.626%
TOTAL............................ $197,002,000 $1,750,000 $195,252,000
</TABLE>
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE
NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
MORGAN STANLEY & CO. INCORPORATED EXPECTS TO DELIVER THE DEBENTURES TO
PURCHASERS ON APRIL 12, 1999.
------------------------
MORGAN STANLEY DEAN WITTER
CREDIT SUISSE FIRST BOSTON
MERRILL LYNCH & CO.
APRIL 7, 1999
<PAGE>
THESE OFFERING MATERIALS CONSIST OF TWO DOCUMENTS: (A) THIS PROSPECTUS
SUPPLEMENT, WHICH DESCRIBES THE TERMS OF THE DEBENTURES THAT WE ARE CURRENTLY
OFFERING, AND (B) THE ACCOMPANYING PROSPECTUS, WHICH PROVIDES GENERAL
INFORMATION ABOUT OUR DEBT SECURITIES, SOME OF WHICH MAY NOT APPLY TO THE
DEBENTURES THAT WE ARE CURRENTLY OFFERING. THE INFORMATION IN THIS PROSPECTUS
SUPPLEMENT SUPERSEDES ANY INCONSISTENT INFORMATION INCLUDED IN THE ACCOMPANYING
PROSPECTUS.
IN VARIOUS PLACES IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS, WE REFER YOU TO OTHER SECTIONS OF SUCH DOCUMENTS FOR ADDITIONAL
INFORMATION BY INDICATING THE CAPTION HEADING OF SUCH OTHER SECTIONS. THE PAGE
ON WHICH EACH PRINCIPAL CAPTION INCLUDED IN THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS CAN BE FOUND IS LISTED IN THE TABLE OF CONTENTS BELOW.
ALL SUCH CROSS REFERENCES IN THIS PROSPECTUS SUPPLEMENT ARE TO CAPTIONS
CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND NOT IN THE ACCOMPANYING PROSPECTUS,
UNLESS OTHERWISE STATED.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Use of Proceeds............................................................................................ S-3
Certain Terms of the Debentures............................................................................ S-4
Underwriters............................................................................................... S-6
PROSPECTUS
<CAPTION>
PAGE
-----
<S> <C>
Available Information...................................................................................... 3
Incorporation of Certain Documents by Reference............................................................ 3
The Company................................................................................................ 4
Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends................................................................................................ 5
The IPC Trusts............................................................................................. 5
Use of Proceeds............................................................................................ 6
Description of Debt Securities............................................................................. 7
Description of Capital Stock............................................................................... 21
Description of Preferred Stock............................................................................. 22
Description of Depositary Shares........................................................................... 25
Description of Common Stock................................................................................ 27
Description of Warrants.................................................................................... 28
Limitations on Issuance of Bearer Securities............................................................... 29
Description of Trust Capital Securities and Trust Guarantees............................................... 31
Plan of Distribution....................................................................................... 34
Validity of Securities..................................................................................... 35
Experts.................................................................................................... 35
</TABLE>
------------------------
YOU SHOULD READ THIS PROSPECTUS SUPPLEMENT ALONG WITH THE PROSPECTUS THAT
FOLLOWS. YOU SHOULD RELY ONLY ON THE INFORMATION PROVIDED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT
MAKING AN OFFER OF THE DEBENTURES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED.
YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATES ON THE FRONT OF THESE
DOCUMENTS. IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, "WE,"
"US" AND "OUR" REFER TO INTERNATIONAL PAPER COMPANY (THE "COMPANY").
S-2
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the Debentures offered hereby are
estimated to be approximately $195,252,000. All of such net proceeds will be
used for general corporate purposes, including working capital increases,
capital expenditures, acquisitions and reducing indebtedness.
S-3
<PAGE>
CERTAIN TERMS OF THE DEBENTURES
The following description of the particular terms of the Debentures
supplements the description of the general terms and provisions of the Debt
Securities set forth under the heading "Description of Debt Securities" in the
accompanying Prospectus. If a particular term is inconsistent with the more
general term described in the Prospectus, the particular term replaces the more
general term.
GENERAL
We will issue the Debentures under an indenture dated April 12, 1999 between
the Company and the Trustee, The Bank of New York.
The Debentures will be limited to $200,000,000 aggregate principal amount
and will mature on April 15, 2029. The Debentures will bear interest from April
12, 1999 at the rate per annum of 6 7/8%, payable semiannually on April 15 and
October 15 of each year, commencing April 15, 1999, to the persons in whose
names such Debentures are registered, subject to certain exceptions, at the
close of business on April 1 or October 1, as the case may be, next preceding
such interest payment date.
The Debentures have no sinking fund provisions.
OPTIONAL REDEMPTION
We may redeem all or a portion of the Debentures at any time as set forth
below. We will mail notice to registered holders of the Debentures of our intent
to redeem on not less than 30 nor more than 60 days' notice. We may redeem the
Debentures at a redemption price equal to the greater of:
- 100% of the principal amount plus accrued interest to the redemption date;
or
- the sum of the present values of the remaining scheduled payments of
principal and interest (exclusive of interest accrued to the date of
redemption) discounted to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate plus 25 basis points, plus accrued interest on the principal
amount being redeemed to the redemption date.
"Treasury Rate" means, with respect to any redemption date, (i) the yield,
under the heading which represents the average for the immediately preceding
week, appearing in the most recently published statistical release designated
"H.15(519)" or any successor publication which is published weekly by the Board
of Governors of the Federal Reserve System and which establishes yields on
actively traded United States Treasury securities adjusted to constant maturity
under the caption "Treasury Constant Maturities," for the maturity corresponding
to the Comparable Treasury Issue (if no maturity is within three months before
or after the Remaining Life, yields for the two published maturities most
closely corresponding to the Comparable Treasury Issue shall be determined and
the Treasury Rate shall be interpolated or extrapolated from such yields on a
straight line basis, rounding to the nearest month) or (ii) if such release (or
any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semiannual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date. The Treasury Rate shall be calculated on the third
Business Day preceding the redemption date.
"Business Day" means any calendar day that is not a Saturday, Sunday or
legal holiday in New York, New York and on which commercial banks are open for
business in New York, New York.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term ("Remaining Life") of the Debentures to be redeemed that
would be utilized, at the time of selection and in accordance with
S-4
<PAGE>
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity to the remaining term of the Debentures.
"Comparable Treasury Price" means, with respect to any redemption date, (A)
the average of four Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if the Independent Investment Banker obtains fewer than four
such Reference Treasury Dealer Quotations, the average of all such Quotations.
"Independent Investment Banker" means Morgan Stanley & Co. Incorporated or,
if such firm is unwilling or unable to select the Comparable Treasury Issue, an
independent investment banking institution of national standing appointed by the
Trustee.
"Reference Treasury Dealer" means (i) each of Morgan Stanley & Co.
Incorporated; Credit Suisse First Boston Corporation; Merrill Lynch, Pierce,
Fenner & Smith Incorporated and their respective successors, provided, however,
that if any of the foregoing shall cease to be a primary U.S. Government
securities dealer in New York City (a "Primary Treasury Dealer"), we will
substitute therefor another Primary Treasury Dealer and (ii) any other Primary
Treasury Dealer selected by us.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Independent Investment Banker, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Independent Investment Banker by such Reference
Treasury Dealer at 5:00 p.m. on the third Business Day preceding such redemption
date.
S-5
<PAGE>
UNDERWRITERS
The Underwriters named below have severally agreed to purchase, and we have
agreed to sell to them, the respective principal amount of the Debentures from
us according to the terms of an underwriting agreement dated April 7, 1999 in
the following amounts set forth opposite their respective names below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF
NAME DEBENTURES
- -------------------------------------------------------------------------- ------------------
<S> <C>
Morgan Stanley & Co. Incorporated......................................... $ 80,000,000
Credit Suisse First Boston Corporation.................................... 60,000,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated........................ 60,000,000
------------------
Total............................................................. $ 200,000,000
------------------
------------------
</TABLE>
If all of the conditions under the underwriting agreement have been met, the
Underwriters will purchase all of the Debentures if any are purchased.
The Underwriters will offer the Debentures to the public initially at the
offering price set forth on the cover page of this Prospectus Supplement. They
will also offer the Debentures to certain dealers at such prices less a
concession not in excess of .50% of the principal amount of the Debentures. The
Underwriters may allow, and dealers may reallow, a concession not in excess of
.25% of the principal amount of the Debentures on sales to certain other
dealers. After the initial public offering, the public offering price and
concessions may be changed by the Underwriters.
The Debentures are a new issue of securities with no established trading
market, and will not be listed on any national securities exchange. The
Underwriters have advised us that they presently intend to act as market makers
for the Debentures. However, the Underwriters are not 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 the Debentures.
In order to facilitate the offering of the Debentures, the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price of
the Debentures. Specifically, the Underwriters may overallot in connection with
the offering, creating a short position in the Debentures for their own account.
In addition, to cover overallotments or to stabilize the price of the
Debentures, the Underwriters may bid for, and purchase, the Debentures in the
open market. Finally, the underwriting syndicate may reclaim selling concessions
allowed to an underwriter or a dealer for distributed Debentures in transactions
to cover syndicate short positions, in stabilization transactions or otherwise.
Any of those activities may stabilize or maintain the market price of the
Debentures above independent market levels. The Underwriters are not required to
engage in these activities, and may end any of these activities at any time.
We have agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
Certain of the Underwriters and their associates and affiliates engage in
transactions with and/or perform services, including investment banking and
general financing and banking services, for us and our affiliates in the
ordinary course of business.
S-6
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] $2,075,775,000
</TABLE>
INTERNATIONAL PAPER COMPANY
DEBT SECURITIES, PREFERRED STOCK, COMMON STOCK AND WARRANTS
INTERNATIONAL PAPER CAPITAL TRUST III
INTERNATIONAL PAPER CAPITAL TRUST IV
TRUST PREFERRED SECURITIES FULLY AND UNCONDITIONALLY
GUARANTEED BY INTERNATIONAL PAPER COMPANY
------------------
International Paper Company, a New York corporation (the "Company" or
"International Paper"), may issue from time to time, together or separately up
to an aggregate initial offering price of $2,075,775,000 of its (i) debt
securities (the "Debt Securities"), which may be either senior debt securities
(the "Senior Debt Securities") or subordinated debt securities (the
"Subordinated Debt Securities"), consisting of notes, debentures or other
unsecured evidences of indebtedness in one or more series, (ii) shares of its
serial preferred stock, par value $1.00 per share (the "Preferred Stock"),
which, for any or all series of Preferred Stock, may be issued in the form of
depositary shares evidenced by depositary receipts (the "Depositary Shares");
(iii) shares of its common stock, par value $1.00 per share (the "Common
Stock"), and shares issuable upon conversion of securities which are, pursuant
to the terms thereof, convertible into shares of Common Stock; and (iv) warrants
to purchase securities of the Company as shall be designated by the Company at
the time of the offering (the "Warrants") in amounts, at prices and on terms to
be determined at the time of the offering. The Debt Securities, Preferred Stock,
Common Stock and Warrants may be offered independently or together in any
combination for sale directly to purchasers or through dealers, underwriters or
agents designated and in amounts, at prices and on terms to be determined by
market conditions at the time of the offering. The Debt Securities, Preferred
Stock, Depositary Shares, Common Stock and Warrants are referred to herein
collectively as the "Company Securities."
International Paper Capital Trust III and International Paper Capital Trust
IV (each, an "IPC Trust" and collectively, the "IPC Trusts"), statutory business
trusts formed under Delaware law, may offer, from time to time, preferred
securities (the "Trust Preferred Securities") with the payment of dividends and
payments on liquidation or redemption of the Trust Preferred Securities issued
by each IPC Trust guaranteed on a subordinated basis by the Company (the "Trust
Guarantees") to the extent described herein and in an accompanying prospectus
supplement (the "Prospectus Supplement"). The Company will be the owner of the
trust interests represented by common securities (the "Trust Common Securities")
to be issued by each IPC Trust. Unless indicated otherwise in a Prospectus
Supplement, each IPC Trust exists for the sole purpose of issuing its trust
interests and investing the proceeds thereof in Subordinated Debt Securities.
The Company Securities and the Trust Preferred Securities are referred to herein
collectively as the "Offered Securities."
The Offered Securities may be offered as separate series or issuances at an
aggregate initial offering price not to exceed $2,075,775,000 or, if applicable,
the equivalent thereof in one or more foreign currencies, currency units,
composite currencies or in amounts determined by reference to an index as shall
be designated by the Company, in amounts, at prices and on terms to be
determined in light of market conditions at the time of sale and set forth in a
Prospectus Supplement or Prospectus Supplements. The Offered Securities may be
offered separately or as units with other Offered Securities, in separate series
in amounts, at prices and on terms to be determined at or prior to the time of
sale.
Unless otherwise specified in a Prospectus Supplement, the Senior Debt
Securities, when issued, will be unsecured and will rank on a parity with all
other unsecured and unsubordinated indebtedness of the Company. The Subordinated
Debt Securities, when issued, will be subordinated in right of payment to all
Senior Indebtedness of the Company. Certain specific terms of the particular
Offered Securities in respect of which this Prospectus is being delivered are
set forth in the Prospectus Supplement, including, where applicable, (i) in the
case of Debt Securities, the title, aggregate principal amount, denominations,
maturity, any interest rate (which may be fixed or variable) and time of payment
of any interest, any terms for redemption at the option of the Company or the
holder, any terms for sinking fund payments, any terms for conversion or
exchange into other Offered Securities, currency or currencies of denomination
and payment, if other than U.S. dollars, any listing on a securities exchange
and any other terms in connection with the offering and sale of the Debt
Securities in respect of which this Prospectus is delivered, as well as the
initial public offering price; (ii) in the case of Preferred Stock, the specific
title, the aggregate amount, any dividend (including the method of calculating
payment of dividends), seniority, liquidation, redemption, voting and other
rights, any terms for any conversion or exchange into other Offered Securities,
any listing on a securities exchange, the initial public offering price and any
other terms; (iii) in the case of Common Stock, the number of shares of Common
Stock and the terms of offering thereof; (iv) in the case of Warrants, the
designation and number, the exercise price, any listing of the Warrants or the
underlying Offered Securities on a securities exchange and any other terms in
connection with the offering, sale and exercise of the Warrants; (v) in the case
of Trust Preferred Securities, the designation, number of shares, liquidation
amount per share, initial public offering price, dividend rate (or method of
calculation thereof), dates on which dividends shall be payable and dates from
which dividends shall accrue, any redemption or sinking fund provisions and any
conversion or exchange provisions; and (vi) in the case of all Offered
Securities, whether such Offered Securities will be offered separately or as a
unit with other Offered Securities. The Prospectus Supplement will also contain
information, where applicable, about certain United States Federal income tax
considerations relating to, and any listing on a securities exchange of, the
Offered Securities covered by the Prospectus Supplement. (CONTINUED ON NEXT
PAGE)
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The Offered Securities may be sold directly, through agents, underwriters or
dealers as designated from time to time, or through a combination of such
methods. See "Plan of Distribution." If agents of the Company or the IPC Trusts
or any dealers or underwriters are involved in the sale of the Offered
Securities in respect of which this Prospectus is being delivered, the names of
such agents, dealers or underwriters and any applicable agent's commission,
dealer's purchase price or underwriter's discount will be set forth in or may be
calculated from the Prospectus Supplement with respect to such Offered
Securities. The net proceeds to the Company or the IPC Trusts from such sale
also will be set forth in a Prospectus Supplement.
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement.
THE DATE OF THIS PROSPECTUS IS APRIL 7, 1999.
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
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.
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.
2
<PAGE>
AVAILABLE INFORMATION
The Company and the IPC Trusts have filed with the Securities and Exchange
Commission (the "Commission") a joint registration statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the securities offered hereby. This
- -Prospectus, which forms a part of the Registration Statement, does not contain
all of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company, the IPC Trusts
and the securities offered hereby, reference is made to the Registration
Statement and to the exhibits thereto. Any statements made in this Prospectus
concerning the provisions of certain documents are not necessarily complete and,
in each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
International Paper is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Commission.
The Registration Statement, the exhibits forming a part thereof and the reports
and other information filed by the Company with the Commission may be inspected
and copies may be obtained at the principal office of the Commission at 450
Fifth Street, N.W., Washington D.C. 20549, and at the following regional offices
of the Commission: 500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
and 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such
materials can be obtained from the Public Reference Room of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Information on
the operation of the Public Reference Room may be obtained by calling the
Commission at 1-800-SEC-0330. Such materials may also be accessed electronically
by means of the Commission's home page on the Internet at (http://www.sec.gov.).
Reports and other information concerning the Company can also be inspected at
the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005.
No separate financial statements of the IPC Trusts have been included or
incorporated by reference herein. Neither the IPC Trusts nor the Company
considers such financial statements material to holders of Trust Preferred
Securities because (i) all of the voting securities of each of the IPC Trusts
will be owned, directly or indirectly, by the Company, a reporting company under
the Exchange Act, (ii) each of the IPC Trusts has no independent operations but
rather exists for the purpose of issuing securities representing undivided
beneficial interests in the assets of each such IPC Trust and investing the
proceeds thereof in Subordinated Debt Securities, and (iii) the obligations of
the IPC Trusts under the Trust Preferred Securities issued by such trust are
fully and unconditionally guaranteed on a subordinated basis by the Company to
the extent set forth herein. See "The IPC Trusts" and "Description of Trust
Preferred Securities and Trust Guarantees--Trust Guarantees."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
International Paper has filed with the Commission, pursuant to the Exchange
Act:
- (File No. 1-3157), an Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, filed on March 31, 1999, (the "International Paper 1998
Form 10-K");
- Amended Annual Report on Form 10-K/A for the fiscal year ended December
31, 1997, filed on March 29, 1999; and
- Current Reports on Form 8-K, dated March 11, 1999 and January 5, 1999.
The information incorporate by reference is deemed to be part of this
document except for any information superseded by information in this document.
Statements contained in any such documents as to the contents of any contract or
other document referred to therein are not necessarily complete and, in
3
<PAGE>
each instance, reference is made to the copy of such contract or other document
filed with the Commission, each such statement being qualified in all respects
by such reference.
The following documents filed by the Company with the Commission pursuant to
the Exchange Act (File No. 1-3157) are also incorporated in this Prospectus by
reference: (i) the description of the Company's capital stock which is contained
in the Company's registration statement on Form 8-A, dated July 20, 1976, as
amended, and (ii) the Company's registration statements on Form S-3, filed
January 8, 1992 (No. 33-44855) and December 23, 1993 (No. 33-51447).
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Offered Securities shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated, or deemed to be incorporated, by reference herein or contained in
this Prospectus shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent any statement contained herein or in any
subsequently filed document which also is, or is deemed to be, incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed to constitute a part hereof except as
so modified or superseded. This Prospectus does not contain all the information
set forth in the Registration Statement of which this Prospectus forms a part
which the Company has filed with the Commission and to which reference is hereby
made.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF
THIS PROSPECTUS HAS BEEN DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF SUCH
PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS WHICH ARE INCORPORATED HEREIN BY
REFERENCE, OTHER THAN EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS). REQUESTS FOR SUCH
COPIES SHOULD BE DIRECTED TO INTERNATIONAL PAPER COMPANY, TWO MANHATTANVILLE
ROAD, PURCHASE, NEW YORK 10577, ATTENTION: INVESTOR RELATIONS DEPARTMENT
(TELEPHONE: (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.$").
THE COMPANY
International Paper is a global paper and forest products company that
produces printing and writing papers, pulp, tissue, paperboard and packaging,
and wood products. The Company also manufactures specialty chemicals and
specialty panels and laminated products. The Company is one of the world's
largest producers of bleached paperboard used primarily in consumer packaging
and uncoated freesheet used in printing and writing, two major and growing
segments in the paper industry. The Company is also a leading producer of
linerboard, which is used in industrial packaging, and a leading distributor of
printing and writing papers and other products. International Paper's primary
markets and manufacturing and distribution operations are in the United States,
Europe and the Pacific Rim.
In the United States at December 31, 1998, the Company operted 26 pulp,
paper and packaging mills, 58 converting and packaging plants, 31 wood products
facilities, 9 specialty panels and laminated products plants and 6 specialty
chemicals plants. Production facilities at December 31, 1998 in Europe, Asia,
Latin America and Canada included 14 pulp, paper and packaging mills, 35
converting and packaging plants, 4 wood products facilities, 3 specialty panels
and laminated products plants and 5 specialty chemicals plants. The Company
distributes printing, packaging, graphic arts and industrial supply products,
primarily manufactured by other companies, through over 250 distribution
branches located primarily in the United States, and also engages in oil and gas
and real estate activities in the United States. At December 31, 1998, the
Company controlled approximately 5.9 million acres of forestlands in the United
States.
Through Carter Holt Harvey, the company, primarily in New Zealand and
Australia, operates 6 mills producing pulp, paper, packaging and tissue
products, 27 converting and packaging plants and 52 wood
4
<PAGE>
proucts manufacturing and distribution facilities. Carter Holt Harvey
distributes paper and packaging products through 19 distribution branches
located in New Zealand and Australia. In New Zealand, Carter Holt Harvey
controls approximately 820,000 acres of forestland.
To achieve its current market position, the Company has followed a
consistent strategy for improved profitability and growth which is based on
enhancing cost position and efficiency, emphasizing higher value products,
expanding into fast-growing markets worldwide, and maintaining and developing
market leadership positions for its three core businesses: (i) paper including
paper distribution; (ii) consumer and industrial packaging; and (iii) forest
products, which encompasses building materials and related products. As a result
of this strategy, which in part has been implemented through acquisitions, the
Company's total sales have increased more than 2.0 times since 1988, to
approximately $19.5 billion in 1998.
International Paper has entered into an agreement to acquire Union Camp
Corporation. As a result of the merger, Union Camp shareholders will receive,
for each Union Camp common share that they own, between 1.47 and 1.6247
International Paper common shares. The exchange ratio will be detemined by
referring to the average International Paper share price, calculated based on
market prices on ten randomly selected days during a 20-trading day period
shortly prior to the merger. Information regarding the merger is included in the
Registration Statement on Form S-4/A filed on March 30, 1999.
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(UNAUDITED, DOLLARS IN MILLIONS)
The following table sets forth International Paper's ratio of earnings to
fixed charges on a historical basis for each of the five years in the period
ended December 31, 1998. The ratio of earnings to fixed charges and the ratio of
earnings to combined fixed charges and preferred stock dividends are the same
for all periods presented.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges..................... 2.43 3.61 1.80 1.41
Deficiency in earnings
necessary to cover fixed
charges..................... $195.3
</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 International Paper, 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.
THE IPC TRUSTS
International Paper Capital Trust III and International Paper Capital Trust
IV (each, an "IPC Trust" and collectively, the "IPC Trusts") are statutory
business trusts each formed under Delaware law pursuant to (i) a separate
Declaration of Trust (a "Declaration") executed by the Company, as sponsor for
such IPC Trusts, and the Trustees (as defined herein) of such IPC Trust and (ii)
the filing of a certificate of trust with the Delaware Secretary of State.
Unless an accompanying Prospectus Supplement provides otherwise, each IPC Trust
exists for the sole purposes of (i) issuing the Trust Preferred Securities and
investing the proceeds thereof in a specific series of Subordinated Debt
Securities, (ii) issuing and selling Common Securities to the Company in
exchange for cash and investing the proceeds thereof in additional Subordinated
Debt Securities, and (iii) engaging in such other activities as are necessary,
convenient or incidental thereto. Each IPC Trust shall not borrow money, issue
debt or reinvest proceeds derived from investments, pledge any of its assets, or
otherwise undertake (or permit to be undertaken) any activity that
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<PAGE>
would cause such IPC Trust not to be classified for United States Federal income
tax purposes as a grantor trust. All of the Trust Common Securities of each IPC
Trust will be owned by the Company. The Trust Common Securities will rank PARI
PASSU, and payments will be made thereon PRO RATA, with the Trust Preferred
Securities, except that upon the occurrence and continuance of an event of
default under the Declaration, the rights of the holders of the Trust Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Trust Preferred Securities. The Company will acquire Trust Common Securities
having an aggregate liquidation amount equal to a minimum of 3% of the total
capital of each IPC Trust. Each IPC Trust will have a term of 40 years, but may
terminate earlier as provided in the Declaration of such IPC Trust. Each IPC
Trust's business and affairs will be conducted by the Trustees of such IPC
Trust. The holder of the Trust Common Securities of each IPC Trust will be
entitled to appoint, remove or replace any of, or increase or reduce the number
of, the Trustees of such IPC Trust. The duties and obligations of the Trustees
of each IPC Trust shall be governed by the Declaration of such IPC Trust. At
least one of the Trustees of each IPC Trust will be a person who is an employee
or officer of or who is affiliated with the Company (a "Regular Trustee"). One
Trustee of each IPC Trust will be a financial institution that is not affiliated
with the Company, which shall act as property trustee and as indenture trustee
for the purposes of the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), pursuant to the terms set forth in a Prospectus Supplement (the
"Property Trustee"). In addition, unless the Property Trustee of each IPC Trust
maintains a principal place of business in the State of Delaware and otherwise
meets the requirements of applicable law, one Trustee of each IPC Trust will be
a legal entity having a principal place of business in, or an individual
resident of, the State of Delaware (the "Delaware Trustee" and, together with
the Regular Trustee and the Property Trustee, the "Trustees"). The Company will
pay all fees and expenses related to each IPC Trust and the offering of the
Trust Preferred Securities of such IPC Trust. Unless otherwise indicated in an
applicable Prospectus Supplement, the Property Trustee will be The Bank of New
York, and the Delaware Trustee will be The Bank of New York (Delaware). Unless
otherwise indicated in an applicable Prospectus Supplement, the office of the
Delaware Trustee in the State of Delaware is White Clay Center, Route 273,
Newark, Delaware 19711. The principal place of business of each IPC Trust is c/o
International Paper Company, Two Manhattanville Road, Purchase, New York 10577.
Telephone: (914) 397-1500.
USE OF PROCEEDS
Unless otherwise specified in the Prospectus Supplement, the net proceeds
from the sale of the Company Securities offered hereby will be used for general
corporate purposes. Unless otherwise specified in the Prospectus Supplement, the
IPC Trusts will use all proceeds from the sale of Trust Preferred Securities to
purchase Subordinated Debt Securities of the Company. Additional information on
the use of net proceeds from the sale of the Offered Securities offered hereby
may be set forth in the Prospectus Supplement relating to such Offered
Securities.
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<PAGE>
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions of
the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement and
the extent, if any, to which such general provisions may not apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating to
such Debt Securities.
The Senior Debt Securities will be issued under one of two identical
Indentures (each, a "Senior Indenture"), the forms of which have been filed with
the Commission as exhibits to, or incorporated by reference in, the Registration
Statement of which this Prospectus forms a part, to be entered into between the
Company and The Chase Manhattan Bank, N.A., as trustee, or such other trustee as
shall be named in a Prospectus Supplement. The Subordinated Debt Securities will
be issued under one of two separate identical Indentures (each, a "Subordinated
Indenture"), the forms of which have been filed with the Commission as exhibits
to, or incorporated by reference in, the Registration Statement of which this
Prospectus forms a part, to be entered into between the Company and The Chase
Manhattan Bank, N.A., as trustee, or such other trustee as shall be named in a
Prospectus Supplement. The Senior Indenture and the Subordinated Indenture are
sometimes referred to collectively as the "Indentures." Copies of the Senior
Indenture and the Subordinated Indenture have been filed as exhibits to the
Registration Statement. The Chase Manhattan Bank, N.A., or such other trustee as
shall be named in a Prospectus Supplement, as trustee under the Senior Indenture
and under the Subordinated Indenture, is referred to herein as the "Trustee."
The following summaries of certain provisions of the Senior Debt Securities,
the Subordinated Debt Securities and the Indentures do not purport to be
complete and are subject to, and qualified in their entirety by reference to,
all the provisions of the Indenture applicable to a particular series of Debt
Securities, including the definitions therein of certain terms. Wherever
particular Sections, Articles or defined terms of the Indentures are referred to
herein or in a Prospectus Supplement, it is intended that such Sections,
Articles or defined terms shall be incorporated by reference herein or therein,
as the case may be. Section and Article references used herein are references to
the applicable Indenture. Except as otherwise indicated, the terms of the Senior
Indenture and the Subordinated Indenture are identical. Capitalized terms not
otherwise defined herein shall have the meanings given to them in the applicable
Indenture.
GENERAL
The Indentures will not limit the aggregate principal amount of Debt
Securities which may be issued thereunder, and each Indenture provides that Debt
Securities may be issued thereunder from time to time in one or more series up
to the aggregate amount from time to time authorized by the Company for each
series. Unless otherwise specified in the Prospectus Supplement, the Senior Debt
Securities when issued will be unsecured and unsubordinated obligations of the
Company and will rank equally and ratably with all other unsecured and
unsubordinated indebtedness of the Company. The Subordinated Debt Securities
when issued will be subordinated in right of payment to the prior payment in
full of all Senior Indebtedness (as defined in the Subordinated Indenture) of
the Company as described in the Prospectus Supplement applicable to the offering
of Subordinated Debt Securities.
Concurrently with the issuance of Trust Preferred Securities, the IPC Trusts
will invest the proceeds thereof and the consideration paid by the Company for
the related Trust Common Securities in Subordinated Debt Securities. The
Subordinated Debt Securities will be in the principal amount equal to the
aggregate stated liquidation preference of the Trust Preferred Securities plus
the Company's concurrent investment in the related Trust Common Securities.
7
<PAGE>
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 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 Indentures 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.
8
<PAGE>
FORM, EXCHANGE, REGISTRATION AND TRANSFER
Debt Securities of a series may be issuable in definitive form solely as
Registered Securities, solely as Bearer Securities or as both Registered
Securities and Bearer Securities. Unless otherwise indicated in an applicable
Prospectus Supplement, Bearer Securities will have interest coupons attached.
(Section 2.1) The Indentures also will provide that Debt Securities of a series
may be issuable in temporary or permanent global form and may be issued as
Book-Entry Securities that will be deposited with, or on behalf of, The
Depository Trust Company (the "Depository") or another depository named by the
Company and identified in a Prospectus Supplement with respect to such series.
(Sections 2.1 and 2.4) See "--Global and Book-Entry Debt Securities."
In connection with its original issuance, no Bearer Security (including a
Debt Security exchangeable for a Bearer Security or a Debt Security in global
form that is either a Bearer Security or exchangeable for Bearer Securities)
shall be mailed or otherwise delivered to any location in the United States (as
defined under "Limitations on Issuance of Bearer Securities") and a Bearer
Security may be delivered in connection with its original issuance only if the
Person entitled to receive such Bearer Security furnishes written certification
of the beneficial ownership of the Bearer Security as required by Treasury
Regulation Section 1.163-5(c)(2)(i)(D)(3). In the case of a Bearer Security in
permanent global form, such certification must be given in connection with
notation of a beneficial owner's interest therein in connection with the
original issuance of such Debt Security. (Section 3.3) See "--Global and
Book-Entry Debt Securities" and "Limitations on Issuance of Bearer Securities."
Registered Securities of any series will be exchangeable for other
Registered Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations. In addition, if Debt
Securities of any series are issuable as both Registered Securities and Bearer
Securities, at the option of the Holder upon request confirmed in writing, and
subject to the terms of the applicable Indenture, Bearer Securities (with all
unmatured coupons, except as provided below, and all matured coupons in default)
of such series will be exchangeable into Registered Securities of the same
series of any authorized denominations and of a like aggregate principal amount
and tenor. Bearer Securities surrendered in exchange for Registered Securities
between a Regular Record Date or a Special Record Date and the relevant date for
payment of interest shall be surrendered without the coupon relating to such
date for payment of interest and interest accrued as of such date will not be
payable in respect of the Registered Security issued in exchange for such Bearer
Security, but will be payable only to the Holder of such coupon when due in
accordance with the terms of the applicable Indenture. Bearer Securities will
not be issued in exchange for Registered Securities. (Section 3.5) Each Bearer
Security, and any coupon attached thereto, other than a temporary global Bearer
Security will bear the following legend: "Any United States person who holds
this obligation will be subject to limitations under the United States income
tax laws, including the limitations provided in Sections 165(j) and 1287(a) of
the United States Internal Revenue Code." 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 registrable 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
9
<PAGE>
described in the applicable Indenture. Such transfer or exchange will be
effected upon the Security Registrar or such transfer agent, as the case may be,
being satisfied with the documents of title and identity of the person making
the request. The Company has appointed the Trustee as Security Registrar.
(Section 3.5) If a Prospectus Supplement refers to any transfer agents (in
addition to the Security Registrar) initially designated by the Company with
respect to any series of Debt Securities, the Company may at any time rescind
the designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, except that, if Debt Securities of a
series are issuable solely as Registered Securities, the Company will be
required to maintain a transfer agent in each Place of Payment for such series
and, if Debt Securities of a series are issuable as Bearer Securities, the
Company will be required to maintain (in addition to the Security Registrar) a
transfer agent in a Place of Payment for such series located outside the United
States. The Company may at any time designate additional transfer agents with
respect to any series of Debt Securities. (Section 10.2)
Unless otherwise indicated an applicable Prospectus Supplement, in the event
of any redemption in part, the Company shall not be required to (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)
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<PAGE>
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
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
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portion of a temporary or permanent global Debt Security shall be mailed or
otherwise delivered to any location in the United States in connection with such
exchange. (Sections 3.4 and 3.5)
A Person having a beneficial interest in a permanent global Debt Security
will, except with respect to payment of principal of, premium, if any, and
interest on such permanent global Debt Security, be treated as a Holder of such
principal amount of Outstanding Debt Securities represented by such permanent
global Debt Security as shall be specified in a written statement of the Holder
of such permanent global Debt Security or, in the case of a permanent global
Debt Security in bearer form, of the operator of Euro-clear or CEDEL which is
provided to the Trustee by such Person. (Section 2.3)
If Debt Securities to be sold in the United States are designated by the
Company in a Prospectus Supplement as Book-Entry Securities, a global security
representing the Book-Entry Securities will be deposited in the name of Cede &
Co., as nominee for the Depository representing the Debt Securities to be sold
in the United States. Upon such deposit of the Book-Entry Securities, the
Depository shall credit an account maintained or designated by an institution to
be named by the Company or any purchaser of the Debt Securities represented by
the Book-Entry Securities with an aggregate amount of Debt Securities equal to
the total number of Debt Securities that have been so purchased. The specific
terms of any depository arrangement with respect to any portion of a series of
Debt Securities to be represented by one or more global securities will be
described in the applicable Prospectus Supplement. Beneficial interests in such
Debt Securities will only be evidenced by, and transfers thereof will only be
effected through, records maintained by the Depository and the institutions that
are Depository participants.
CERTAIN COVENANTS OF THE COMPANY WITH RESPECT TO THE SENIOR DEBT SECURITIES
Unless otherwise indicated in an applicable Prospectus Supplement, with
respect to the Senior Debt Securities the Company will covenant in the Senior
Indenture that it will not, nor will it permit any Subsidiary (as hereinafter
defined), to issue, assume or guarantee any debt for money borrowed ("Debt") if
such Debt is secured by a mortgage, pledge, security interest or lien (a
"mortgage" or "mortgages") upon any Forestlands or Principal Manufacturing
Facility (as hereinafter defined), now owned or hereafter acquired, without in
any such case effectively providing that the Senior Debt Securities shall be
secured equally and ratably with (or prior to) such Debt, except that the
foregoing restrictions shall not apply to (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
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foregoing restrictions) in an aggregate amount which, together with all other
such Debt and the Attributable Debt (as hereinafter defined) in respect of Sale
and Lease-Back Transactions (as hereinafter defined) of the Company and its
Subsidiaries existing at such time (other than Sale or Lease-Back Transactions
the proceeds of which have been applied to the retirement of Funded Debt (as
hereinafter defined)), does not at the time exceed 10% of the net tangible
assets of the Company and its consolidated Subsidiaries as of the latest fiscal
year. (Section 10.7 of Senior Indenture) "Net tangible assets" is defined as the
aggregate amount of assets (less applicable reserves and other properly
deductible items) after deducting therefrom (a) all current liabilities and (b)
all goodwill, tradenames, trademarks, patents, unamortized debt discount and
expense (to the extent included in said aggregate amount of assets) and other
like intangibles, all as set forth on the most recent consolidated balance sheet
of the Company and its consolidated Subsidiaries and computed in accordance with
generally accepted accounting principles.
The Company will not, nor will it permit any Subsidiary to, enter into any
arrangement with any person providing for the leasing to the Company or a
Subsidiary of any Forestlands or any Principal Manufacturing Facility (except
for temporary leases for a term of not more than three years), which property
has been owned and, in the case of any such Principal Manufacturing Facility,
has been placed in commercial operation more than 180 days by the Company or
such 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
excludible from gross income of the holders thereof pursuant to the provisions
of Section 103(a) of the Internal Revenue Code (or any successor to such
provision) as in effect at the time of issuance of such obligations, or (ii)
which, in the opinion of the Board of Directors of the Company, is not of
material importance to the total business conducted by the Company and its
Subsidiaries as an entirety. (Section 1.1 of Senior Indenture)
The term "Subsidiary" shall mean any corporation of which at least a
majority of the outstanding stock having by the terms thereof ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned or
controlled by the Company, or by any one or more Subsidiaries, or by the Company
and one or more Subsidiaries. (Section 1.1 of Senior Indenture)
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The term "Attributable Debt" shall mean, at the time of determination, the
present value (discounted at the interest rate, compounded semiannually, equal
to the weighted average Yield to Maturity of the Senior Debt Securities then
Outstanding, such average being weighted by the principal amount of the Senior
Debt Securities of each series or, in the case of Original Issue Discount
Securities, such amount to be determined as provided in the definition of
"Outstanding" in the Senior Indenture) of the obligation of a lessee for net
rental payments during the remaining term of any lease (including any period for
which such lease has been extended) entered into in connection with a sale and
leaseback transaction. (Section 1.1 of Senior Indenture)
The term "Funded Debt" shall mean Debt which by its terms matures at, or is
extendible or renewable at the option of the obligor to, a date more than twelve
months after the date of the creation of such Debt. (Section 1.1 of Senior
Indenture)
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
Unless otherwise indicated in an applicable Prospectus Supplement, the
following provisions will apply to the Subordinated Debt Securities.
The Subordinated Debt Securities will, to the extent set forth in the
Subordinated Indenture, be subordinate in right of payment to the prior payment
in full of all Senior Indebtedness. Upon any payment or distribution of assets
to creditors upon any liquidation, dissolution, winding up, reorganization,
assignment for the benefit of creditors, 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
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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, guaranty, assumption, deferral, renewal, extension or refunding
involved is not senior in right of payment to the Subordinated Debt Securities
or that such indebtedness is PARI PASSU with or junior to the Subordinated Debt
Securities. (Section 1.1 of Subordinated Indenture)
The Prospectus Supplement may further describe the provisions, if any,
applicable to the subordination of the Subordinated Debt Securities of a
particular series.
CONVERSION RIGHTS
The terms on which Debt Securities of any series are convertible into or
exchangeable for Common Stock or other securities of the Company will be set
forth in the Prospectus Supplement relating thereto. Such terms will include
provisions as to whether conversion or exchange is mandatory, at the option of
the Holder or at the option of the Company, and may include provisions pursuant
to which the number of shares of Common Stock or other securities of the Company
to be received by the Holders of Debt Securities would be subject to adjustment.
EVENTS OF DEFAULT
Unless otherwise indicated in an applicable Prospectus Supplement, any one
of the following events will constitute an Event of Default under the applicable
Indenture with respect to Debt Securities of any series: (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
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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)
DEFEASANCE
Unless otherwise indicated in an applicable Prospectus Supplement, if so
specified with respect to any particular series of Debt Securities, the Company
may discharge its indebtedness and its obligations or certain of its obligations
under the applicable Indenture with respect to such series by depositing funds
or obligations issued or guaranteed by the United States of America with the
applicable Trustee.
DEFEASANCE AND DISCHARGE. The Indentures will provide that, if so specified
with respect to the Debt Securities of any series, the Company will be
discharged from any and all obligations in respect of the Debt Securities of
such series (including, in the case of Subordinated Debt Securities, the
subordination provisions described under "Subordination of Subordinated Debt
Securities" herein and except for certain obligations relating to temporary Debt
Securities and exchange of Debt Securities, registration of transfer or exchange
of Debt Securities of such series, replacement of stolen, lost or mutilated Debt
Securities of such series, maintenance of paying agencies, to hold monies for
payment in trust and payment of additional amounts, if any, required in
consequence of United States withholding taxes imposed on payments to non-United
States persons) upon the deposit with the applicable Trustee, in trust, of money
and/or U.S. Government Obligations which through the payment of interest and
principal in respect thereof in accordance with their terms will provide money
in an amount sufficient to pay the principal of (and premium, if any), each
instalment of interest on, and any sinking fund payments on, the Debt Securities
of such series on the Stated Maturity of such payments in accordance with the
terms of the applicable Indenture and the Debt Securities of such series. Such a
trust may only be established if, among other things, (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
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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 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
Unless otherwise indicated in an applicable Prospectus Supplement,
modifications and amendments of the Indentures may be made by the Company and
the Trustee under the applicable Indenture only with the consent of the Holders
of not less than 66 2/3% aggregate principal amount of the Outstanding Debt
Securities issued under the applicable Indenture and 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
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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)
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
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be made, given or taken by the Holders of a specified percentage, which is less
than a majority, in principal amount of the Outstanding Debt Securities of a
series may be adopted at a meeting or adjourned meeting duly reconvened at which
a quorum is present by the affirmative vote of the Holders of such specified
percentage in the principal amount of the Outstanding Debt Securities of that
series. Any resolution passed or decision taken at any meeting of Holders of
Debt Securities of any series duly held in accordance with the applicable
Indenture will be binding on all Holders of Debt Securities of that series and
the related coupons. The quorum at any meeting called to adopt a resolution, and
at any reconvened meeting, will be persons holding or representing a majority in
principal amount of the Outstanding Debt Securities of a series; provided,
however, that if any action is to be taken at such meeting with respect to a
consent or waiver which may be given by the Holders of not less than 66 2/3% in
principal amount of the Outstanding Debt Securities of a series, the persons
holding or representing 66 2/3% in principal amount of the Outstanding Debt
Securities of such series will constitute a quorum. (Section 13.4)
CONSOLIDATION, MERGER AND SALE OF ASSETS
Unless otherwise indicated in an applicable Prospectus Supplement, the
Company, without the consent of the Holders of any of the Outstanding Debt
Securities under the applicable Indenture, may consolidate or merge with or
into, sell, lease, transfer or otherwise dispose of its assets substantially as
an entirety to, any Person which is a corporation, partnership or trust
organized and validly existing under the laws of any domestic jurisdiction, or
may permit any such Person to consolidate or merge with or into the Company or
sell, lease, transfer or otherwise dispose of its assets substantially as an
entirety to the Company, provided that any successor Person assumes the
Company's obligations on the Debt Securities and under the applicable Indenture,
that after giving effect to the transaction no Event of Default, and no event
which, after notice or lapse of time, would become an Event of Default, shall
have occurred and be continuing, and that certain other conditions are met.
(Section 8.1)
REDEMPTION AT THE OPTION OF HOLDERS UPON CHANGE IN CONTROL
Unless otherwise indicated in an applicable Prospectus Supplement, in the
event of any Change in Control (as hereinafter defined) of the Company, prior to
maturity of the Debt Securities, that has not been approved by the Continuing
Directors (as hereinafter defined) of the Company, Debt Securities may be
submitted for redemption, on and after the Exchange Date in the case of Debt
Securities of any series issuable as Bearer Securities or at any time in the
case of all other Debt Securities, at the option of the Holders, unless, prior
to the expiration of ten days following such Change in Control, the Company, if
permitted to do so by the terms of the Debt Securities of a series, shall have
called all of the Debt Securities of such series for redemption. Bearer
Securities may be so redeemed only in whole and Registered Securities in whole
or in part in increments of $1,000. Any Debt Securities to be so submitted must
be submitted during a period (the "Exercise Period") commencing on the date of
the Company's notice described below to Holders of such Change in Control and
expiring on the 20th business day after such notice is given.
Debt Securities submitted for redemption will be redeemed on a Redemption
Date that will be the 15th day after expiration of the Exercise Period, at a
redemption price of 100% of the principal amount of the Debt Security, plus
accrued interest to the Redemption Date. Exercise of this redemption option by
the Holder of a Debt Security will be irrevocable.
On or before the tenth day after a Change in Control, the Company is
obligated, unless the Continuing Directors have approved such Change in Control
prior to such date, to give notice to Holders as set forth under "Notices"
below, and written notice to the Trustee, regarding the Change in Control, the
date of expiration of the Exercise Period, the applicable Redemption Date, the
redemption price and the procedure which the Holder must follow to exercise this
option. To exercise this option, the Holder must deliver on or before the
expiration of the Exercise Period to one of the Paying Agents referred to below
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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 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
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at the expense of the Holder upon delivery of the Trustee of the Debt Security
and coupons or evidence of the destruction, loss or theft thereof satisfactory
to the Company and the Trustee; in the case of any coupon which becomes
destroyed, stolen or lost, such coupon will be replaced by issuance of a new
Debt Security in exchange for the Debt Security to which such coupon appertains.
In the case of a destroyed, lost or stolen Debt Security or coupon, an indemnity
satisfactory to the Trustee and the Company may be required at the expense of
the Holder of such Debt Security or coupon before a replacement Debt Security
will be issued. (Section 3.6)
GOVERNING LAW
The Indentures, the Debt Securities and the coupons will be governed by, and
construed in accordance with, the laws of the State of New York without regard
to principles of conflicts of laws. (Section 1.13)
REGARDING THE TRUSTEE
The Indentures contain limitations on the right of the Trustee, as a
creditor of the Company, to obtain payment of claims in certain cases or to
realize on certain property received in respect of any such claim as security or
otherwise. In addition, the Trustee may be deemed to have a conflicting interest
and may be required to resign as Trustee if at the time of a default under one
of the Indentures it is a creditor of the Company. The Chase Manhattan Bank,
N.A. also acts as trustee under various indentures and the Company and certain
subsidiaries from time to time maintain deposit accounts and conduct their
banking transactions with The Chase Manhattan Bank, N.A. in the ordinary course
of their business. The applicable Prospectus Supplement will describe any such
relationships between the Company and/or certain or its subsidiaries and any
other trustee named in such Prospectus Supplement.
EXPENSES OF THE IPC TRUSTS
Unless otherwise indicated in an applicable Prospectus Supplement, pursuant
to the Subordinated Indenture or a supplement thereto, the Company will agree to
pay all of the costs, expenses or liabilities of the IPC Trusts, other than
obligations of the IPC Trusts to pay to the holders of any Trust Preferred
Securities or Trust Common Securities the amounts due such holders pursuant to
the terms of the Trust Preferred Securities or Trust Common Securities.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of (i) 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 July 31, 1998, there were outstanding (a) 307,247,628 shares of Common
Stock, (b) employee stock options to purchase an aggregate of approximately
12,466,121 shares of Common Stock, (c) 15,696 shares of $4 Preferred Stock and
(d) no shares of any series of Preferred Stock. In addition, approximately
8,332,313 shares of Common Stock were reserved for issuance upon conversion of
International Paper-obligated mandatorily redeemable preferred securities of a
subsidiary trust.
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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 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.
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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 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.
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VOTING RIGHTS
Except as indicated below or in the Prospectus Supplement relating to a
particular series of Preferred Stock or except as expressly required by
applicable law, the holders of shares of Preferred Stock will have no voting
rights.
PREFERRED STOCK OUTSTANDING
As of July 31, 1998, the Company had issued and outstanding 15,696 shares
without par value of $4 Preferred Stock, which is senior to the Common Stock and
the Preferred Stock as to the payment of dividends and distributions of assets
on liquidation, dissolution or winding up of the Company. The $4 Preferred Stock
bears a dividend of $4.00 per share per annum from the surplus or net profits of
the Company, but only when and as declared by the Board of Directors. Dividends
on the $4 Preferred Stock are cumulative. Such dividends are payable quarterly
in each year on such dates as from time to time may be fixed by the Board of
Directors. Accumulation of dividends do not bear interest.
If dividends in full on all outstanding shares of the $4 Preferred Stock for
all past quarterly dividend periods and for the then current quarterly period
have not been paid or declared and set 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.
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),
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(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.
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.
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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 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
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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 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
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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 is recommended by the Board of Directors at a
time when Disinterested Directors constitute a majority of the entire Board of
Directors.
The overall effect of these provisions may be to deter or discourage hostile
takeover attempts by making it more difficult for a person who has gained a
substantial equity interest in the Company effectively to exercise control.
DESCRIPTION OF WARRANTS
The Company may issue Warrants, including Warrants to purchase Debt
Securities ("Debt Warrants"), as well as other types of Warrants to purchase
Securities. Warrants may be issued independently or together with any Securities
and may be attached to or separate from such Securities. The Warrants are to be
issued under warrant agreements (each a "Warrant Agreement") to be entered into
between the Company and a bank or trust company, as warrant agent (the "Warrant
Agent"), all as shall be set forth in the Prospectus Supplement relating to
Warrants being offered pursuant thereto.
DEBT WARRANTS
The applicable Prospectus Supplement will describe the terms of Debt
Warrants offered thereby, the Warrant Agreement relating to such Debt Warrants
and the certificates representing such Debt Warrants, including the following:
(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
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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
of holders of the Debt Securities purchasable upon such exercise and will not be
entitled to payment of principal of or any premium or interest on the Debt
Securities purchasable upon such exercise.
OTHER WARRANTS
THE COMPANY MAY ISSUE OTHER WARRANTS. The applicable Prospectus Supplement
will describe the following terms of any such other Warrants in respect of which
this Prospectus is being delivered: (1) the title of such Warrants; (2) the
Securities (which may include Preferred Stock or Common Stock) for which such
Warrants are exercisable; (3) the price or prices at which such Warrants will be
issued; (4) the currency or currencies, including composite currencies or
currency units, in which the price of such Warrants may be payable; (5) if
applicable, the designation and terms of the Preferred Stock or Common Stock
with which such Warrants are issued, and the number of such Warrants issued with
each such share of Preferred Stock or Common Stock; (6) if applicable, the date
on and after which such Warrants and the related Preferred Stock or Common Stock
will be separately transferable; (7) if applicable, a discussion of any material
federal income tax considerations; and (8) any other terms of such Warrants,
including terms, procedures and limitations relating to the exchange and
exercise of such Warrants.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder to purchase for cash such principal
amount of Debt Securities or number of shares of Preferred Stock or Common Stock
at such exercise price as shall in each case be set forth in, or be determinable
as set forth in, the Prospectus Supplement relating to the Warrants offered
thereby. Warrants may be exercised at any time up to the close of business on
the expiration date set forth in the Prospectus Supplement relating to the
Warrants offered thereby. After the close of business on the expiration date,
unexercised Warrants will become void.
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)
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including offers and sales to offices located outside the United States of
United States financial institutions (as defined in Treasury Regulation Section
1.165-12(c)(l)(v)) which agree in writing to comply with the requirements of
Section 165(j)(3)(A),(B) or (C) of the Code, as defined below, and the
regulations thereunder, and any underwriters, agents and dealers participating
in the offering of Debt Securities must agree in writing that they will not
offer, sell or resell any Bearer Securities to persons within the United States
or to United States persons (except as described above) nor deliver Bearer
Securities within the United States. In addition, any such underwriters, agents
and dealers must represent in writing that they have in effect, in connection
with the offer and sale of the Debt Securities, procedures reasonably designed
to ensure that their employees or agents who are directly engaged in selling the
Debt Securities are aware that Bearer Securities cannot be offered or sold to a
person who is within the United States or is a United States person except as
otherwise permitted by Treasury Regulation Section 1.163-5(c)(2)(i)(D).
Furthermore, the owner of the obligation (or the financial institution or
clearing organization through which the owner holds the obligation) must certify
to the Company that the owner is not a United States Person. Bearer Securities
and any coupons attached hereto will bear the following legend: "Any United
States person who holds this obligation will be subject to limitations under the
United States income tax laws, including the limitations provided in Sections
165(j) and 1287(a) of the United States Internal Revenue Code."
Purchasers of Bearer Securities may be affected by certain limitations under
United States tax laws. The applicable Prospectus Supplement or Prospectus
Supplements will describe such limitations for any Bearer Securities relating
thereto.
As used herein, "United States person" means (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.
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DESCRIPTION OF TRUST PREFERRED SECURITIES AND TRUST GUARANTEES
TRUST PREFERRED SECURITIES
The Declaration pursuant to which each IPC Trust is organized will be
replaced by an Amended and Restated Declaration of Trust (the "Amended
Declaration") which will authorize the Trustees of each IPC Trust to issue on
behalf of such IPC Trust one series of Trust Preferred Securities and one series
of Trust Common Securities (together, the "Trust Securities"). The Trust
Preferred Securities will be issued to the public pursuant to the Registration
Statement of which this Prospectus forms a part, and the Trust Common Securities
will be issued directly or indirectly to the Company.
The Trust Preferred Securities will have such terms, including dividends,
redemption, voting, conversion, liquidation rights and such other preferred,
deferred or other special rights or such restrictions as shall be set forth in
the applicable Amended Declaration or made part of such Amended Declaration by
the Trust Indenture Act. Reference is made to the applicable Prospectus
Supplement relating to the Trust Preferred Securities of such IPC Trust for
specific terms, including (i) the distinctive designation of Trust Preferred
Securities, (ii) the number of Trust Preferred Securities issued by such IPC
Trust, (iii) the annual dividend rate (or method of determining such rate) for
Trust Preferred Securities issued by such IPC Trust and the date or dates upon
which such dividends shall be payable, (iv) whether dividends on Trust Preferred
Securities issued by such IPC Trust shall be cumulative, and, in the case of
Trust Preferred Securities having such cumulative dividend rights, the date or
dates or method of determining the date or dates from which dividends on Trust
Preferred Securities issued by such IPC Trust shall be cumulative, (v) the
amount or amounts which shall be paid out of the assets of such IPC Trust to the
holders of Trust Preferred Securities of such IPC Trust upon voluntary or
involuntary dissolution, winding-up or termination of such IPC Trust, (vi) the
terms and conditions, if any, under which Trust Preferred Securities of such IPC
Trust may be converted into shares of capital stock of the Company, including
the conversion price per share and the circumstances, if any, under which any
such conversion right shall expire, (vii) the terms and conditions, if any, upon
which the related series of the Subordinated Debt Securities of the Company may
be distributed to holders of Trust Preferred Securities of such IPC Trust, (ix)
the obligation, if any, of such IPC to purchase or redeem Trust Preferred
Securities issued by such IPC Trust and the price or prices at which, the period
or periods within which and the terms and conditions upon which Trust Preferred
Securities issued by such IPC shall be purchased or redeemed, in whole or in
part, pursuant to such obligation, (x) the voting rights, if any, of Trust
Preferred Securities issued by such IPC Trust in addition to those required by
law, including the number of votes per Trust Preferred Security and any
requirement for the approval by the holders of Trust Preferred Securities, as a
condition to specified action or amendments to the applicable Amended
Declaration of such IPC Trust and (xi) any other relevant rights, preferences,
privileges, limitations or restrictions of Trust Preferred Securities issued by
such IPC consistent with the applicable amended Declaration of such IPC Trust or
with applicable law. Pursuant to the applicable Amended Declaration of such IPC
Trust, the Property Trustee will own the Subordinated Debt Securities of the
Company purchased by the applicable IPC Trust for the benefit of the holders of
the Trust Preferred Securities and the Trust Common Securities. The payment of
dividends out of money held by the IPC Trusts, and payments upon redemption of
Trust Preferred Securities or liquidation of any IPC Trust, will be guaranteed
by the Company to the extent described under "--Trust Guarantees."
Certain United States Federal income tax considerations applicable to an
investment in Trust Preferred Securities will be described in the Prospectus
Supplement relating thereto.
In connection with the issuance of Trust Preferred Securities, each IPC
Trust will also issue one series of Trust Common Securities. Each Amended
Declaration will authorize the Regular Trustees of an IPC Trust to issue on
behalf of such IPC Trust one series of Trust Common Securities having such
terms, including dividends, conversion, redemption, voting, liquidation rights
or such restrictions as shall be set forth therein. Except as otherwise provided
in the Prospectus Supplement relating to the Trust Preferred Securities, the
terms of the Trust Common Securities issued by such IPC Trust will be
substantially
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identical to the terms of the Trust Preferred Securities issued by such IPC
Trust, and the Trust Common Securities will rank PARI PASSU, and payments will
be made thereon PRO RATA with the Trust Preferred Securities, except that, upon
an event of default under the applicable Amended Declaration of such IPC Trust,
the rights of the holders of the Trust Common Securities to payment in respect
of dividends and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the Trust Preferred Securities.
Except in certain limited circumstances, the Trust Common Securities will also
carry the right to vote and appoint, remove or replace any of the Trustees of
the related IPC Trust. All of the Trust Common Securities of each IPC Trust will
be directly or indirectly owned by the Company.
The applicable Prospectus Supplement will describe whether the Company
and/or certain of its subsidiaries maintain deposit accounts and conduct other
banking transactions, including borrowings in the ordinary course of business,
with the Property Trustee.
TRUST GUARANTEES
Set forth below is a summary of information concerning the Trust Guarantees
which will be executed and delivered by the Company, from time to time, for the
benefit of the holders of Trust Preferred Securities. The accompanying
Prospectus Supplement will describe any significant differences between the
actual terms of the Trust Guarantees and the summary below. The following
summary does not purport to be complete and is subject in all respects to the
provisions of, and is qualified in its entirety by reference to, the Trust
Guarantees, which is filed with the Commission and incorporated by reference as
an exhibit to the Registration Statement of which this Prospectus forms a part.
GENERAL. The Company will irrevocably and unconditionally agree, to the
extent set forth in the Trust Guarantees, to pay in full, to the holders of
Trust Preferred Securities of each IPC Trust, the Trust Guarantee Payments (as
defined below) (except to the extent paid by such IPC Trust), as and when due,
regardless of any defense, right of set-off or counterclaim which such IPC Trust
may have or assert. The following payments with respect to the Trust Preferred
Securities to the extent not paid by the applicable IPC Trust (the "Trust
Guarantee Payments") will be subject to the Trust Guarantees (without
duplication): (i) any accrued and unpaid dividends which are required to be paid
on the Trust Preferred Securities of such IPC Trust, to the extent such IPC
Trust shall have funds legally available therefor, (ii) the redemption price,
including all accrued and unpaid dividends (the "Redemption Price"), payable out
of funds legally available therefor, with respect to any Trust Preferred
Securities called for redemption by such IPC Trust and (iii) upon a liquidation
of such IPC Trust (other than in connection with the distribution of
Subordinated Debt Securities of the Company to the holders of the Trust
Preferred Securities or the redemption of all of the Trust Preferred Securities
issued by such IPC Trust), the lesser of (a) the aggregate of the liquidation
preference and all accrued and unpaid dividends on the Trust Preferred
Securities of such IPC Trust to the date of payment and (b) the amount of assets
of such IPC Trust remaining available for distribution to holders of Trust
Preferred Securities of such IPC Trust in liquidation of such IPC Trust. The
Company's obligation to make a Trust Guarantee Payment may be satisfied by
direct payment of the required amounts by the Company to the holders of Trust
Preferred Securities or by causing the applicable IPC Trust to pay such amounts
to such holders.
COVENANTS OF THE COMPANY. In each Trust Guarantee, the Company will
covenant that, so long as any Trust Preferred Securities issued by the
applicable IPC Trust remain outstanding, if there shall have occurred any event
that would constitute an event of default under such Trust Guarantee or the
Amended and Restated Declaration of such IPC Trust, then (a) the Company shall
not declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase or acquire or make a liquidation payment with respect to, any
of its capital stock (other than stock dividends paid by the Company which
consist of the stock of the same class as that on which any dividend is being
paid), (b) the Company shall not make any payment of principal or premium, if
any, on or repay, repurchase or redeem any debt securities issued by the Company
which rank PARI PASSU with or junior to the Subordinated Debt Securities, and
(c) the
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Company shall not make any guarantee payments with respect to the foregoing
(other than pursuant to the Trust Guarantees).
AMENDMENT AND ASSIGNMENT. Except with respect to any changes which do not
adversely affect the rights of holders of Trust Preferred Securities of any IPC
Trust (in which case no vote will be required), the Trust Guarantees with
respect to the Trust Preferred Securities may be changed only with the prior
approval of the holders of not less than 66 2/3% in liquidation preference of
the outstanding Trust Preferred Securities of such IPC Trust. The manner of
obtaining any such approval of holders of the Trust Preferred Securities of such
IPC Trust will be as set forth in an accompanying Prospectus Supplement. All
guarantees and agreements contained in the Trust Guarantees shall bind the
successors, assigns, receivers, trustees and representatives of the Company and
shall inure to the benefit of the holders of the Trust Preferred Securities then
outstanding.
TERMINATION OF THE TRUST GUARANTEES. Each Trust Guarantee will terminate as
to the Trust Preferred Securities issued by the applicable IPC Trust (a) upon
full payment of the redemption price of all Trust Preferred Securities of such
IPC Trust, (b) upon distribution of the Subordinated Debt Securities of the
Company held by such IPC Trust to the holders of the Trust Preferred Securities
of such IPC Trust or (c) upon full payment of the amounts payable in accordance
with the Amended and Restated Declaration upon liquidation of such IPC Trust.
Each Trust Guarantee will continue to be effective or will be reinstated, as the
case may be, if at any time any holder of Trust Preferred Securities issued by
applicable IPC Trust must restore payment of any sums paid under such Trust
Preferred Securities or such Trust Guarantee. The subordination provisions of
the Subordinated Debt Securities and the Trust Guarantees, respectively, will
provide that in the event payment is made on the Subordinated Debt Securities or
the Trust Guarantees in contravention of such provisions, such payments will be
paid over to the holders of Senior Indebtedness.
RANKING OF THE TRUST GUARANTEES. Each Trust Guarantee will constitute an
unsecured obligation of the Company and will rank (i) subordinate and junior in
right of payment to all other liabilities of the Company, except any liabilities
that may be made PARI PASSU expressly by their terms, (ii) PARI PASSU with the
most senior preferred or preference stock now or hereafter issued by the Company
and with any guarantee now or hereafter entered into by the Company in respect
of any preferred or preference stock or interests of any affiliate of the
Company and (iii) senior to the Company's Common Stock. Each Amended Restated
Declaration will provide that each holder of Trust Preferred Securities by
acceptance thereof agrees to the subordination provisions and other terms of the
applicable Trust Guarantee.
Each Trust Guarantee will constitute a guarantee of payment and not of
collection. Each Trust Guarantee will be deposited with the Property Trustee to
be held for the benefit of the Trust Preferred Securities of the applicable IPC
Trust. The Property Trustee will have the right to enforce the Trust Guarantees
on behalf of the holders of the Trust Preferred Securities of the applicable IPC
Trust. The holders of not less than a majority in aggregate liquidation
preference of the Trust Preferred Securities of the applicable IPC Trust will
have the right to direct the time, method and place of conducting any proceeding
for any remedy available in respect of the applicable Trust Guarantee, including
the giving of directions to the Property Trustee. If the Property Trustee fails
to enforce a Trust Guarantee as above provided, any holder of Trust Preferred
Securities of the applicable IPC Trust may institute a legal proceeding directly
against the Company to enforce its rights under such Trust Guarantee, without
first instituting a legal proceeding against the applicable IPC Trust, or any
other person or entity. Each Trust Guarantee will not be discharged except by
payment of the Trust Guarantee Payments in full to the extent not paid by the
applicable IPC Trust, and by complete performance of all obligations under such
Trust Guarantee.
GOVERNING LAW. Each Trust Guarantee will be governed by, and construed in
accordance with, the laws of the State of New York.
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PLAN OF DISTRIBUTION
The Company and/or the IPC Trusts, as the case may be, may sell Offered
Securities to or through underwriters or dealers and also may sell Offered
Securities directly to other purchasers or through agents. Any such underwriter
or agent involved in the offer and sale of the Offered Securities will be named
in an applicable Prospectus Supplement.
Underwriters may offer and sell the Offered Securities at a fixed price or
prices, which may be changed, or from time to time at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Company and/or the IPC Trust, as the case may be, also
may, from time to time, authorize underwriters acting as the Company's and/or
the IPC Trust's agents to offer and sell the Offered Securities upon the terms
and conditions as shall be set forth in any Prospectus Supplement. In connection
with the sale of Offered Securities, underwriters may be deemed to have received
compensation from the Company and/or the IPC Trusts in the form of underwriting
discounts or commissions from purchasers of Offered Securities for whom they may
act as agent. Underwriters may sell Offered Securities to or through dealers,
and such dealers may receive compensation in the form of discounts, concessions
or commissions from the underwriters and/or commissions (which may be changed
from time to time) from the purchasers for whom they may act as agent.
Any underwriting compensation paid by the Company and/or the IPC Trusts to
underwriters or agents in connection with the offering of Offered Securities,
and any discounts, concessions or commissions allowed by underwriters to
participating dealers, will be set forth in an applicable Prospectus Supplement.
Underwriters, dealers and agents participating in the distribution of the
Offered Securities may be deemed to be underwriters, and any discounts and
commissions received by them and any profit realized by them on resale of the
Offered Securities may be deemed to be underwriting discounts and commissions
under the Securities Act. Underwriters, dealers and agents may be entitled,
under agreements with the Company and/or the IPC Trusts, to indemnification
against and contribution toward certain civil liabilities, including liabilities
under the Securities Act, and to reimbursement by the Company and/or the IPC
Trusts for certain expenses.
If so indicated in an applicable Prospectus Supplement, the Company and/or
the IPC Trusts will authorize dealers acting as the Company's and/or the IPC
Trust's agents to solicit offers by certain institutions to purchase Offered
Securities from the Company and/or the IPC Trusts at the public offering price
set forth in such Prospectus Supplement pursuant to Delayed Delivery Contracts
("Contracts") providing for payment and delivery on the date or dates stated in
such Prospectus Supplement. Each Contract will be for an amount specified in the
applicable Prospectus Supplement. Institutions with whom Contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and other institutions, but will in all cases be subject to the
approval of the Company and/or the IPC Trusts. Contracts will not be subject to
any conditions except (i) the purchase by an institution of the Offered
Securities covered by its Contracts shall not at the time of delivery be
prohibited under the laws of any jurisdiction in the United States to which such
institution is subject, and (ii) if the Offered Securities are being sold to
underwriters, the Company and/or the IPC Trusts shall have sold to such
underwriters the amount of the Offered Securities specified in the applicable
Prospectus Supplement. Agents and underwriters will have no responsibility in
respect of the delivery or performance of Contracts. A commission as indicated
in the applicable Prospectus Supplement will be paid to underwriters and agents
soliciting purchases of Offered Securities pursuant to Contracts accepted by the
Company and/or the IPC Trusts.
Each underwriter, dealer and agent participating in the distribution of any
Offered Securities which are issuable in bearer form will agree that it will not
offer, sell or deliver, directly or indirectly, Offered Securities in bearer
form in the United States or to United States persons except as otherwise
permitted by Treasury Regulation Section 1.163-5(c)(2)(i)(D).
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Any underwriters to whom Offered Securities are sold by the Company and/or
the IPC Trusts for public offering and sale may make a market in such Offered
Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for any Offered Securities.
The applicable Prospectus Supplement will describe whether certain of the
underwriters or agents and their associates may be customers of, engage in
transactions with and perform services for the Company in the ordinary course of
business.
VALIDITY OF SECURITIES
Unless otherwise indicated in the applicable Prospectus Supplement, the
validity of the Company Securities will be passed upon for the Company by James
W. Guedry, Esq., Associate Counsel of the Company. The validity of the Trust
Preferred Securities will be passed upon for the IPC Trusts by Skadden, Arps,
Slate, Meagher & Flom LLP, New York, New York, special counsel to the IPC
Trusts. The validity of the Offered Securities will be passed upon for any
underwriters or agents by Skadden, Arps, Slate, Meagher & Flom LLP, New York,
New York. Mr. Guedry does not own a material or significant amount of the
outstanding shares of International Paper Common Stock. He participates in
International Paper's Stock Option Plan and in its Salaried Savings Plan, having
an interest in a fund under that plan which invests in International Paper
Common Stock. prospectus and elsewhere in the
EXPERTS
The audited financial statements and schedules incorporated by reference in
prospectus and elsewhere in the Registration Statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
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