<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 19, 2000
REGISTRATION NO. 333-[ ]
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
INTERNATIONAL PAPER COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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NEW YORK 2600 13-0872805
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
INTERNATIONAL PAPER COMPANY
2 MANHATTANVILLE ROAD
PURCHASE, NEW YORK 10577
(914) 397-1500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
WILLIAM B. LYTTON, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
INTERNATIONAL PAPER COMPANY
2 MANHATTANVILLE ROAD
PURCHASE, NEW YORK 10577
(914) 397-1500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
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<S> <C>
DENNIS S. HERSCH, ESQ. BLAINE V. FOGG, ESQ.
DAVIS POLK & WARDWELL JOSEPH A. COCO, ESQ.
450 LEXINGTON AVENUE SKADDEN, ARPS, SLATER, MEAGHER & FLOM LLP
NEW YORK, NEW YORK 10017 FOUR TIMES SQUARE
(212) 450-4000 NEW YORK, NEW YORK 10036
(212) 735-3000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement becomes effective and upon
consummation of the transactions described in the enclosed prospectus.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
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- ---------------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT PRICE(2) FEE(3)
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<S> <C> <C> <C> <C>
Common Stock, par value $1.00 per share.... 72,902,424 N/A $2,196,719,664.41 $579,933.99
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</TABLE>
(1) Represents the maximum number of shares of common stock, par value $1.00 per
share, of the registrant, International Paper Company, estimated to be
issuable upon the consummation of the merger of Condor Acquisition
Corporation, a New York corporation and a wholly owned subsidiary of
International Paper Company, with and into Champion International
Corporation based on an exchange ratio of .7353 of a share of International
Paper common stock (the maximum exchange ratio pursuant to the Agreement and
Plan of Merger dated as of May 12, 2000 among International Paper, Champion
International Corporation and Condor Acquisition Corporation) to be
exchanged, as one-third of the consideration paid, for each share of common
stock, par value $0.50 per share, of Champion International Corporation.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f)(1) and (3) and Rule 457(c) of the Securities Act of
1933, as amended (the "Securities Act"), based on the product of (i)
$72.1563, the average of the high and low sales prices of Champion
International Corporation common stock on the New York Stock Exchange
Composite Tape on May 12, 2000 and (ii) 99,146,503 shares of Champion
International Corporation common stock, the number of shares of Champion
International Corporation common stock outstanding at the close of business
on May 16, 2000, assuming the exercise of all options to purchase Champion
International Corporation common stock expected to be outstanding and
exercisable prior to the date the offer is expected to be consummated, less
$4,957,325,150.00, the amount of cash to be paid by International Paper in
connection with the exchange if all possible shares of Champion
International Corporation are exchanged.
(3) Computed in accordance with Rule 457(f) under the Securities Act to be
$579,933.99 which is equal to 0.000264 multiplied by the proposed maximum
aggregate offering price of $2,196,719,664.41.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS MAY BE CHANGED. WE MAY NOT SELL THESE
SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL
THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
INTERNATIONAL PAPER COMPANY
OFFER TO EXCHANGE
EACH OUTSTANDING SHARE
OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO
PURCHASE PREFERRED STOCK)
OF
CHAMPION INTERNATIONAL CORPORATION
FOR
SHARES OF COMMON STOCK
OF
INTERNATIONAL PAPER COMPANY
HAVING A VALUE OF $25
(SUBJECT TO THE LIMITATION DESCRIBED IN THIS PROSPECTUS)
AND
$50 NET TO THE SELLER IN CASH
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON JUNE 16, 2000 UNLESS EXTENDED. SHARES TENDERED PURSUANT TO THE OFFER
MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION OF THE OFFER, BUT NOT
DURING ANY SUBSEQUENT OFFERING PERIOD.
On May 12, 2000, we entered into an Agreement and Plan of Merger with
Champion. The Champion board of directors has unanimously approved the merger
agreement, determined that the offer is fair to, and in the best interests of,
Champion stockholders and recommends that Champion stockholders accept the offer
and tender their shares pursuant to the offer.
Through Condor Acquisition Corporation, our wholly owned subsidiary, we are
offering to exchange shares of IP common stock having a value of $25, subject to
the limitation described in this prospectus, and $50 in cash for each
outstanding share of Champion common stock, including the associated rights to
purchase preferred stock, that is validly tendered and not properly withdrawn.
Our obligation to exchange IP common stock and cash for Champion common
stock is subject to the conditions listed under "The Offer -- Conditions of Our
Offer." IP's common stock is listed on the New York Stock Exchange under the
symbol "IP" and Champion's common stock is listed on the New York Stock Exchange
under the symbol "CHA."
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities to be issued under this
prospectus or determined if this prospectus is accurate or adequate. Any
representation to the contrary is a criminal offense.
The Dealer Manager for this Offer is:
LOGO
The date of this prospectus is May 19, 2000.
<PAGE> 3
TABLE OF CONTENTS
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PAGE
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QUESTIONS AND ANSWERS ABOUT THE PROPOSED ACQUISITION........ 1
WHERE YOU CAN FIND MORE INFORMATION......................... 4
SUMMARY..................................................... 6
INTERNATIONAL PAPER SELECTED CONSOLIDATED HISTORICAL
FINANCIAL DATA............................................ 11
CHAMPION SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA.... 12
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA........ 13
RECENT DEVELOPMENTS......................................... 14
COMPARATIVE PER SHARE DATA.................................. 15
CAPITALIZATION.............................................. 16
THE COMPANIES............................................... 17
International Paper Company and Purchaser................. 17
Champion International Corporation........................ 17
REASONS FOR THE OFFER....................................... 18
Reasons for the IP Board's Recommendation; Factors
Considered............................................. 18
Reasons for the Champion Board's Recommendation; Factors
Considered............................................. 18
BACKGROUND OF THE OFFER..................................... 20
THE OFFER................................................... 23
Timing of our Offer....................................... 23
Litigation................................................ 24
Extension, Termination and Amendment...................... 24
Exchange of Champion Shares; Delivery of IP Common Stock
and Cash............................................... 25
Cash Instead of Fractional Shares of IP Common Stock...... 25
Withdrawal Rights......................................... 25
Procedure for Tendering................................... 26
Guaranteed Delivery....................................... 27
Certain Federal Income Tax Consequences................... 28
Purpose of Our Offer; The Merger; Appraisal Rights........ 29
Conditions of Our Offer................................... 30
Regulatory Approvals...................................... 31
Certain Effects of the Offer.............................. 34
Source and Amount of Funds................................ 35
Relationships with Champion............................... 35
Accounting Treatment...................................... 36
Fees and Expenses......................................... 36
Stock Exchange Listing.................................... 37
THE MERGER AGREEMENT........................................ 38
The Offer................................................. 38
The Merger................................................ 38
Champion Board of Directors............................... 39
</TABLE>
i
<PAGE> 4
<TABLE>
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PAGE
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Treatment of Champion Stock Options and Restricted Stock
Units.................................................. 39
Covenants and Representations and Warranties.............. 39
Conditions of the Offer................................... 41
Conditions of the Merger.................................. 41
Termination of the Merger Agreement....................... 41
Termination Fees.......................................... 42
Amendments................................................ 43
INTERESTS OF CERTAIN PERSONS................................ 44
COMPARATIVE STOCK PRICES AND DIVIDENDS...................... 47
IP Dividend Policy........................................ 47
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
STATEMENTS................................................ 48
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
FOR THE QUARTER ENDED MARCH 31, 2000...................... 49
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1999...................... 50
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AT
MARCH 31, 2000............................................ 51
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
STATEMENTS................................................ 52
DESCRIPTION OF IP CAPITAL STOCK............................. 55
COMPARISON OF STOCKHOLDER RIGHTS............................ 58
LEGAL MATTERS............................................... 59
EXPERTS..................................................... 59
FORWARD-LOOKING STATEMENTS.................................. 60
SCHEDULE I: DIRECTORS AND EXECUTIVE OFFICERS OF IP AND
PURCHASER................................................. I-1
ANNEX A: AGREEMENT AND PLAN OF MERGER....................... A-1
</TABLE>
ii
<PAGE> 5
THIS DOCUMENT INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION
ABOUT IP AND CHAMPION FROM DOCUMENTS FILED WITH THE SEC THAT HAVE NOT BEEN
INCLUDED IN OR DELIVERED WITH THIS DOCUMENT. THIS INFORMATION IS AVAILABLE AT
THE INTERNET WEB SITE THE SEC MAINTAINS AT HTTP://WWW.SEC.GOV, AS WELL AS FROM
OTHER SOURCES. SEE "WHERE YOU CAN FIND MORE INFORMATION" ON PAGE .
YOU ALSO MAY REQUEST COPIES OF THESE DOCUMENTS FROM US, WITHOUT CHARGE,
UPON WRITTEN OR ORAL REQUEST TO OUR INFORMATION AGENT, INNISFREE M&A
INCORPORATED, 501 MADISON AVENUE, 20th FLOOR, NEW YORK, NEW YORK 10022, COLLECT
AT 1-212-750-5833 OR TOLL-FREE AT 1-877-750-5837. IN ORDER TO RECEIVE TIMELY
DELIVERY OF THE DOCUMENTS, YOU MUST MAKE YOUR REQUESTS NO LATER THAN JUNE 9,
2000.
iii
<PAGE> 6
QUESTIONS AND ANSWERS ABOUT THE PROPOSED ACQUISITION
Q: WHAT ARE IP AND CHAMPION PROPOSING?
A: We have entered into a merger agreement with Champion pursuant to which we
are offering, through Condor Acquisition Corporation, a wholly owned subsidiary
of IP ("Purchaser"), to exchange shares of IP common stock and cash as described
in the next answered question for each outstanding share of Champion common
stock and the associated preferred stock purchase rights. After the offer is
completed, Condor Acquisition Corporation will merge with Champion. As a result
of the offer and the merger, Champion will become a wholly owned subsidiary of
IP.
Q: WHAT WOULD I RECEIVE IN EXCHANGE FOR MY CHAMPION SHARES?
A: We are offering to exchange shares of IP common stock having a value of $25,
subject to the limitation described below, and $50 in cash for each outstanding
share of common stock of Champion that is validly tendered and not properly
withdrawn. The number of shares of IP common stock into which each share of
Champion common stock will be converted in the offer will be determined by
dividing $25 by the average of the volume weighted averages of the trading
prices of IP common stock on the New York Stock Exchange for the 15 trading days
randomly selected by lot by IP and Champion together from the 30 consecutive
trading days ending on the third trading day prior to the expiration date;
provided that if the average trading price for the 15 trading days is less than
$34, the exchange ratio will be .7353.
If we do not close the offer on June 16, 2000, the initial scheduled
expiration date, by virtue of the failure of any of the antitrust regulatory
conditions to the offer to be satisfied, we have agreed to pay to the holders of
shares of Champion common stock an additional payment in cash calculated at a
rate of 8.00% per annum (calculated on the basis of a 365 day calendar year) on
the $75 per share offer consideration from and after the initial scheduled
expiration date until the closing of the offer.
You will not receive any fractional shares of IP common stock in the offer.
Instead, you will receive cash in an amount equal to the market value of any
fractional shares you would otherwise have been entitled to receive.
The term "expiration date" means 12:00 midnight, New York City time, on
June 16, 2000, unless we extend the period of time for which the offer is open,
in which case the term "expiration date" means the latest time and date on which
the offer, as so extended, expires.
Q: HOW CAN I FIND OUT THE FINAL EXCHANGE RATIO?
A: Before the offer expires, we will notify you by issuing a press release
announcing the final exchange ratio and filing that press release with the SEC.
Q: HOW LONG WILL IT TAKE TO COMPLETE THE OFFER AND THE MERGER?
A: We hope to complete the offer by June 16, 2000, the initial scheduled
expiration date. We expect to complete the merger shortly after we complete the
offer.
Q: WILL I HAVE TO PAY ANY FEES OR COMMISSIONS?
A: If you are the record owner of your shares and you tender your shares
directly to the Exchange Agent, you will not have to pay brokerage fees or incur
similar expenses. If you own your shares through a broker or other nominee, and
your broker tenders the shares on your behalf, your broker may charge you a fee
for doing so. You should consult your broker or nominee to determine whether any
charges will apply.
Q: DOES CHAMPION SUPPORT THE OFFER AND THE MERGER?
A: Yes, Champion's board of directors has unanimously determined that the offer
is fair to, and in the best interests of, Champion stockholders, and recommends
that Champion stockholders accept the offer and tender
1
<PAGE> 7
their shares pursuant to the offer. Champion's board of directors has
unanimously approved the merger agreement and the merger. Information about the
recommendation of Champion's board of directors is more fully set forth in
Champion's Solicitation/Recommendation Statement on Schedule 14D-9, which is
being mailed to Champion stockholders together with this prospectus.
Q: HAS CHAMPION RECEIVED A FAIRNESS OPINION IN CONNECTION WITH THE OFFER AND THE
MERGER?
A: Yes. Champion has received an opinion from Goldman, Sachs & Co. dated May 12,
2000 to the effect that, as of such date, the consideration to be received by
Champion stockholders (other than IP) in the offer and the merger was fair from
a financial point of view to such stockholders. The full text of such opinion,
which sets forth assumptions made, matters considered and limitations on the
review undertaken in connection with the opinion, is attached as a schedule to
Champion's Schedule 14D-9, which is being mailed to the stockholders of Champion
with this prospectus.
Q: WHAT PERCENTAGE OF IP COMMON STOCK WILL CHAMPION STOCKHOLDERS OWN AFTER THE
OFFER AND THE MERGER?
A: After completion of the merger, former stockholders of Champion would own
approximately 13.7% of the outstanding shares of IP common stock, assuming that
the average of the volume weighted averages of the trading prices of IP common
stock during the pricing period prior to the expiration date is $36.836, which
corresponds to an exchange ratio of .6787 shares of IP common stock for each
share of Champion common stock.
Q: WHAT ARE THE CONDITIONS TO THE OFFER?
A: The offer is subject to several conditions, including:
- two-thirds of the outstanding Champion shares, on a fully-diluted basis,
having been tendered and not properly withdrawn,
- waiting periods under applicable antitrust laws having expired or been
terminated,
- the registration statement of which this prospectus is a part having been
declared effective by the SEC,
- the shares of IP common stock to be issued in the offer and the merger
having been approved for listing on the New York Stock Exchange, subject
to official notice of issuance,
- Champion not having breached any covenant, representation or warranty in
a material manner, and
- there not having occurred any event that has had or could reasonably be
expected to have a material adverse effect on Champion and its
subsidiaries, taken as a whole.
These conditions and other conditions to the offer are discussed in this
prospectus under "The Offer -- Conditions of Our Offer" beginning on page 30.
Q: HOW DO I PARTICIPATE IN YOUR OFFER?
A: To tender your shares, you should do the following:
- If you hold shares in your own name, complete and sign the enclosed
letter of transmittal and return it with your share certificates to
ChaseMellon Shareholder Services, L.L.C., the exchange agent for the
offer, at the appropriate address specified on the back cover page of
this prospectus before the expiration date of the offer.
- If you hold your shares in "street name" through a broker, instruct your
broker to tender your shares before the expiration date.
For more information on the timing of the offer, extensions of the offer
period and your rights to withdraw your shares from the offer before the
expiration date, please refer to "The Offer" beginning on page 23.
2
<PAGE> 8
Q: WILL I BE TAXED ON THE IP SHARES AND CASH THAT I RECEIVE?
A: Yes, the exchange of your Champion shares for IP shares and cash will be a
taxable transaction for U.S. federal income tax purposes. You will generally
recognize gain or loss equal to the difference between (a) the sum of the fair
market value of the IP shares on the expiration date and cash received including
any additional payment and (b) the aggregate tax basis of the Champion shares
you tendered. That gain or loss will be capital gain or loss (assuming you hold
your Champion shares as a capital asset) and any such capital gain or loss will
be long term if, as of such time, you have held the Champion shares for more
than one year. If you receive the IP shares and cash in the merger, you will
have the same federal income tax consequences, except that the fair market value
of IP shares will be determined as of the effective time of the merger.
Q: DO THE STATEMENTS ON THE COVER PAGE REGARDING THIS PROSPECTUS BEING
INCOMPLETE AND THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION NOT YET BEING EFFECTIVE MEAN THAT THE OFFER HAS NOT COMMENCED?
A: No. Completion of this prospectus and effectiveness of the registration
statement are not necessary for the offer to commence. The SEC recently changed
its rules to permit exchange offers to begin before the related registration
statement has become effective, and we are taking advantage of the rule changes
with the goal of combining IP and Champion faster than similar combinations
could previously have been accomplished. We cannot, however, accept for exchange
any shares tendered in the offer until the registration statement is declared
effective by the SEC and the other conditions to our offer have been satisfied
or, where permissible, waived. The offer will commence when we mail this
prospectus and the related letter of transmittal to Champion stockholders.
Q: IS IP'S FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER MY SHARES IN
THE OFFER?
A: Yes. Shares of Champion accepted in the offer will be exchanged in part for
shares of IP common stock and so you should consider our financial condition
before you decide to become one of our stockholders through the offer. In
considering IP's financial condition, you should review the documents
incorporated by reference in this prospectus, because they contain detailed
business, financial and other information about us.
Q: WHERE CAN I FIND OUT MORE INFORMATION ABOUT IP AND CHAMPION?
A: You can find out information about IP and Champion from various sources
described under "Where You Can Find More Information" on page 4.
Q: WHO CAN I CALL WITH QUESTIONS ABOUT THE OFFER?
A: You can contact our information agent, Innisfree M&A Incorporated, collect at
1-212-750-5833 or toll-free at 1-877-750-5837, or the dealer manager, Credit
Suisse First Boston Corporation, toll-free at 1-800-881-8320.
3
<PAGE> 9
WHERE YOU CAN FIND MORE INFORMATION
IP and Champion file annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange Commission
under the Securities Exchange Act of 1934. You may read and copy this
information at the following locations of the SEC:
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Midwest Regional Office
Public Reference Room North East Regional Office 500 West Madison Street
450 Fifth Street, N.W. 7 World Trade Center Suite 1400
Room 1024 Suite 1300 Chicago, Illinois
Washington, D.C. 20549 New York, New York 10048 60661-2511
</TABLE>
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates.
The SEC also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, like IP and
Champion, who file electronically with the SEC. The address of that site is
http://www.sec.gov.
You can also inspect reports, proxy statements and other information about
IP and Champion at the offices of the New York Stock Exchange, 20 Broad Street,
New York, New York 10005.
We filed a registration statement on Form S-4 to register with the SEC the
IP common shares to be issued pursuant to the offer and the merger. This
prospectus is a part of that registration statement. As allowed by SEC rules,
this prospectus does not contain all the information you can find in the
registration statement or the exhibits to the registration statement. In
addition, we also filed with the SEC a statement on Schedule TO pursuant to Rule
14d-3 under the Securities Exchange Act of 1934 to furnish certain information
about the offer. You may obtain copies of the Form S-4 and the Schedule TO (and
any amendments to those documents) in the manner described above.
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this prospectus, except for
any information superseded by information contained directly in this prospectus.
This prospectus incorporates by reference the documents set forth below that IP
and Champion have previously filed with the SEC. These documents contain
important information about IP and Champion and their financial condition.
The following documents listed below that IP and Champion have previously
filed with the SEC are incorporated by reference:
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IP SEC FILINGS PERIOD
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Annual Report on Form 10-K................ Year ended December 31, 1999, as filed on
March 27, 2000
Quarterly Report on Form 10-Q............. Quarter ended March 31, 2000, as filed on
May 12, 2000
The description of IP common stock set
forth in IP's registration statements
filed by IP pursuant to Section 12 of
the Securities Exchange Act of 1934,
including any amendment or report filed
for purposes of updating any such
description............................. Filed on August 13, 1999
</TABLE>
4
<PAGE> 10
<TABLE>
<CAPTION>
IP SEC FILINGS PERIOD
-------------- ------
<S> <C>
Current Reports on Form 8-K............... Filed on:
- January 11, 2000
- February 17, 2000
- March 24, 2000
- April 11, 2000
- April 26, 2000
<CAPTION>
CHAMPION SEC FILINGS PERIOD
-------------------- ------
<S> <C>
Annual Report on Form 10-K(a)............. Year ended December 31, 1999, as filed on
March 17, 2000
Quarterly Report on Form 10-Q............. Quarter ended March 31, 2000, as filed on
May 12, 2000
Current Report on Form 8-K................ Filed on May 17, 2000
The description of Champion's common stock
set forth in Champion's registration
statement on Form 8-A filed pursuant to
Section 12 of the Securities Exchange
Act of 1934, including any amendment or
report filed with the SEC for the
purpose of updating this description.... Filed on September 16, 1999
</TABLE>
(a) Except for Note 20 -- Subsequent Events, which reads as follows:
On May 12, 2000, Champion's board of directors accepted an offer from IP
of $75 per share for all outstanding shares of Champion common stock and
Champion signed a merger agreement with IP. In connection with the
termination of the Agreement and Plan of Merger dated as of February 17,
2000 among Champion, UPM - Kymmene Corporation and Blue Acquisition, Inc.
referred to in Note 19, on May 12, 2000, Champion paid to UPM a
termination fee and expenses of $210 million.
All documents filed by IP and Champion pursuant to Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 from the date of this prospectus
to the date that shares are accepted for exchange pursuant to our offer (or the
date that our offer is terminated) shall also be deemed to be incorporated
herein by reference.
DOCUMENTS INCORPORATED BY REFERENCE ARE AVAILABLE FROM US WITHOUT CHARGE
UPON REQUEST TO OUR INFORMATION AGENT, INNISFREE M&A INCORPORATED, 501 MADISON
AVENUE, 20th FLOOR, NEW YORK, NEW YORK 10022, COLLECT AT 1-212-750-5833 OR
TOLL-FREE AT 877-750-5837. IN ORDER TO ENSURE TIMELY DELIVERY, ANY REQUEST
SHOULD BE SUBMITTED NO LATER THAN JUNE 9, 2000. IF YOU REQUEST ANY INCORPORATED
DOCUMENTS FROM US, WE WILL MAIL THEM TO YOU BY FIRST CLASS MAIL, OR ANOTHER
EQUALLY PROMPT MEANS, WITHIN ONE BUSINESS DAY AFTER WE RECEIVE YOUR REQUEST.
We have not authorized anyone to give any information or make any
representation about our offer that is different from, or in addition to, that
contained in this prospectus or in any of the materials that we have
incorporated by reference into this prospectus. Therefore, if anyone does give
you information of this sort, you should not rely on it. If you are in a
jurisdiction where offers to exchange or sell, or solicitations of offers to
exchange or purchase, the securities offered by this document are unlawful, or
if you are a person to whom it is unlawful to direct these types of activities,
then the offer presented in this document does not extend to you. The
information contained in this document speaks only as of the date of this
document unless the information specifically indicates that another date
applies.
5
<PAGE> 11
SUMMARY
This brief summary does not contain all of the information that should be
important to you. You should carefully read this entire document and the other
documents to which this document refers you to fully understand the offer. See
"Where You Can Find More Information" on page 4.
THE OFFER (PAGE 23)
We are proposing a business combination of International Paper Company and
Champion International Corporation. We are offering to exchange shares of IP
common stock having a value of $25, subject to the limitation described below,
and $50 in cash for each share of Champion common stock, including the
associated rights to purchase preferred stock, validly tendered and not properly
withdrawn.
We intend, promptly after completion of the offer, to seek to merge Condor
Acquisition Corporation, a wholly owned subsidiary of IP and the purchaser in
the offer, with and into Champion. Each share of Champion common stock which has
not been exchanged or accepted for exchange in the offer would be converted in
the merger into the same number of IP shares and the same amount of cash as is
paid in the offer.
INFORMATION ABOUT IP AND CHAMPION (PAGE 17)
INTERNATIONAL PAPER COMPANY
Two Manhattanville Road
Purchase, New York 10577
(914) 397-1500
IP is a global paper and forest products company that is complemented by an
extensive distribution system. IP produces printing and writing papers, pulp,
tissue, paperboard and packaging and wood products. IP also manufactures
specialty chemicals and specialty panels and laminated products and engages in
oil and gas and real estate activities in the United States. IP's primary
markets and manufacturing and distribution operations are in the United States,
Europe and the Pacific Rim. IP is a New York corporation and was incorporated in
1941 as the successor to the New York corporation of the same name organized in
1898. Our home page on the Internet is www.internationalpaper.com. You can learn
more about us by visiting that site.
CHAMPION INTERNATIONAL CORPORATION
One Champion Plaza
Stamford, Connecticut 06921
(203) 358-7000
Champion is one of the leading domestic manufacturers of paper for business
communications, commercial printing and publications. In addition, Champion has
significant market pulp, plywood, lumber and wood chip manufacturing operations
and owns or controls approximately 4,996,000 acres of timberlands in the United
States. Champion's Canadian and Brazilian subsidiaries also own or control
significant timber resources supporting their operations. Champion's business
segments are North American pulp and paper, Brazilian pulp and paper,
distribution and wood products.
REASONS FOR OFFER (PAGE 18)
We believe that our acquisition of Champion represents a compelling
opportunity to enhance value for both Champion and IP stockholders. The IP and
the Champion boards of directors have approved the offer, the merger and the
merger agreement after careful consideration. For a list of the factors
considered by each board of directors in making its determination, please see
"Reasons for the Offer".
6
<PAGE> 12
DIVIDEND POLICY OF IP (PAGE 47)
The holders of IP common stock receive dividends if and when declared by
the IP board of directors out of legally available funds. Our past practice has
been to pay dividends on our common stock over the long term at a rate of
approximately 30% of net income. For the last 19 fiscal quarters, we have paid a
cash dividend of $0.25 per common share. Following completion of the offer and
the merger, we expect to continue paying quarterly cash dividends on a basis
consistent with our past practice. However, the declaration and payment of
dividends will depend upon business conditions, operating results and our board
of directors" consideration of other relevant factors. No assurance can be given
that we will continue to pay dividends on our common stock in the future.
THE OFFER (PAGE 23)
Summary of the Offer
We are offering, upon the terms and subject to the conditions set forth in
this prospectus and in the related letter of transmittal, to exchange shares of
IP common stock having a value of $25, based on the average trading price for
shares of IP common stock as more fully described in this prospectus, and $50 in
cash for each outstanding share of common stock of Champion, including the
associated rights to purchase preferred stock, that is validly tendered on or
prior to the expiration date and not properly withdrawn.
If we do not close the offer by June 16, 2000, the initial expiration date,
by virtue of the failure of any of the antitrust regulatory conditions to the
offer to be satisfied, we have agreed to pay to the holders of shares of
Champion common stock an additional payment in cash calculated at a rate of
8.00% per annum (calculated on the basis of a 365 day calendar year) on the $75
per share offer consideration from and after the initial scheduled expiration
date until the closing of the offer.
The term "expiration date" means 12:00 midnight, New York City time, on
June 16, 2000, unless we extend the period of time for which this offer is open,
in which case the term "expiration date" means the latest time and date on which
the offer, as so extended, expires.
Conditions of Our Offer
Our obligation to exchange shares of our common stock and cash for Champion
shares pursuant to the offer is subject to several conditions referred to below
under "The Offer -- Conditions of Our Offer," including conditions that would
require a minimum number of shares of Champion common stock to be tendered,
receipt of all required regulatory approvals and satisfaction of other
conditions that are discussed below.
Timing of the Offer
Our offer is currently scheduled to expire on June 16, 2000; however, we
currently intend to extend our offer from time to time as necessary until all
the conditions to the offer have been satisfied or, where permissible, waived.
See "The Offer -- Extension, Termination and Amendment."
Extension, Termination and Amendment
We expressly reserve the right, in our sole discretion (subject to the
provisions of the merger agreement), at any time or from time to time, to extend
the period of time during which our offer remains open, and we can do so by
giving oral or written notice of such extension to the exchange agent. If we
decide to extend our offer, we will make an announcement to that effect no later
than 9:00 a.m., New York City time, on the next business day after the
previously scheduled expiration date. We are not making any assurance that we
will exercise our right to extend our offer, although we currently intend to do
so until all conditions have been satisfied or, where permissible, waived.
During any such extension, all Champion shares previously tendered and not
properly withdrawn will remain subject to the offer, subject to your right to
withdraw your Champion shares.
7
<PAGE> 13
Subject to the SEC's applicable rules and regulations, we also reserve the
right, in our sole discretion, at any time or from time to time, (a) to delay
our acceptance for exchange or our exchange of any Champion shares pursuant to
our offer, regardless of whether we previously accepted Champion shares for
exchange, or to terminate our offer and not accept for exchange or exchange any
Champion shares not previously accepted for exchange or exchanged, upon the
failure of any of the conditions of the offer to be satisfied and (b) to waive
any condition (other than the minimum tender condition, the condition relating
to regulatory approvals and the conditions relating to the absence of an
injunction and the effectiveness of the registration statement for the IP shares
to be issued in our offer) or otherwise to amend the offer in any respect, by
giving oral or written notice of such delay, termination or amendment to the
exchange agent and by making a public announcement. We will follow any
extension, termination, amendment or delay, as promptly as practicable, with a
public announcement. In the case of an extension, any such announcement will be
issued no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Securities Exchange Act of
1934, which require that any material change in the information published, sent
or given to the stockholders in connection with the offer be promptly sent to
stockholders in a manner reasonably designed to inform stockholders of such
change) and without limiting the manner in which we may choose to make any
public announcement, we assume no obligation to publish, advertise or otherwise
communicate any such public announcement other than by making a release to the
Dow Jones News Service.
Exchange of Shares; Delivery of IP Common Stock and Cash
Upon the terms and subject to the conditions of our offer (including, if
the offer is extended or amended, the terms and conditions of any extension or
amendment), we will accept for exchange, and will exchange, shares validly
tendered and not properly withdrawn as promptly as practicable after the
expiration date and promptly after they are tendered during any subsequent
offering period.
Withdrawal Rights
Your tender of Champion shares pursuant to the offer is irrevocable, except
that Champion shares tendered pursuant to the offer may be withdrawn at any time
prior to the expiration date, and, unless we previously accepted them pursuant
to the offer, may also be withdrawn at any time after July 17, 2000.
Subsequent Offering Period
With the consent of Champion, we may, although we do not currently intend
to, elect to provide a subsequent offering period of three to 20 business days
after the acceptance of Champion shares pursuant to the offer if the
requirements under Rule 14d-11 of the Securities Exchange Act of 1934 have been
met. You will not have the right to withdraw Champion shares that you tender in
the subsequent offering period, if any.
Procedure for Tendering Shares
For you to validly tender Champion shares pursuant to our offer, (a) a
properly completed and duly executed letter of transmittal (or manually executed
facsimile of that document), along with any required signature guarantees, or an
agent's message, which is explained below, in connection with a book-entry
transfer, and any other required documents, must be transmitted to and received
by the exchange agent at one of its addresses set forth on the back cover of
this prospectus, and certificates for tendered Champion shares must be received
by the exchange agent at such address, or those Champion shares must be tendered
pursuant to the procedures for book-entry tender set forth in "The Offer" (and a
confirmation of receipt of such tender received), in each case before the
expiration date, or (b) you must comply with the guaranteed delivery procedures
set forth in "The Offer -- Guaranteed Delivery."
APPRAISAL RIGHTS (PAGE 29)
The offer does not entitle you to appraisal rights with respect to your
Champion shares.
8
<PAGE> 14
If at the end of the offer, we have received between two-thirds and 90% of
the outstanding Champion shares, we will effect a long form merger as permitted
under New York law. Champion stockholders who did not tender their Champion
shares during the offer would not have appraisal rights in connection with a
long form merger.
If at the end of the offer, however, we have received 90% or more of the
outstanding Champion shares, we will effect a short form merger as permitted
under New York law. In the event of a short form merger, stockholders who did
not tender their Champion shares would have the right under New York law to
dissent and demand appraisal rights of Champion shares, but only if they comply
with certain statutory requirements. In the event of a short-form merger,
information regarding these requirements will be provided to Champion
stockholders who have not tendered their Champion shares.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES (PAGE 28)
The receipt of IP shares and cash in exchange for your Champion shares
pursuant to the exchange will be a taxable transaction. You will generally
recognize gain or loss equal to the difference between (a) the sum of the fair
market value of the IP shares on the expiration date and cash received including
any additional payment and (b) the aggregate tax basis of the Champion shares
you tendered. That gain or loss will be capital gain or loss (assuming you hold
your Champion shares as a capital asset) and any such capital gain or loss will
be long term if, as of that time, you have held the Champion shares for more
than one year. Champion stockholders receiving IP shares and cash in the merger
will have the same federal income tax consequences, except that the fair market
value of the IP shares will be determined at the effective time of the merger.
See "The Offer -- Certain Federal Income Tax Consequences".
IP WILL ACCOUNT FOR THE MERGER USING THE PURCHASE METHOD (PAGE 36)
IP will account for the merger as a purchase for financial reporting
purposes.
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE (PAGE 60)
This prospectus, including information included or incorporated by
reference in this document, contains certain forward-looking statements
concerning the financial condition, results of operations and business of IP
following the consummation of its proposed acquisition of Champion, the
anticipated financial and other benefits of such proposed acquisition and the
plans and objectives of IP's management following such proposed acquisition,
including, without limitation, statements relating to the cost savings expected
to result from the proposed acquisition, anticipated results of operations of
the combined company following the proposed acquisition, projected earnings per
share of the combined company following the proposed acquisition and the
restructuring charges estimated to be incurred in connection with the proposed
acquisition. Generally, the words "will," "may," "should," "continue,"
"believes," "expects," "intends," "anticipates" or similar expressions identify
forward-looking statements.
These forward-looking statements involve certain risks and uncertainties.
Factors that could cause actual results to differ materially from those
contemplated by the forward-looking statements include, among others, the
following factors:
- cost savings expected to result from the proposed acquisition may not be
fully realized or realized within the expected time frame,
- operating results following the proposed acquisition may be lower than
expected,
- competitive pressure among companies in our industry may increase
significantly,
- costs or difficulties related to the integration of the businesses of IP
and Champion may be greater than expected,
- adverse changes in the interest rate environment may reduce interest
margins or adversely affect asset values of the combined company,
9
<PAGE> 15
- general economic conditions, whether nationally or in the market areas in
which IP and Champion conduct business, may be less favorable than
expected,
- legislation or regulatory changes may adversely affect the businesses in
which IP and Champion are engaged or
- adverse changes may occur in the securities markets.
10
<PAGE> 16
INTERNATIONAL PAPER SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
The following selected financial data for each of the five years in the
period ended December 31, 1999 have been derived from IP's consolidated
financial statements, which have been audited by Arthur Andersen LLP,
independent public accountants. The financial data as of March 31, 2000 and
1999, and for each of the three-month periods then ended, have been derived from
IP's unaudited condensed consolidated financial statements which include, in
management's opinion, all adjustments, consisting of normal recurring
adjustments, necessary to present fairly the results of operations and financial
position of IP for the periods and dates presented. This data should be read in
conjunction with the respective audited and unaudited consolidated financial
statements of IP, including the notes thereto, incorporated herein by reference
and the Unaudited Pro Forma Condensed Combined Financial Statements appearing
elsewhere in this prospectus.
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
MARCH 31, FOR THE YEAR ENDED DECEMBER 31,
---------------------------- -----------------------------------------------
2000 1999 1999(B) 1998 1997 1996 1995
-------------- ----------- ------- ------- ------- ------- -------
(UNAUDITED)(A) (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS DATA:
Net sales.................. $ 6,371 $ 6,032 $24,573 $23,979 $24,556 $24,182 $24,140
Costs and expenses,
excluding interest....... 5,805 5,795 23,620 23,039 23,976 23,193 20,791
Earnings before income
taxes, minority interest
and extraordinary item... 566 237 448 429 143 939 2,742
Earnings (loss) before
extraordinary item....... 244 32 199 247 (80) 379 1,595
Earnings (loss) per common
share before
extraordinary item....... $ 0.59 $ 0.08 $ 0.48 $ 0.60 $ (0.20) $ 0.95 $ 4.41(c)
Cash dividends declared per
common share(d).......... $ 0.25 $ 0.26 $ 1.01 $ 1.05 $ 1.05 $ 1.05 $ 0.98(c)
BALANCE SHEET DATA:
Working capital............ $ 3,198 $ 2,480 $ 2,859 $ 2,675 $ 1,476 $ 454 $ 1,471
Plants, properties and
equipment, net........... 14,389 15,037 14,381 15,320 14,707 16,570 14,347
Forestlands................ 2,895 3,084 2,921 3,093 3,273 3,637 3,030
Total assets............... 31,549 31,076 30,268 31,466 31,971 33,357 28,838
Long-term debt............. 7,250 7,615 7,520 7,697 8,521 7,943 7,144
Common shareholders'
equity................... 10,529 10,487 10,304 10,738 10,647 11,349 9,837
</TABLE>
- ---------------
(a) Excludes an extraordinary gain of $134 million after taxes and minority
interest on the sale of IP's investment in Scitex and Carter Holt Harvey's
sale of its equity interest in COPEC.
(b) Excludes an extraordinary loss of $16 million after taxes for the early
extinguishment of debt.
(c) Earnings and cash dividends per common share reflect the impact of a
two-for-one stock split which was payable on September 15, 1995.
(d) IP's annual dividend has remained at $1.00 per common share since 1996.
However, cash dividends declared per common share have been restated to
include dividends declared by Union Camp Corporation, a company acquired by
IP in 1999 in a transaction accounted for as a pooling-of-interests.
11
<PAGE> 17
CHAMPION SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
The following selected financial data for each of the five years in the
period ended December 31, 1999 have been derived from Champion's consolidated
financial statements, which have been audited by Arthur Andersen LLP,
independent public accountants. The financial data as of March 31, 2000 and
1999, and for each of the three-month periods then ended, have been derived from
Champion's unaudited condensed consolidated financial statements which include,
in management's opinion, all adjustments, consisting of normal recurring
adjustments, necessary to present fairly the results of operations and financial
position of Champion for the periods and dates presented. This data should be
read in conjunction with the respective audited and unaudited consolidated
financial statements of Champion, including the notes thereto, incorporated
herein by reference and the Unaudited Pro Forma Condensed Combined Financial
Statements appearing elsewhere in this prospectus.
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
MARCH 31, FOR THE YEAR ENDED DECEMBER 31,
------------------------- -------------------------------------------
2000 1999 1999(A) 1998 1997 1996 1995
----------- ----------- ------- ------ ------ ------ ------
(UNAUDITED) (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS DATA:
Net sales.................. $1,368 $1,275 $5,268 $5,653 $5,736 $5,880 $6,972
Costs and expenses,
excluding interest....... 1,169 1,171 4,703 5,355 6,393 5,453 5,509
Earnings before income
taxes and extraordinary
item..................... 149 41 322 37 (897) 205 1,237
Earnings (loss) before
extraordinary item....... 98 42 237 75 (549) 141 772
Earnings (loss) per common
share before
extraordinary item....... $ 1.01 $ 0.44 $ 2.48 $ 0.79 $(5.72) $ 1.48 $ 8.01
Cash dividends declared per
common share............. $ 0.15 $ 0.05 $ 0.25 $ 0.20 $ 0.20 $ 0.20 $ 0.20
BALANCE SHEET DATA:
Working capital............ $ 511 $ 406 $ 559 $ 391 $ 428 $ 372 $ 503
Plants, properties and
equipment, net........... 3,873 4,077 3,876 4,229 4,800 5,653 5,514
Forestlands................ 2,288 2,341 2,273 2,430 2,397 2,365 2,008
Total assets............... 8,413 8,486 8,318 8,840 9,111 9,820 9,543
Long-term debt............. 2,526 2,843 2,526 2,948 3,194 3,085 2,828
Common shareholders'
equity................... 3,187 2,908 3,095 3,096 3,210 3,756 3,647
</TABLE>
- ---------------
(a) Excludes an extraordinary loss of $5 million after taxes for the early
extinguishment of debt.
12
<PAGE> 18
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The following selected unaudited pro forma combined financial data gives
effect to the merger. The unaudited pro forma condensed combined statement of
earnings data for the three-month period ended March 31, 2000 and the year ended
December 31, 1999 was prepared based upon IP's and Champion's consolidated
financial statements for the respective periods indicated as if the merger had
occurred on January 1, 1999. The selected unaudited pro forma combined balance
sheet data was prepared based upon the balance sheet data of IP and Champion at
March 31, 2000 as if the merger had occurred on March 31, 2000. The unaudited
pro forma data were based upon the terms of the merger in which IP will exchange
$50 in cash and common stock having a value of $25 for each outstanding Champion
common share. The exchange ratio is equal to (a) $25 divided by the "average
price" if the average price is greater than or equal to $34 or (b) .7353 if the
average price is below $34. The pro forma information has been prepared assuming
for purposes of these calculations that the IP share price will be equal to
$36.836, the final sales price on the NYSE Composite Tape on May 12, 2000. Based
on this price, the stock consideration will be equal to .6787 shares of IP
common stock for each of Champion's common shares. The actual number of shares
of IP common stock constituting the stock consideration will be determined by
dividing $25 by the IP share price, provided that the stock consideration will
not be more than .7353 shares of IP common stock. The unaudited pro forma data
may not be indicative of the results that actually would have been achieved if
the merger had been in effect as of the date and for the periods indicated or
which may be obtained in the future. IP expects to achieve certain reductions in
costs subsequent to the merger as a result of the combination and consolidation
of IP and Champion. The cost reductions reflected in the accompanying Unaudited
Pro Forma Condensed Combined Statements of Earnings have been limited to
specific salary and benefit costs that are expected to be eliminated after the
merger. The unaudited pro forma combined financial data should be read in
conjunction with the respective audited and unaudited consolidated financial
statements of IP and Champion, including the notes thereto, incorporated herein
by reference and the Unaudited Pro Forma Condensed Combined Financial Statements
appearing elsewhere in this prospectus. See "Where You Can Find More
Information." Pro forma adjustments made to arrive at the pro forma combined
amounts are based on the purchase method of accounting and a preliminary
allocation of the purchase price. However, changes to the adjustments included
in the unaudited pro forma combined financial data set forth below are expected
as evaluations of assets and liabilities are completed and additional
information becomes available. In addition, the results of operations of
Champion subsequent to March 31, 2000 will affect the allocation of the purchase
price and the unaudited pro forma combined financial data. Accordingly, the
final unaudited pro forma combined financial data will differ from the amounts
reflected in the information set forth below.
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED YEAR ENDED
MARCH 31, 2000 DECEMBER 31, 1999
------------------------------ ------------------------------
COMBINED COMBINED
INTERNATIONAL INTERNATIONAL
INTERNATIONAL PAPER AND INTERNATIONAL PAPER AND
PAPER CHAMPION PAPER CHAMPION
(HISTORICAL) PRO FORMA (HISTORICAL) PRO FORMA
------------- ------------- ------------- -------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net sales................................. $ 6,371 $ 7,711 $24,573 $29,737
Costs and expenses, excluding interest.... 5,805 6,970 23,620 28,390
Earnings before income taxes, minority
interest and extraordinary item......... 435 470 448 290
Earnings before extraordinary item........ 244 264 199 110
Earnings per common share before
extraordinary item...................... $ 0.59(a) $ 0.55 $ 0.48(b) $ 0.23
Cash dividends per common share........... $ 0.25 $ 0.25 $ 1.01(c) $ 1.01(c)
BALANCE SHEET DATA:
Working capital........................... $ 3,198 $ 1,695(d)
Plants, properties and equipment, net..... 14,389 19,037
Forestlands............................... 2,895 5,910
</TABLE>
13
<PAGE> 19
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED YEAR ENDED
MARCH 31, 2000 DECEMBER 31, 1999
------------------------------ ------------------------------
COMBINED COMBINED
INTERNATIONAL INTERNATIONAL
INTERNATIONAL PAPER AND INTERNATIONAL PAPER AND
PAPER CHAMPION PAPER CHAMPION
(HISTORICAL) PRO FORMA (HISTORICAL) PRO FORMA
------------- ------------- ------------- -------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Total assets.............................. 31,549 45,286
Long-term debt............................ 7,250 12,960(e)
Common shareholders' equity............... 10,529 12,944
</TABLE>
- ---------------
(a) Excludes an extraordinary gain of $134 million after taxes and minority
interest on the sale of IP's investment in Scitex and Carter Holt Harvey's
sale of its equity interest in COPEC.
(b) Excludes an extraordinary loss of $16 million after taxes for the early
extinguishment of debt.
(c) IP's annual dividend has remained at $1.00 per common share since 1996.
However, cash dividends declared per common share have been restated to
include dividends declared by Union Camp Corporation, a company acquired by
IP in 1999 in a transaction accounted for as a pooling-of-interests.
(d) Pro forma working capital includes approximately $1.7 billion of short-term
debt to finance a portion of the offer and the merger.
(e) Pro forma long-term debt includes approximately $3.3 billion of long-term
debt to finance the remainder of the cash consideration payable in
connection with the offer and the merger.
RECENT DEVELOPMENTS
INTERNATIONAL PAPER
On February 21, 2000, Carter Holt Harvey, a 50.3% owned subsidiary of IP,
announced the purchase for approximately $200 million of CSR Limited's medium
density fiberboard and particleboard businesses and its Oberon sawmill. The
acquisition was completed on April 28, 2000.
In connection with the announcement of IP's offer to purchase Champion, IP
also announced its intention to sell more than $3 billion of assets by the end
of 2001 as part of its increased focus on its core businesses. When the
disposition plans are finalized, IP may incur costs and charges in future
periods. As a result of the announcement to purchase Champion, Moody's has
lowered IP's long-term debt rating to Baa1. At March 31, 2000, outstanding debt
included approximately $2.5 billion of commercial paper and bank notes with
interest rates that fluctuate based on market conditions and our credit ratings.
On May 9, 2000, IP announced regular quarterly dividends of $.25 per share
on its common stock and $1.00 per share on its preferred stock for the period
from April 1, 2000 to June 30, 2000, inclusive. The dividends are payable June
15, 2000 to holders of record at the close of business on May 19, 2000.
CHAMPION
In connection with the termination of the Agreement and Plan of Merger
dated as of February 17, 2000 among Champion, UPM and Blue Acquisition, Inc. on
May 12, 2000, Champion paid to UPM a termination fee and expense reimbursement
aggregating $210 million.
On May 18, 2000, the Champion board of directors declared a cash dividend
of $0.15 per share payable on July 14, 2000 to Champion stockholders of record
at the close of business on June 14, 2000.
14
<PAGE> 20
COMPARATIVE PER SHARE DATA
The table below sets forth historical earnings before the effect of
extraordinary items, cash dividends and book value per common share data for IP
and Champion on an individual company basis. The table also sets forth unaudited
pro forma per common share data for IP and Champion. The unaudited pro forma
data gives effect to the merger as if such event occurred for balance sheet
purposes at the balance sheet date and for statement of earnings purposes at
January 1, 1999. Unaudited pro forma data were prepared based upon IP's and
Champion's statement of earnings and balance sheet data as of and for the three
months ended March 31, 2000, and as of and for the year ended on December 31,
1999. The unaudited pro forma data were based upon the terms of the merger in
which IP will exchange $50 in cash and common stock having a value of $25 for
each outstanding Champion common share. The stock exchange ratio is equal to (a)
$25 divided by the "average price" if the average price is greater than or equal
to $34 or (b) .7353 if the average price is below $34. The pro forma information
has been prepared assuming for purposes of these calculations that the IP share
price will be equal to $36.836, the final sales price on the NYSE Composite Tape
on May 12, 2000. Based on this price, the stock consideration will be equal to
.6787 shares of IP common stock for each of Champion's common shares. The actual
number of shares of IP common stock constituting the stock consideration will be
determined by dividing $25 by the IP share price, provided that the stock
consideration will not be more than .7353 shares of IP common stock. The
information in the table below should be read in conjunction with the respective
audited and unaudited consolidated financial statements of IP and Champion,
including the notes thereto, incorporated herein by reference and the Unaudited
Pro Forma Condensed Combined Financial Statements appearing elsewhere in this
prospectus.
<TABLE>
<CAPTION>
QUARTER ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
2000 1999
-------------- ------------
(UNAUDITED)
<S> <C> <C>
INTERNATIONAL PAPER -- HISTORICAL
Earnings per common share before extraordinary item
Basic..................................................... $ 0.59 $0.48
Diluted................................................... $ 0.59 $0.48
Cash dividends declared per common share.................... $ 0.25 $1.01(b)
Book value per common share................................. $25.46
CHAMPION -- HISTORICAL
Earnings per common share before extraordinary item
Basic..................................................... $ 1.01 $2.48
Diluted................................................... $ 1.01 $2.46
Cash dividends declared per common share.................... $ 0.15 $0.25
Book value per common share................................. $32.99
INTERNATIONAL PAPER -- PRO FORMA COMBINED COMPANY
Earnings per common share before extraordinary item
Basic..................................................... $ 0.55 $0.23
Diluted................................................... $ 0.55 $0.23
Cash dividends declared per common share.................... $ 0.25 $1.01(b)
Book value per common share................................. $26.95
CHAMPION -- PRO FORMA EQUIVALENT PER SHARE INFORMATION(A)
Earnings per common share before extraordinary item
Basic..................................................... $ 1.12 $0.47
Diluted................................................... $ 1.12 $0.47
Cash dividends declared per common share.................... $ 0.51 $2.06
Book value per common share................................. $54.87
</TABLE>
- ---------------
(a) Amounts are calculated by multiplying the IP pro forma combined amounts by
the ratio determined by dividing the combined cash and stock consideration
($75) by the IP share price. For purposes of these calculations, it has been
assumed that the IP share price will be equal to $36.836, the last price of
IP common stock on the NYSE Composite Tape on May 12, 2000.
(b) IP's annual dividend has remained at $1.00 per common share since 1996.
However, cash dividends declared per common share have been restated to
include dividends declared by Union Camp Corporation, a company acquired by
IP in 1999 in a transaction accounted for as a pooling-of-interests.
15
<PAGE> 21
CAPITALIZATION
Set forth below are the unaudited (i) consolidated capitalization of IP as
of March 31, 2000; (ii) consolidated capitalization of Champion as of March 31,
2000; and (iii) pro forma combined capitalization of IP as of March 31, 2000
after giving effect to the merger. The pro forma information has been prepared
assuming for purposes of these calculations that the IP share price will be
equal to $36.836, the final sales price on the NYSE Composite Tape on May 12,
2000, and that, therefore, the stock consideration for each of Champion's common
shares will be equal to .6787 shares of IP common stock, or an aggregate of
approximately 65.6 million shares of IP common stock. This information should be
read in conjunction with the audited and unaudited financial statements,
including the notes thereto, and other financial information pertaining to IP
and Champion incorporated herein by reference and the Unaudited Pro Forma
Condensed Combined Financial Statements included elsewhere in this prospectus.
<TABLE>
<CAPTION>
AS OF MARCH 31, 2000
----------------------------------------------
COMBINED
INTERNATIONAL
INTERNATIONAL PAPER AND
PAPER CHAMPION CHAMPION
(HISTORICAL) (HISTORICAL) PRO FORMA
------------- ------------ -------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
(IN MILLIONS)
<S> <C> <C> <C>
INDEBTEDNESS:
Short-term debt....................................... $ 1,350 $ 111 $ 3,189(a)
Current maturities of long-term debt.................. 349 128 477
------- ------ -------
Total short-term debt.............................. 1,699 239 3,666
Long-term debt, excluding current maturities.......... 7,250 2,526 12,960(b)
------- ------ -------
TOTAL INDEBTEDNESS...................................... 8,949 2,765 16,626
International Paper -- obligated mandatorily redeemable
preferred securities of subsidiaries holding
International Paper debentures........................ 1,805 -- 1,805
------- ------ -------
COMMON SHAREHOLDERS' EQUITY:
Common stock.......................................... 415 56 480
Paid-in capital....................................... 4,076 1,733 6,426
Retained earnings..................................... 6,887 2,521 6,887
Accumulated other comprehensive income (loss)......... (799) (434) (799)
Less: Common stock held in treasury, at cost.......... (50) (689) (50)
------- ------ -------
TOTAL COMMON SHAREHOLDERS' EQUITY....................... 10,529 3,187 12,944
------- ------ -------
TOTAL CAPITALIZATION.................................... $21,283 $5,952 $31,375
======= ====== =======
</TABLE>
- ---------------
(a) Represents the issuance of approximately $1.7 billion of short-term debt to
finance a portion of the merger.
(b) Represents the issuance of long-term debt of approximately $3.3 billion to
finance the remainder of the cash consideration payable in the merger.
16
<PAGE> 22
THE COMPANIES
INTERNATIONAL PAPER COMPANY AND PURCHASER
IP is a New York corporation incorporated in 1941 as the successor to the
New York corporation of the same name organized in 1898, with its principal
offices located at Two Manhattanville Road, Purchase, New York 10577. The
telephone number of IP is (914) 397-1500.
IP is a global paper and forest products company that is complemented by an
extensive distribution system. IP produces printing and writing papers, pulp,
tissue, paperboard and packaging and wood products. IP also manufactures
specialty chemicals and specialty panels and laminated products. IP's primary
markets and manufacturing and distribution operations are in the United States,
Europe and the Pacific Rim.
IP distributes printing, packaging, graphic arts and industrial supply
products, primarily manufactured by other companies, through over 305
distribution branches located primarily in the United States, and also engages
in oil and gas and real estate activities in the United States. IP has
operations in nearly 50 countries, employs nearly 100,000 people and exports its
products to more than 130 nations.
Purchaser is a New York corporation with its principal offices located at
Two Manhattanville Road, Purchase, New York 10577. The telephone number of
Purchaser is (914) 397-1500. Purchaser is a wholly owned subsidiary of IP. Since
its incorporation, Purchaser has not carried on any activities other than in
connection with the offer.
The name, citizenship, business address, business phone number, principal
occupation or employment and five-year employment history for each of the
directors and executive officers of IP and Purchaser are set forth in Schedule
I.
CHAMPION INTERNATIONAL CORPORATION
Champion is a New York corporation with its principal executive offices
located at One Champion Plaza, Stamford, Connecticut 06921. The telephone number
of Champion is (203) 358-7000. Champion International Corporation was
incorporated on April 28, 1937.
Champion is one of the leading domestic manufacturers of paper for business
communications, commercial printing and publications. In addition, Champion has
significant market pulp, plywood, lumber and wood chip manufacturing operations
and owns or controls approximately 4,996,000 acres of timberlands in the United
States. Champion's Canadian and Brazilian subsidiaries also own or control
significant timber resources supporting their operations. Champion's business
segments are North American pulp and paper, Brazilian pulp and paper,
distribution and wood products.
17
<PAGE> 23
REASONS FOR THE OFFER
REASONS FOR THE IP BOARD'S RECOMMENDATION; FACTORS CONSIDERED
In approving the merger agreement, the offer, the merger and the other
transactions contemplated by the merger agreement, the IP board of directors
considered a number of factors, including:
1. The IP board of directors' review of the business, operations,
financial condition, earnings and prospects of both IP and Champion, which
the IP board of directors analyzed in its consideration of IP's strategic
alternatives.
2. The IP board of directors' consensus that the merger was preferable
to other strategic alternatives to maximize shareholder value.
3. The potential product and sales synergies that may be achieved
through cross-marketing each company's products to the other company's
customers as well as organizational synergies.
4. The strategic fit between IP and Champion, and the belief that the
combined company has the potential to enhance stockholder value through
additional opportunities and operating efficiencies.
5. The opportunity for IP stockholders to participate in a larger,
more competitive company.
6. The IP board of directors' belief that the terms of the merger
agreement are reasonable.
7. The competitive conditions in the paper industry, including the
likelihood of consolidation and increased competition.
8. The likely impact of the merger on each company's employees and
customers.
The foregoing discussion of the information and factors considered by the
IP board of directors is not intended to be exhaustive, but includes the
material factors considered by the board of directors. In view of the variety of
factors considered in connection with its evaluation of the offer and the
merger, the IP board of directors did not find it practicable to, and did not,
quantify or otherwise assign relative weights to the specific factors considered
in reaching its determination and recommendation. In addition, individual
directors may have given differing weights to different factors.
REASONS FOR THE CHAMPION BOARD'S RECOMMENDATION; FACTORS CONSIDERED
In approving the merger agreement, the offer, the merger and the other
transactions contemplated by the merger agreement, and recommending that
Champion's stockholders accept the offer and tender their Champion shares
pursuant to the offer, the board of directors of Champion considered a number of
factors, including:
1. The Champion board of directors' belief that the $75 per share
consideration offered by IP pursuant to the merger agreement was superior
to the $70 per share consideration offered by UPM pursuant to its proposal
on May 8, 2000. The Champion board of directors also considered that UPM
had informed Champion on May 12, 2000 that it would not increase its $70
per share offer.
2. The opinion of Goldman, Sachs & Co. to the effect that, as of May
12, 2000, the consideration to be paid in the offer and the merger pursuant
to the merger agreement was fair from a financial point of view to
Champion's stockholders (other than IP). The full text of the written
opinion of Goldman Sachs, which sets forth assumptions made, matters
considered and limitations on the review undertaken in connection with the
opinion, is attached as Schedule II to the Schedule 14D-9 of Champion dated
May 19, 2000, and a description of the financial analyses underlying such
opinion is included in such Schedule 14D-9. Both such opinion and such
description are incorporated by reference into this prospectus.
3. The fact that the value of the stock portion of the consideration
offered in the offer and the merger is protected to the extent that the
average IP trading price during the pricing period prior to the expiration
of the offer falls to $34 per share, but is not protected to the extent
that the average IP trading
18
<PAGE> 24
price during such period were to fall below $34 per share. The Champion
board of directors also considered the fact that the per share
consideration offered in the offer and the merger will bear cash interest
at the rate of 8% per year if the offer is not consummated by June 16, 2000
due to the failure to obtain certain regulatory approvals by such date.
4. The fact that since the public announcement of the execution of the
Champion-UPM merger agreement on February 17, 2000, no third party (other
than IP) had expressed to Champion an interest in pursuing a possible
business combination.
5. The fact that the consideration and other terms of the merger
agreement resulted from arms-length negotiations between Champion and IP,
and the Champion board of directors' belief that $75 per share represented
the highest per share consideration that could be negotiated with IP.
6. The commitment by IP in the merger agreement to take all actions
necessary to obtain the required regulatory approvals of the offer and the
merger, except to the extent that such actions would have a material
adverse effect on IP.
7. The fact that the offer and the merger provide for a prompt
exchange offer for all Champion shares to be followed by a second-step
merger at the same consideration, thereby enabling Champion's stockholders
to obtain the benefits of the transaction at the earliest possible time.
8. The financial ability of IP to consummate the offer and the merger.
In this regard, the Champion board of directors noted that IP had received
an executed commitment letter from a financial institution providing for
all financing necessary to purchase the Champion shares and to pay all
transaction fees in connection with the offer and the merger.
9. The fact that the merger agreement permits Champion to furnish
information to and participate in negotiations with third parties in
response to a takeover proposal if a majority of the Champion board of
directors (a) reasonably determines in good faith, after consultation with
an independent, nationally recognized investment bank, that taking such
action would be reasonably likely to lead to the delivery to Champion of a
superior proposal and (b) determines in good faith, after receiving the
advice of outside legal counsel, that it is necessary to take such actions
in order to comply with its fiduciary duties under applicable law.
10. The fact that the Champion board of directors is permitted to
terminate the merger agreement if prior to the purchase of Champion shares
pursuant to the offer, a superior proposal is received by Champion and the
Champion board of directors reasonably determines in good faith, after
receiving the advice of outside legal counsel, that it is necessary to
terminate the merger agreement and enter into a new agreement to effect the
superior proposal in order to comply with its fiduciary duties under
applicable law.
The foregoing discussion of the information and factors considered by the
Champion board of directors is not intended to be exhaustive, but includes the
material factors considered by the Champion board of directors. In view of the
variety of factors considered in connection with its evaluation of the offer and
the merger, the Champion board of directors did not find it practicable to, and
did not, quantify or otherwise assign relative weights to the specific factors
considered in reaching its determination and recommendation. In addition,
individual directors may have given differing weights to different factors.
19
<PAGE> 25
BACKGROUND OF THE OFFER
As part of the continuous evaluation of its businesses and plans, IP
regularly considers a variety of strategic options and transactions. In recent
years, as part of this process, IP's management has evaluated various
alternatives for expanding its paper manufacturing and products businesses,
including the advisability of acquisitions, and has, from time to time, analyzed
opportunities for consolidation in the paper manufacturing and products
industries and discussed such matters with the IP board of directors.
On February 17, 2000, Champion entered into an Agreement and Plan of Merger
with UPM. Under the terms of the Champion-UPM merger agreement, a subsidiary of
UPM would have been merged with and into Champion, and each outstanding share of
Champion's common stock would have been converted into 1.99 UPM American
Depositary Shares representing UPM's ordinary shares or, at the option of each
Champion stockholder, 1.99 UPM ordinary shares.
On April 24, 2000, with the approval of the IP board of directors, John T.
Dillon, Chief Executive Officer of IP, sent the following letter to Richard E.
Olson, Chairman and Chief Executive Officer of Champion:
Mr. Richard E. Olson
Chairman & CEO
Champion International Corporation
One Champion Plaza
Stamford, CT 06921
Dear Dick:
Our board of directors has authorized me to convey to you and to the board
of directors of Champion International Corporation our offer to acquire all of
Champion shares for a combination of cash and International Paper common stock
at a value of $64 per share, of which $43 is cash and $21 is International Paper
common stock. Based on today's closing price of $39 15/16 for International
Paper common stock, the exchange ratio represented by the stock portion of our
offer is 0.526. In order to protect the value of our offer for Champion
shareholders, we would maintain the value of the stock component down to a price
of $36 per International Paper share.
Our two companies, while competitors, are headquartered only a few miles
from each other, and many of us have enjoyed close friendships with Champion
employees at all levels over many years. We are confident that our corporate
"cultures" are similar, and that an assimilation of the two companies would be
relatively easy. We believe that our recent experience with Union Camp and
Federal Paperboard, both companies which you knew well, demonstrates our ability
to combine the best of both companies into an even better company. In addition,
a merger between International Paper and Champion would permit the combined
company to realize many efficiencies and create an even stronger competitor in
an industry which must now compete on a global basis.
We are of course aware that Champion is currently a party to a merger
agreement with UPM-Kymmene Corporation. Based on today's closing price of
UPM-Kymmene ADRs, under that agreement Champion shareholders would receive
UPM-Kymmene shares with a value of $52.735. We believe it is clear that our
proposal represents a superior offer in a number of important respects. It
represents a 21.4% premium over the implied value of the UPM-Kymmene offer
today; it is largely in cash; and, because of our inclusion in the Dow Jones
Industrial Average as well as our average daily trading volume on the New York
Stock Exchange, the International Paper stock we are offering is far more liquid
than ADRs or shares traded on the Helsinki Exchange.
In addition, our proposal is not subject to a due diligence review of your
business, to pooling-of-interests accounting treatment, or to a vote of the
International Paper shareholders. We are confident that there are no impediments
to our offer from an antitrust or other standpoint. Nonetheless, International
Paper will give Champion International the same undertaking as did UPM-Kymmene
to take whatever steps are required to obtain regulatory approval. Furthermore,
our lawyers have a draft agreement containing substantially similar conditions,
representations and warranties as in the UPM-Kymmene agreement. We have fully
committed
20
<PAGE> 26
financing for our offer. We will be making our Hart-Scott-Rodino filing within a
day or two. In short, we are convinced we can consummate the transaction
quickly.
Dick, I think you already know that our board of directors and I have a
great deal of respect for you and for the Champion board. We would have much
preferred to discuss this matter with you directly, but recognized that you were
bound by the strict terms of your merger agreement. However, given developments
in the market subsequent to the UPM-Kymmene proposal, what is contained in this
letter is clearly a superior proposal from a financial point of view, and we are
certain that the Champion board of directors, as well as the Champion
shareholders, will recognize that fact.
I want to assure you that we view a merger with Champion as an important
strategic objective for International Paper and that we are committed to
bringing the combination to a successful conclusion. We understand that, after
UPM-Kymmene has been informed of our proposal, which we intend to make public,
the Champion board can authorize management to enter into discussions with us,
and we would respectfully request that the Champion board make that
determination as soon as possible. I look forward to meeting with you at the
earliest opportunity.
Sincerely,
John
Champion and IP subsequently issued press releases announcing the delivery
of the IP proposal.
On April 27, 2000, the Champion board of directors held a meeting to
discuss the IP proposal and to review, with Champion's counsel, Champion's
obligations under the Champion-UPM merger agreement and the fiduciary duties of
the Champion board of directors to Champion's stockholders.
On April 28, 2000, counsel for IP contacted counsel for Champion to advise
Champion that IP would be prepared to increase its offer if the Champion board
of directors conducted a fair process to sell Champion. Counsel for Champion
responded that Champion and its representatives were restricted under the terms
of the Champion-UPM merger agreement from engaging in discussions or
negotiations with IP and its representatives and that the Champion board of
directors would consider IP's proposal and take appropriate action, perhaps
sometime in the following week, consistent with the fiduciary duties of the
Champion board of directors and the Champion-UPM merger agreement.
On May 5, 2000, the Champion board of directors held a meeting to further
discuss the IP proposal. At this meeting, the Champion board of directors
determined, after consulting with its financial advisors and counsel, that
engaging in negotiations with IP could reasonably be likely to lead to the
delivery of a superior proposal and was necessary to discharge the Champion
board of directors' fiduciary duties. Accordingly, the Champion board of
directors authorized Champion management and its advisors to commence
negotiations with IP with respect to a possible acquisition of Champion by IP.
Following the meeting of the Champion board of directors, Champion informed UPM
of the determination of the Champion board of directors to commence
negotiations.
Later on May 5, 2000, IP and Champion entered into a confidentiality
agreement, and counsel for IP delivered a draft merger agreement to counsel for
Champion. On May 6, 2000, counsel for UPM delivered a draft amendment to the
existing merger agreement between Champion and UPM reflecting a possible
acquisition of Champion by UPM in an all-cash transaction.
Commencing on May 7, 2000, counsel for Champion negotiated the terms of the
draft merger agreements with counsel to IP and UPM, respectively.
On May 8, 2000, Juha Niemela, President and Chief Executive Officer of UPM,
delivered a letter to Mr. Olson proposing that UPM acquire all outstanding
Champion shares at a price of $70 per share in cash.
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<PAGE> 27
The terms of the UPM proposal indicated that the terms of the proposal were not
permitted to be disclosed prior to its acceptance.
Following receipt of UPM's proposal, counsel for Champion informed counsel
for IP that UPM had made a proposal to acquire Champion at a price substantially
higher than the IP proposal, but that under the terms of the UPM proposal,
Champion was not permitted to disclose the price or other terms of the proposal
to IP.
On May 9, 2000, Mr. Dillon delivered a letter and revised draft of a merger
agreement to Mr. Olson which contemplated a $75 per share cash tender offer for
two-thirds of the outstanding shares of Champion common stock to be followed by
a stock-for-stock merger in which each share of Champion common stock would be
converted into shares of IP common stock with a value of $75 (subject to a price
floor of $34.50 per IP common share). Under the terms of the revised IP
proposal, IP had the right to withdraw its offer if (1) the Champion board of
directors did not determine prior to 11:59 p.m. on May 9, 2000 that the revised
IP proposal constituted a superior proposal or (2) Champion had not accepted
IP's revised proposal and executed a merger agreement with IP prior to 6:00 p.m.
on May 12, 2000.
Later that evening, the Champion board of directors held a meeting to
discuss IP's and UPM's revised proposals. At this meeting, the Champion board of
directors, after consulting with its financial advisors and counsel, determined
that IP's revised proposal constituted a superior proposal and that it was
necessary to terminate the Champion-UPM merger agreement and enter into the
merger agreement with IP in order for the Champion board of directors to comply
with its fiduciary duties. Following the board meeting, Champion notified UPM of
its board's determination and its intent to terminate the Champion-UPM merger
agreement and enter into the merger agreement with IP at 5:00 p.m. on May 12,
2000 if the IP proposal continued to constitute a superior proposal at such
time.
From May 9, 2000 to May 12, 2000, counsel for Champion and counsel for IP
and UPM continued to negotiate the terms of the draft merger agreements.
During the afternoon of May 12, 2000, IP delivered a letter to Champion
indicating that, on the assumption that Champion's board of directors was
prepared to terminate the Champion-UPM merger agreement at 5:00 p.m. on such
date, IP was prepared to (1) convert the structure of its proposal to provide
for an exchange offer for all outstanding Champion shares at a price per share
of Champion common stock consisting of $50 in cash and shares of IP common stock
having a value of $25, (2) adjust the price floor on the stock portion of the
consideration to $34 and (3) pay Champion stockholders cash interest in the
amount of 8% per year in the event that the closing of the exchange offer were
delayed due to the failure to obtain antitrust approvals.
The Champion board of directors held a meeting beginning at approximately
4:30 p.m. on May 12, 2000. Shortly after the meeting commenced, UPM and its
counsel informed Champion and its counsel that UPM was unwilling to revise its
$70 per share offer. Also during the board meeting, at approximately 4:45 p.m.,
Champion's counsel and financial advisors contacted IP's counsel and financial
advisors to inquire as to whether $75 represented IP's best offer. IP declined
to increase its $75 per share offer, but reaffirmed its willingness to make the
adjustments described in its May 12 letter. The Champion board of directors then
reaffirmed its determination that IP's $75 per share proposal continued to
constitute a superior proposal and determined that terminating the
Champion - UPM merger agreement was necessary for the Champion board of
directors to comply with its fiduciary duties and that the merger agreement with
IP was fair to and in the best interests of Champion's stockholders. The
Champion board of directors then determined to terminate the Champion-UPM merger
agreement.
Following the meeting of the Champion board of directors, Champion
terminated the Champion-UPM merger agreement and paid UPM the $210 million
termination fee and expenses required under the Champion-UPM merger agreement.
Later that evening, IP and Champion executed the merger agreement and issued
press releases announcing the execution of the merger agreement.
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<PAGE> 28
THE OFFER
We are offering to exchange shares of IP common stock having a value of
$25, subject to the limitation described below, and $50 in cash for each
outstanding share of Champion common stock, including the associated rights to
purchase preferred stock, validly tendered and not properly withdrawn, subject
to the terms and conditions described in this prospectus and the related letter
of transmittal.
The number of shares of IP common stock into which each share of Champion
common stock would be converted in the offer will be determined by dividing $25
by the average (rounded to the nearest 1/10,000) of the volume weighted averages
(rounded to the nearest 1/10,000) of the trading prices of IP common stock on
the New York Stock Exchange for the 15 trading days randomly selected by lot by
IP and Champion together from the 30 consecutive trading days ending on the
third trading day prior to the expiration date; provided that if the average
trading price for IP common stock during such period is less than $34.00, the
exchange ratio will be .7353.
You should understand that if the average IP common stock price referred to
in the preceding paragraph is less than $34 that you will receive shares of IP
common stock having a value of less than $25 for each share of Champion common
stock validly tendered and not properly withdrawn.
If we do not close the offer on June 16, 2000, the initial expiration date,
by virtue of the failure of any of the antitrust regulatory conditions to the
offer to be satisfied, we have agreed to pay to the holders of shares of
Champion common stock as additional payment in cash calculated at a rate of
8.00% per annum (calculated on the basis of a 365 day calendar year) on the $75
per share offer consideration from and after the initial scheduled expiration
date of the offer until the acceptance for payment of shares of Champion common
stock validly tendered and not properly withdrawn in the offer.
You will not receive any fractional shares of IP common stock. Instead, you
will receive cash in an amount equal to the market value of any fractional
shares you would otherwise have been entitled to receive.
The term "expiration date" means 12:00 midnight, New York City time, on
June 16, 2000, unless we extend the period of time for which the offer is open,
in which case the term "expiration date" means the latest time and date on which
the offer, as so extended, expires.
If you are the record owner of your shares and you tender your shares
directly to the Exchange Agent, you will not be obligated to pay any charges or
expenses of the exchange agent or any brokerage commissions. If you own your
shares through a broker or other nominee, and your broker tenders the shares on
your behalf, your broker may charge you a fee for doing so. You should consult
your broker or nominee to determine whether any changes will apply. Except as
set forth in the instructions to the letter of transmittal, transfer taxes on
the exchange of Champion common stock pursuant to our offer will be paid by us
or on our behalf.
We are making this offer in order to acquire all of the outstanding shares
of Champion common stock. We intend, as soon as possible after completion of the
offer, to have Purchaser merge with Champion. The purpose of the merger is to
acquire all Champion shares not tendered and exchanged pursuant to the offer. In
the merger, each then outstanding share of Champion common stock (except for
treasury shares of Champion and shares that we hold for our own account) would
be converted into the same number of IP shares and same amount of cash per
Champion share as is paid in the offer.
Our obligation to exchange shares of IP common stock and cash for Champion
shares pursuant to the offer is subject to several conditions referred to below
under "Conditions of Our Offer," including the minimum tender condition, the
regulatory approvals condition and other conditions that are discussed below.
TIMING OF OUR OFFER
Our offer is scheduled to expire at 12:00 midnight, New York City time on
June 16, 2000. For more information, you should read the discussion under the
caption "Extension, Termination and Amendment."
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<PAGE> 29
LITIGATION
Commencing in February 2000, a total of seven purported class action
lawsuits were filed in the Supreme Court of the State of New York, County of New
York. These actions allege that Champion and the individual directors of
Champion breached their fiduciary duties to shareholders by, among other things,
entering into the Champion-UPM merger agreement at an unfair price and by
agreeing to certain other provisions (including the $200 million termination fee
and reimbursement of up to $10 million of UPM's expenses in connection with the
termination of the Champion-UPM merger agreement) that allegedly discouraged
offers from other prospective merger or acquisition partners. In addition,
certain of the actions allege that Champion and its board of directors breached
their fiduciary duties to shareholders by not engaging in negotiations with IP
immediately following IP's public announcement of its $64 per Champion share
offer. These actions purport to be brought on behalf of all shareholders of
Champion, other than the defendants and members of their families.
On May 15, 2000, the plaintiffs and defendants entered into a stipulation
providing for the consolidation of all of the actions into a single proceeding
and affording plaintiffs 30 days to file a consolidated amended complaint.
Champion and the individual defendants strenuously deny all allegations of
wrongdoing contained in the existing complaints in these actions, and intend to
contest them vigorously.
EXTENSION, TERMINATION AND AMENDMENT
We expressly reserve the right, in our sole discretion (subject to the
provisions of the merger agreement), at any time or from time to time, to extend
the period of time during which our offer remains open, and we can do so by
giving oral or written notice of the extension to the exchange agent. If we
decide to so extend our offer, we will make an announcement to that effect no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled expiration date. We are not making any assurance that we
will exercise our right to extend our offer, although we currently intend to do
so until all conditions have been satisfied or, where permissible, waived.
During any such extension, all Champion shares previously tendered and not
properly withdrawn will remain subject to the offer, subject to your right to
withdraw your Champion shares. You should read the discussion under the caption
"Withdrawal Rights" for more details.
Subject to the SEC's applicable rules and regulations, we also reserve the
right, in our sole discretion (subject to the provisions of the merger
agreement), at any time or from time to time, (a) to delay acceptance for
exchange of or, regardless of whether we previously accepted Champion shares for
exchange, exchange of any Champion shares pursuant to our offer or to terminate
our offer and not accept for exchange or exchange any Champion shares not
previously accepted for exchange, or exchanged, upon the failure of any of the
conditions of the offer to be satisfied and (b) to waive any condition (other
than the regulatory approvals condition and the conditions relating to the
absence of an injunction and the effectiveness of the registration statement for
the IP shares to be issued in our offer) or otherwise amend the offer in any
respect, by giving oral or written notice of such delay, termination or
amendment to the exchange agent and by making a public announcement. We will
follow any extension, termination, amendment or delay, as promptly as
practicable, with a public announcement. In the case of an extension, any
announcement will be issued no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled expiration date. Subject to
applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act,
which require that any material change in the information published, sent or
given to stockholders in connection with the offer be promptly sent to
stockholders in a manner reasonably designed to inform stockholders of the
change) and without limiting the manner in which we may choose to make any
public announcement, we assume no obligation to publish, advertise or otherwise
communicate any such public announcement other than by making a release to the
Dow Jones News Service.
We confirm to you that if we make a material change in the terms of our
offer or the information concerning the offer, or if we waive a material
condition of the offer, we will extend the offer to the extent required under
the Exchange Act. If, prior to the expiration date, we change the percentage of
Champion shares being sought or the consideration offered to you, that change
will apply to all holders whose Champion shares are accepted for exchange
pursuant to our offer. If at the time notice of that change is first published,
24
<PAGE> 30
sent or given to you, the offer is scheduled to expire at any time earlier than
the tenth business day from and including the date that the notice is first so
published, sent or given, we will extend the offer until the expiration of that
ten business-day period. For purposes of our offer, a "business day" means any
day other than a Saturday, Sunday or federal holiday and consists of the time
period from 12:01 a.m. through 12:00 midnight, New York City time.
With the consent of Champion, we may, although we do not currently intend
to, elect to provide a subsequent offering period of three to 20 business days
after the acceptance of Champion shares in the offer if the requirements under
Exchange Act Rule 14d-11 have been met. You will not have the right to withdraw
Champion shares that you tender in the subsequent offering period, if any.
EXCHANGE OF CHAMPION SHARES; DELIVERY OF IP COMMON STOCK AND CASH
Upon the terms and subject to the conditions of our offer (including, if
the offer is extended or amended, the terms and conditions of the extension or
amendment), we will accept for exchange, and will exchange, Champion shares
validly tendered and not properly withdrawn as promptly as practicable after the
expiration date. In addition, subject to applicable rules of the SEC, we
expressly reserve the right to delay acceptance for exchange or the exchange of
Champion shares in order to comply with any applicable law. In all cases,
exchange of Champion shares tendered and accepted for exchange pursuant to the
offer will be made only after timely receipt by the exchange agent of
certificates for those Champion shares (or a confirmation of a book-entry
transfer of those Champion shares in the exchange agent's account at The
Depository Trust Company (which we refer to as the "DTC")), a properly completed
and duly executed letter of transmittal (or a manually signed facsimile of that
document) and any other required documents.
For purposes of the offer, we will be deemed to have accepted for exchange
Champion shares validly tendered and not properly withdrawn as, if and when we
notify the exchange agent of our acceptance of the tenders of those Champion
shares pursuant to the offer. The exchange agent will deliver cash and IP common
stock in exchange for Champion shares pursuant to the offer and cash instead of
fractional shares of IP common stock as soon as practicable after receipt of our
notice. The exchange agent will act as agent for tendering stockholders for the
purpose of receiving IP common stock and cash (including cash to be paid instead
of fractional shares of IP common stock and any additional payment pursuant to
the terms of the merger agreement) from us and transmitting such stock and cash
to you. You will not receive any interest on any cash that we pay you, even if
there is a delay in making the exchange; however, you will receive any
additional payment that may be due to you pursuant to the terms of the merger
agreement.
If we do not accept any tendered Champion shares for exchange pursuant to
the terms and conditions of the offer for any reason, or if certificates are
submitted for more Champion shares than are tendered, we will return
certificates for such unexchanged Champion shares without expense to the
tendering stockholder or, in the case of Champion shares tendered by book-entry
transfer of such Champion shares into the exchange agent's account at DTC
pursuant to the procedures set forth below under the discussion entitled
"Procedure for Tendering," those Champion shares will be credited to an account
maintained within DTC, as soon as practicable following expiration or
termination of the offer.
CASH INSTEAD OF FRACTIONAL SHARES OF IP COMMON STOCK
We will not issue certificates representing fractional shares of our common
stock pursuant to the offer. Instead, each tendering stockholder who would
otherwise be entitled to a fractional share of our common stock will receive
cash in an amount equal to that fraction (expressed as a decimal and rounded to
the nearest 0.01 of a share) multiplied by the average of the last reported
sales prices of IP common stock, as reported on the NYSE Composite Tape, on each
of the twenty trading days ending on the third trading day immediately preceding
the date that we accept those Champion shares for exchange.
WITHDRAWAL RIGHTS
Your tender of Champion shares pursuant to the offer is irrevocable, except
that, other than during a subsequent offering period, Champion shares tendered
pursuant to the offer may be withdrawn at any time
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prior to the expiration date, and, unless we previously accepted them pursuant
to the offer, may also be withdrawn at any time after July 17, 2000. If we elect
to provide a subsequent offering period under Exchange Act Rule 14d-11, you will
not have the right to withdraw Champion shares that you tender in the subsequent
offering period.
For your withdrawal to be effective, the exchange agent must receive from
you a written, telex or facsimile transmission notice of withdrawal at one of
its addresses set forth on the back cover of this prospectus, and your notice
must include your name, address, social security number, the certificate
number(s) and the number of Champion shares to be withdrawn as well as the name
of the registered holder, if it is different from that of the person who
tendered those Champion shares.
A financial institution must guarantee all signatures on the notice of
withdrawal. Most banks, savings and loan associations and brokerage houses are
able to effect these signature guarantees for you. The financial institution
must be a participant in the Securities Transfer Agents Medallion Program, an
"eligible institution," unless those Champion shares have been tendered for the
account of any eligible institution. If Champion shares have been tendered
pursuant to the procedures for book-entry tender discussed under the caption
entitled "Procedure for Tendering," any notice of withdrawal must specify the
name and number of the account at DTC to be credited with the withdrawn Champion
shares and must otherwise comply with DTC's procedures. If certificates have
been delivered or otherwise identified to the exchange agent, the name of the
registered holder and the serial numbers of the particular certificates
evidencing the Champion shares withdrawn must also be furnished to the exchange
agent, as stated above, prior to the physical release of the certificates. We
will decide all questions as to the form and validity (including time of
receipt) of any notice of withdrawal, in our sole discretion, and our decision
shall be final and binding.
Neither we, the exchange agent, the Information Agent, the Dealer Manager
nor any other person will be under any duty to give notification of any defects
or irregularities in any notice of withdrawal or will incur any liability for
failure to give any notification. Any Champion shares properly withdrawn will be
deemed not to have been validly tendered for purposes of our offer. However, you
may retender withdrawn Champion shares by following one of the procedures
discussed under the captions entitled "Procedure for Tendering" or "Guaranteed
Delivery" at any time prior to the expiration date.
PROCEDURE FOR TENDERING
For you to validly tender Champion shares pursuant to the offer, (a) a
properly completed and duly executed letter of transmittal (or manually executed
facsimile of that document), along with any required signature guarantees, or an
agent's message in connection with a book-entry transfer, and any other required
documents, must be transmitted to and received by the exchange agent at one of
its addresses set forth on the back cover of this prospectus, and certificates
for tendered Champion shares must be received by the exchange agent at such
address or those Champion shares must be tendered pursuant to the procedures for
book-entry tender set forth below (and a confirmation of receipt of such tender
received (we refer to this confirmation below as a "book-entry confirmation")),
in each case before the expiration date, or (b) you must comply with the
guaranteed delivery procedures set forth below.
The term "agent's message" means a message, transmitted by DTC to, and
received by, the exchange agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering the Champion shares which are the subject of the
book-entry confirmation, that the participant has received and agrees to be
bound by the terms of the letter of transmittal and that we may enforce that
agreement against the participant.
The exchange agent will establish accounts with respect to the Champion
shares at DTC for purposes of the offer within two business days after the date
of this prospectus, and any financial institution that is a participant in DTC
may make book-entry delivery of the Champion shares by causing DTC to transfer
such Champion shares into the exchange agent"s account in accordance with DTC's
procedure for the transfer. However, although delivery of Champion shares may be
effected through book-entry at DTC, the letter of transmittal (or a manually
signed facsimile thereof), with any required signature guarantees, or an agent's
message in connection with a book-entry transfer, and any other required
documents, must, in any case, be
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transmitted to and received by the exchange agent at one or more of its
addresses set forth on the back cover of this prospectus prior to the expiration
date, or the guaranteed delivery procedures described below must be followed.
Signatures on all letters of transmittal must be guaranteed by an eligible
institution, except in cases in which Champion shares are tendered either by a
registered holder of Champion shares who has not completed the box entitled
"Special Issuance Instructions" on the letter of transmittal or for the account
of an eligible institution.
If the certificates for Champion shares are registered in the name of a
person other than the person who signs the letter of transmittal, or if
certificates for unexchanged Champion shares are to be issued to a person other
than the registered holder(s), the certificates must be endorsed or accompanied
by appropriate stock powers, in either case signed exactly as the name or names
of the registered owner or owners appear on the certificates, with the
signature(s) on the certificates or stock powers guaranteed in the manner we
have described above.
THE METHOD OF DELIVERY OF CHAMPION SHARE CERTIFICATES AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH DTC, IS AT YOUR OPTION AND RISK,
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, WE RECOMMEND REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO
ENSURE TIMELY DELIVERY.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO CASH
RECEIVED PURSUANT TO OUR OFFER, YOU MUST PROVIDE THE EXCHANGE AGENT WITH YOUR
CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY WHETHER YOU ARE SUBJECT TO
BACKUP WITHHOLDING OF FEDERAL INCOME TAX BY COMPLETING THE SUBSTITUTE FORM W-9
INCLUDED IN THE LETTER OF TRANSMITTAL. SOME STOCKHOLDERS (INCLUDING, AMONG
OTHERS, ALL CORPORATIONS AND SOME FOREIGN INDIVIDUALS) ARE NOT SUBJECT TO THESE
BACKUP WITHHOLDING AND REPORTING REQUIREMENTS. IN ORDER FOR A FOREIGN INDIVIDUAL
TO QUALIFY AS AN EXEMPT RECIPIENT, THE STOCKHOLDER MUST SUBMIT A FORM W-8,
SIGNED UNDER PENALTIES OF PERJURY, ATTESTING TO THAT INDIVIDUAL'S EXEMPT STATUS.
GUARANTEED DELIVERY
If you wish to tender Champion shares pursuant to our offer and your
certificates are not immediately available or you cannot deliver the
certificates and all other required documents to the exchange agent prior to the
expiration date or cannot complete the procedure for book-entry transfer on a
timely basis, your Champion shares may nevertheless be tendered, so long as all
of the following conditions are satisfied:
(a) you make your tender by or through an eligible institution;
(b) a properly completed and duly executed notice of guaranteed
delivery, substantially in the form made available by us, is received by
the exchange agent as provided below on or prior to the expiration date;
and
(c) the certificates for all tendered Champion shares (or a
confirmation of a book-entry transfer of such securities into the exchange
agent's account at DTC as described above), in proper form for transfer,
together with a properly completed and duly executed letter of transmittal
(or a manually signed facsimile thereof), with any required signature
guarantees (or, in the case of a book-entry transfer, an agent's message)
and all other documents required by the letter of transmittal are received
by the exchange agent within three NYSE trading days after the date of
execution of such notice of guaranteed delivery.
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You may deliver the notice of guaranteed delivery by hand or transmit it by
facsimile transmission or mail to the exchange agent and you must include a
guarantee by an eligible institution in the form set forth in that notice.
In all cases, we will exchange Champion shares tendered and accepted for
exchange pursuant to our offer only after timely receipt by the exchange agent
of certificates for Champion shares (or timely confirmation of a book-entry
transfer of such securities into the exchange agent's account at DTC as
described above), properly completed and duly executed letter(s) of transmittal
(or a manually signed facsimile(s) thereof), or an agent's message in connection
with a book-entry transfer, and any other required documents.
By executing a letter of transmittal as set forth above, you irrevocably
appoint our designees as your attorneys-in-fact and proxies, each with full
power of substitution, to the full extent of your rights with respect to your
Champion shares tendered and accepted for exchange by us and with respect to any
and all other Champion shares and other securities issued or issuable in respect
of the Champion shares on or after June 16, 2000. That appointment is effective,
and voting rights will be affected, when and only to the extent that we deposit
the shares of our common stock and the cash consideration for Champion shares
that you have tendered with the exchange agent. All such proxies shall be
considered coupled with an interest in the tendered Champion shares and
therefore shall not be revocable. Upon the effectiveness of such appointment,
all prior proxies that you have given will be revoked, and you may not give any
subsequent proxies (and, if given, they will not be deemed effective). Our
designees will, with respect to the Champion shares for which the appointment is
effective, be empowered, among other things, to exercise all of your voting and
other rights as they, in their sole discretion, deem proper at any annual,
special or adjourned meeting of Champion's stockholders or otherwise. We reserve
the right to require that, in order for Champion shares to be deemed validly
tendered, immediately upon our exchange of those Champion shares, we must be
able to exercise full voting rights with respect to such Champion shares.
We will determine questions as to the validity, form, eligibility
(including time of receipt) and acceptance for exchange of any tender of
Champion shares, in our sole discretion, and our determination shall be final
and binding. We reserve the absolute right to reject any and all tenders of
Champion shares that we determine are not in proper form or the acceptance of or
exchange for which may, in the opinion of our counsel, be unlawful. We also
reserve the absolute right to waive any of the conditions of our offer (other
than the regulatory approvals condition and the conditions relating to the
absence of an injunction and the effectiveness of the registration statement for
IP shares to be issued in our offer), or any defect or irregularity in the
tender of any Champion shares. No tender of Champion shares will be deemed to
have been validly made until all defects and irregularities in tenders of
Champion shares have been cured or waived. Neither we, the exchange agent, the
Information Agent, the Dealer Manager nor any other person will be under any
duty to give notification of any defects or irregularities in the tender of any
Champion shares or will incur any liability for failure to give any such
notification. Our interpretation of the terms and conditions of our offer
(including the letter of transmittal and instructions thereto) will be final and
binding.
The tender of Champion shares pursuant to any of the procedures described
above will constitute a binding agreement between us and you upon the terms and
subject to the conditions of the offer.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain United States federal income
tax consequences to Champion stockholders that exchange Champion common stock
for IP common stock and cash pursuant to the offer and the merger. This
discussion is based on provisions of the Internal Revenue Code of 1986, as
amended, Treasury regulations promulgated thereunder, and administrative and
judicial interpretations thereof, all as in effect as of the date hereof and all
of which are subject to change, possibly with retroactive effect. This
discussion does not address all aspects of United States federal income taxation
that may be applicable to Champion stockholders in light of their particular
circumstances or to Champion stockholders subject to special treatment under
United States federal income tax law (including, without limitation,
partnerships, foreign persons who may be subject to tax under the provisions of
the Foreign Investment in Real Property Tax Act of 1980, certain financial
institutions, insurance companies, tax-exempt entities, dealers in
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securities, traders in securities that elect to apply a mark-to-market method of
accounting, certain U.S. expatriates, persons that hold Champion common stock as
part of a straddle, hedge, conversion transaction or other integrated
investment, Champion stockholders whose functional currency is not the United
States dollar and Champion stockholders who acquired Champion common stock
through the exercise of employee stock options or otherwise as compensation).
This discussion is limited to Champion stockholders that hold their Champion
common stock as capital assets and does not consider the tax treatment of
Champion stockholders that hold Champion common stock through a partnership or
other pass-through entity. Furthermore, this summary does not discuss any aspect
of state, local or foreign taxation or any aspect of the Foreign Investment in
Real Property Tax Act of 1980.
A Champion stockholder that receives IP common stock and cash in exchange
for that stockholder's Champion common stock pursuant to the offer and the
merger will realize gain or loss equal to the difference between (a) the sum of
the fair market value of the IP common stock (on the expiration date of the
offer or at the effective time of the merger, as the case may be) and the amount
of cash received including any additional payment, and (b) that stockholder's
adjusted tax basis in the Champion common stock exchanged therefor. The
recognized gain or loss will constitute capital gain or loss. Any capital gain
or loss recognized will constitute long-term capital gain or loss if the
Champion stockholder's holding period for the Champion common stock exchanged is
greater than one year as of the expiration date or at the effective time of the
merger, as the case may be. The IP shares received by Champion stockholders in
exchange for Champion shares pursuant to the offer or the merger will have a tax
basis equal to their fair market value on the expiration date or at the
effective time of the merger, as the case may be, and a new holding period
beginning on the day following the applicable valuation date.
THE FOREGOING DISCUSSION IS INTENDED ONLY AS A SUMMARY AND DOES NOT PURPORT
TO BE A COMPLETE ANALYSIS OR LISTING OF ALL POTENTIAL FEDERAL INCOME TAX
CONSEQUENCES OF THE OFFER AND THE MERGER. CHAMPION STOCKHOLDERS ARE URGED TO
CONSULT THEIR TAX ADVISORS CONCERNING THE UNITED STATES FEDERAL, STATE, LOCAL
AND FOREIGN TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM.
PURPOSE OF OUR OFFER; THE MERGER; APPRAISAL RIGHTS
Purpose. We are making the offer in order to acquire all of the
outstanding shares of Champion common stock. We intend, as soon as practicable
after completion of the offer, to have Purchaser merge with Champion. The
purpose of the merger is to acquire all Champion shares not tendered and
exchanged pursuant to the offer. In the merger, each then outstanding Champion
share (except for Champion shares held in Champion's treasury and Champion
shares that we hold for our own account) would be converted into the right to
receive the same number of IP shares and the same amount of cash as is paid in
the offer.
Approval of the Merger. Under Section 903 of the NYBCL, for a company,
such as Champion, that was incorporated in New York State prior to February 22,
1998, the approval of the board of directors of a such company and the
affirmative vote of the holders of two-thirds of its outstanding shares are
required to approve and adopt a merger and a merger agreement. The Champion
board of directors has previously approved the merger. Accordingly, if we
complete the offer (after satisfaction of the minimum tender condition), we
would have a sufficient number of Champion shares to approve the merger without
the affirmative vote of any other holder of Champion shares. Therefore, unless
the merger is consummated in accordance with the short-form merger provisions
under the NYBCL described below (in which case no action by the stockholders of
Champion, other than IP, will be required to consummate the merger), the only
remaining corporate action of Champion will be the approval and adoption of the
merger agreement by the affirmative vote of the holders of two-thirds of the
outstanding Champion shares.
Possible Short-Form Merger. Section 905 of the NYBCL would permit the
merger to occur without a vote of Champion's stockholders (a "short-form
merger") if IP were to acquire at least 90% of the outstanding Champion shares
in the offer or otherwise (including as a result of purchases by IP during any
subsequent offering period). If, however, IP does not acquire at least 90% of
the then outstanding Champion shares
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pursuant to the offer or otherwise, and a vote of Champion's stockholders is
required under the NYBCL, a longer period of time will be required to effect the
merger. IP has agreed in the merger agreement to effect the merger at the
earliest practicable time, and if it obtains ownership of 90% of the outstanding
Champion shares in the offer, to effect the merger as a short-form merger.
Appraisal Rights. Champion stockholders do not have appraisal rights in
connection with the offer.
If more than two-thirds but less than 90% of the outstanding Champion
shares are validly tendered and not properly withdrawn in the offer, we will
effect a long form merger (as described above) as permitted under Section 903 of
the NYBCL. Champion stockholders who have not exchanged their Champion shares in
the offer will not have appraisal rights in connection with a long form merger.
However, if at least 90% of the outstanding Champion shares are validly
tendered and not properly withdrawn in the offer, we will effect a short form
merger (as described above) as permitted under Section 905 of the NYBCL,
Champion stockholders at the time of a short-form merger will have the right
under Section 910 of the NYBCL to dissent and demand appraisal of their Champion
shares. Stockholders dissenting under Section 910 of the NYBCL who comply with
the applicable statutory procedures will be entitled to receive judicial
determination of the fair value of their Champion shares and to receive payment
of such fair value in cash, together with a rate of interest, if any.
CONDITIONS OF OUR OFFER
The offer is subject to a number of conditions, which are described below:
Minimum Tender Condition
There must be validly tendered and not properly withdrawn prior to the
expiration of the offer a number of Champion shares which will constitute at
least two-thirds of the total number of outstanding Champion shares on a fully
diluted basis (as though all options or other securities convertible into or
exercisable or exchangeable for Champion shares had been so converted, exercised
or exchanged) as of the date that we accept the Champion shares pursuant to our
offer. Based on information supplied by Champion, the number of Champion shares
needed to satisfy the minimum tender condition would have been 64,601,826 as of
May 16, 2000.
Antitrust Condition
This condition would be satisfied if all waiting periods under the HSR Act,
any applicable European antitrust laws and the Competition Act (Canada) have
expired or been terminated.
Registration Statement Effectiveness Condition
The registration statement on Form S-4 of which this prospectus is a part
must have become effective under the Securities Act and not be the subject of
any stop order or proceedings seeking a stop order.
NYSE Listing Condition
The shares of IP common stock issuable to Champion stockholders in the
offer and the merger must have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance.
Other Conditions of the Offer
The offer is also subject to the conditions that, at the time of acceptance
for exchange of Champion shares pursuant to the offer:
(1) There shall not have been issued by any federal, state or foreign court
or by any federal, state or foreign governmental or regulatory agency,
body or authority and be in effect a preliminary or permanent
injunction or other order which prohibits, restrains, restricts or
enjoins the consummation of the offer,
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(2) There shall not have been enacted, entered, promulgated or enforced by
any court or governmental authority any federal, state or foreign
statute, rule, regulation, executive order, decree or order of any kind
which prohibits, restrains, restricts or enjoins the consummation of
the offer or has the effect of making the offer illegal,
(3) There shall not have occurred any event that has had or could
reasonably be expected to have, individually or in the aggregate, a
material adverse effect on Champion and its subsidiaries, taken as a
whole,
(4) Champion shall not have breached or failed to perform in all material
respects any of its obligations under the merger agreement,
(5) (i) The representations and warranties of Champion contained in the
merger agreement that are qualified by reference to a material adverse
effect on Champion and its subsidiaries, taken as a whole, shall be
true when made or at any time prior to the consummation of the offer as
if made at and as of that time, or (ii) the representations and
warranties of Champion contained in the merger agreement that are not
so qualified shall be true when made or at any time prior to the
consummation of the offer as if made at and as of that time, except, in
the case of clause (ii) only, for such inaccuracies as are not
reasonably likely to, individually or in the aggregate, result in a
material adverse effect on Champion and its subsidiaries, taken as a
whole, and
(6) The merger agreement shall not have been terminated.
The conditions of the offer described above are solely for our benefit and
we may assert them regardless of the circumstances giving rise to any such
conditions, including any action or inaction by us. We may, in our sole
discretion, waive these conditions in whole or in part, other than the minimum
tender condition (which may only be waived with Champion's consent), the
regulatory approvals condition and the IP conditions relating to the absence of
an injunction and the effectiveness of the registration statement for the common
shares to be issued in the offer. The determination as to whether any condition
has been satisfied shall be in our good faith judgment and will be final and
binding on all parties. The failure by us at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed a continuing right which may be asserted at any time and
from time to time. Notwithstanding anything to the contrary in this prospectus,
we cannot and will not assert any of the conditions to the offer, other than
certain regulatory conditions as, and to the extent, permitted by applicable
rules and regulations of the SEC, at any time after the expiration date of the
offer. Notwithstanding the fact that we reserve the right to assert the failure
of a regulatory condition following acceptance for exchange but prior to
exchange in order to delay exchange or cancel our obligation to exchange
properly tendered Champion shares, we will either promptly exchange such
Champion shares or promptly return such Champion shares.
REGULATORY APPROVALS
Except as set forth herein, we are not aware of any licenses or regulatory
permits that appear to be material to the business of Champion and its
subsidiaries, taken as a whole, and that might be adversely affected by our
acquisition of Champion shares in the offer. In addition, except as set forth
herein, we are not aware of any filings, approvals or other actions by or with
any governmental authority or administrative or regulatory agency that would be
required for our acquisition or ownership of the Champion shares. Should any
such approval or other action be required, we expect to seek such approval or
action, except as described under "State Takeover Laws." Should any such
approval or other action be required, we cannot be certain that we would be able
to obtain any such approval or action without substantial conditions or that
adverse consequences might not result to Champion's or its subsidiaries'
businesses, or that certain parts of Champion's, IP's or any of their respective
subsidiaries' businesses might not have to be disposed of or held separate in
order to obtain such approval or action. In that event, we may not be required
to purchase any Champion shares in the offer.
State Takeover Laws. A number of states have adopted takeover laws and
regulations that purport to be applicable to attempts to acquire securities of
corporations that are incorporated in those states or that have
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substantial assets, stockholders, principal executive offices or principal
places of business in those states. To the extent that these state takeover
statutes purport to apply to the offer or the merger, we believe that those laws
conflict with U.S. federal law and are an unconstitutional burden on interstate
commerce. In 1982, the Supreme Court of the United States, in Edgar v. Mite
Corp., invalidated on constitutional grounds the Illinois Business Takeovers
Statute, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. The reasoning in that
decision is likely to apply to certain other state takeover statutes. In 1987,
however, in CTS Corp. v. Dynamics Corp. Of America, the Supreme Court of the
United States held that the State of Indiana could as a matter of corporate law
and, in particular, those aspects of corporate law concerning corporate
governance, constitutionally disqualify a potential acquiror from voting on the
affairs of a target corporation without the prior approval of the remaining
stockholders, as long as those laws were applicable only under certain
conditions. Subsequently, in TLX Acquisition Corp. v. Telex Corp., a federal
district court in Oklahoma ruled that the Oklahoma statutes were
unconstitutional insofar as they apply to corporations incorporated outside
Oklahoma, because they would subject those corporations to inconsistent
regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a federal district
court in Tennessee ruled that four Tennessee takeover statutes were
unconstitutional as applied to corporations incorporated outside Tennessee. This
decision was affirmed by the United States Court of Appeals for the Sixth
Circuit. In December 1988, a federal district court in Florida held, in Grand
Metropolitan Plc v. Butterworth, that the provisions of the Florida Affiliated
Transactions Act and Florida Control Share Acquisition Act were unconstitutional
as applied to corporations incorporated outside of Florida.
Article 16 of the NYBCL requires the bidder for the shares of a New York
corporation to file a registration statement with the attorney general and to
satisfy certain disclosure requirements.
Section 912 of the NYBCL prohibits any "business combination" (defined to
include a variety of transactions, including mergers, sales or dispositions of
assets, issuances of stock, liquidations, reclassifications and benefits from
the corporation, including loans or guarantees) with, involving or proposed by
any "interested stockholder" for a period of five years after the date on which
the interested stockholder became an interested stockholder. An "interested
stockholder" is defined generally as any person who, directly or indirectly,
beneficially owns 20% or more of the outstanding voting stock of a New York
corporation. After such five-year period, a business combination between a New
York corporation and such interested stockholder is prohibited unless either
certain "fair price" provisions are complied with or the business combination is
approved by a majority of the outstanding voting stock not beneficially owned by
such interested stockholder or its affiliates. The restrictions of the NYBCL do
not apply, however, to any business combination with an interested stockholder
if such business combination, or the purchase of stock by the interested
stockholder that caused such stockholder to become such, is approved by the
board of directors of the New York corporation prior to the date on which the
interested stockholder becomes such.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations that are incorporated, or have
substantial assets, shareholders, or whose business operations otherwise have
substantial economic effects in such states. Champion, directly or through
subsidiaries, conducts business in a number of states throughout the United
States, some of which may have enacted takeover laws as described above. Except
for those provisions of the NYBCL set forth above, IP and the Purchaser do not
believe that any such takeover statutes are applicable to the offer or the
merger and have not attempted to comply with any such state takeover statutes in
connection therewith.
IP, Purchaser and Champion have complied with Article 16 and Champion has
taken all actions necessary to ensure that Section 912 of the NYBCL will not
apply in connection with the offer or the merger. We reserve the right to
challenge the validity or applicability of any state law allegedly applicable to
the offer or the merger, and nothing herein nor any action that we take in
connection with the offer is intended as a waiver of that right. In the event
that it is asserted that one or more takeover statutes apply to the offer or the
merger, and it is not determined by an appropriate court that the statutes in
question do not apply or are invalid as applied to the offer or the merger, as
applicable, we may be required to file certain documents with, or receive
approvals from, the relevant state authorities, and we might be unable to accept
for payment or purchase Champion shares tendered in the offer or be delayed in
continuing or consummating the offer. In that case, we may not be obligated to
accept for purchase, or pay for, any Champion shares tendered.
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Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the "Antitrust
Division") and the FTC and certain waiting period requirements have been
satisfied. The purchase of Champion shares pursuant to the offer is subject to
such requirements.
Pursuant to the requirements of the HSR Act, we filed a Notification and
Report Form with respect to the offer with the Antitrust Division and the FTC on
April 27, 2000. On May 17, 2000, we received early termination of the 30-day
waiting period applicable to the purchase of Champion shares pursuant to the
offer, thereby concluding the Antitrust Division and FTC pre-merger review
process.
Private parties (including individual states) may also bring legal actions
under the antitrust laws. We do not believe that the consummation of the offer
will result in a violation of any applicable antitrust laws. However, there can
be no assurance that a challenge to the offer on antitrust grounds will not be
made, or if such a challenge is made, what the result will be. For a description
of certain conditions to the offer, including conditions with respect to
litigation and certain governmental actions and for certain termination rights
in connection with antitrust suits, see "Conditions of Our Offer."
Canadian Regulatory Considerations.
The Competition Act (Canada) (the "Act") generally requires pre-merger
notification to the Commissioner of Competition (the "Commissioner") of
transactions that exceed certain financial thresholds, and in the case of share
acquisitions, that exceed an additional voting interest threshold. If a
transaction is subject to the Act's notification requirements, notice must be
given to the Commissioner prior to the completion of the transaction and the
transaction may not be completed before the applicable waiting period has
expired. That waiting period may be either 14 or 42 days after the day on which
the Commissioner certifies the pre-merger notification to be complete, depending
upon the type of filing that is made, or in certain circumstances that is
required by the Commissioner.
Regardless of whether a merger transaction is notifiable under the Act, the
Commissioner may review that transaction to determine its likely impact on
competition. The Commissioner's review may extend beyond the pre-merger
notification waiting periods described above.
If the Commissioner determines that a merger transaction would likely
lessen or prevent completion substantially, the Commissioner may apply to the
Competition Tribunal, a specialized administrative body empowered to deal with
these matters, for an order to require, among other things, the disposition of
the Canadian assets or shares acquired (in the case of a completed merger), or
to prevent the acquisition of Canadian assets or shares (in the case of a
proposed transaction). The Tribunal also has the authority to grant interim
relief in appropriate circumstances.
Alternatively, the Commissioner may issue an "Advance Ruling Certificate"
to the effect that he would not have sufficient grounds on which to apply to the
Competition Tribunal under the merger provisions of the Act. Where an Advance
Ruling Certificate is issued, and the transaction to which it relates is
substantially completed within one year, the Commissioner cannot seek an order
of the Tribunal in respect of the transaction solely on the basis of information
that is the same or substantially the same as the information which formed the
basis for the issuance of the Advance Ruling Certificate. If the Commissioner
does not choose to issue an Advance Ruling Certificate, he may issue instead a
"no-action" advisory opinion to the effect that he does not intend to challenge
the transaction at that time but retains the authority to do so for three years
following the completion of the transaction.
We have filed our required notice with respect to the offer with the
Commissioner and, to the extent necessary, will observe any applicable waiting
period. Although we do not believe that the offer gives rise to substantive
concerns under the Act, there can be no assurance that a challenge to the offer
will not be made pursuant to the Act, or, if such a challenge is made, what the
outcome will be.
Under the Investment Canada Act, certain transactions involving the
acquisition of control of a Canadian business by a non-Canadian, which exceed
certain financial thresholds or involve certain industries, are subject
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to review and cannot be implemented unless the Minister responsible for the
Investment Canada Act (the "Minister") is satisfied that the transaction is
likely to be of net benefit to Canada.
If a transaction is not subject to review, a party is required only to
notify the Minister of the transaction 30 days following closing
("Notification").
We have concluded that only a post-closing Notification will be required
and we will make such Notification within 30 days following closing of the offer
as required.
Foreign Approvals. Champion owns property and conducts business in a
number of other foreign countries and jurisdictions. In connection with the
acquisition of the Champion shares in the offer or the merger, the laws of
certain of those foreign countries and jurisdictions may require the filing of
information with, or the obtaining of the approval or consent of, governmental
authorities in such countries and jurisdictions. The governments in those
countries and jurisdictions might attempt to impose additional conditions on
Champion's operations conducted in those countries and jurisdictions as a result
of the acquisition of the Champion shares in the offer or the merger. If such
approvals or consents are found to be required, we intend to make the
appropriate filings and applications. In the event such a filing or application
is made for the requisite foreign approvals or consents, we cannot be certain
that such approvals or consents will be granted and, if such approvals or
consents are received, we cannot be certain as to the date of those approvals or
consents. In addition, we cannot be certain that we will be able to cause
Champion or its subsidiaries to satisfy or comply with those laws or that
compliance or noncompliance will not have adverse consequences for Champion or
any subsidiary of Champion after purchase of the Champion shares pursuant to the
offer or the merger.
CERTAIN EFFECTS OF OFFER
Reduced Liquidity; Possible Delisting. The tender of Champion shares
pursuant to the offer will reduce the number of holders of Champion shares and
the number of Champion shares that might otherwise trade publicly and could
adversely affect the liquidity and market value of the remaining Champion shares
held by the public. Champion shares are listed and principally traded on the
NYSE. Depending on the number of Champion shares acquired pursuant to the offer,
following consummation of the offer, Champion shares may no longer meet the
requirements of the NYSE for continued listing. For example, published
guidelines of the NYSE indicate that the NYSE would consider delisting the
outstanding Champion shares if, among other things, (i) the number of publicly
held Champion shares (exclusive of holdings of officers, directors and members
of their immediate families and other concentrated holdings of 10 percent or
more) should fall below 600,000, (ii) the number of record holders of 100 or
more Champion shares should fall below 1,200 or (iii) the aggregate market value
of publicly held shares should fall below $5 million.
According to Champion, there were, as of May 16, 2000, approximately
96,902,738 Champion common shares outstanding, held by 13,548 holders of record.
If the NYSE were to delist the Champion shares, including after the
exchange of shares in the offer but prior to the merger, the market for them
could be adversely affected. It is possible that Champion shares would be traded
on other securities exchanges or in the over-the-counter market, and that price
quotations would be reported by such exchanges, or through The Nasdaq Stock
Market (which we refer to as "NASDAQ") or by other sources. The extent of the
public market for the Champion shares and the availability of such quotations
would, however, depend upon the number of holders and/or the aggregate market
value of the Champion shares remaining at such time, the interest in maintaining
a market in the Champion shares on the part of securities firms, the possible
termination of registration of Champion shares under the Securities Exchange Act
of 1934, as described below, and other factors.
Status as "Margin Securities." The Champion shares are presently "margin
securities" under the regulations of the Federal Reserve Board, which has the
effect, among other things, of allowing brokers to extend credit on the
collateral of Champion shares. Depending on the factors similar to those
described above with respect to listing and market quotations, following
consummation of the offer, the Champion shares may
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no longer constitute "margin securities" for the purposes of the Federal Reserve
Board's margin regulations, in which event the Champion shares would be
ineligible as collateral for margin loans made by brokers.
Registration Under the Exchange Act. Champion shares are currently
registered under the Exchange Act. Champion can terminate that registration upon
application to the SEC if the outstanding shares are not listed on a national
securities exchange and if there are fewer than 300 holders of record of
Champion shares. Termination of registration of the Champion shares under the
Exchange Act would reduce the information that Champion must furnish to its
stockholders and to the SEC and would make certain provisions of the Exchange
Act, such as the short-swing profit recovery provisions of Section 16(b) and the
requirement of furnishing a proxy statement in connection with stockholders
meetings pursuant to Section 14(a) and the related requirement of furnishing an
annual report to stockholders, no longer applicable with respect to Champion
shares. In addition, if Champion shares are no longer registered under the
Exchange Act, the requirements of Rule 13e-3 under the Exchange Act with respect
to "going-private" transactions would no longer be applicable to Champion.
Furthermore, the ability of "affiliates" of Champion and persons holding
"restricted securities" of Champion to dispose of such securities pursuant to
Rule 144 under the Securities Act may be impaired or eliminated. If registration
of the shares under the Exchange Act were terminated, they would no longer be
eligible for NYSE listing or for continued inclusion on the Federal Reserve
Board's list of "margin securities."
SOURCE AND AMOUNT OF FUNDS
We expect to obtain the funds necessary to finance the offer partially from
our internal resources and also from borrowings under the credit facility
described below. The offer is not conditioned upon any financing being obtained.
In addition, subject to market conditions, we may elect to sell debt securities
with various maturities in the capital markets.
We have received a commitment from Credit Suisse First Boston, New York
branch to provide financing that will be, together with our existing cash
resources, sufficient to consummate the offer and the merger, to pay related
costs and expenses and to refinance certain existing indebtedness of Champion.
Pursuant to a commitment letter (the "Commitment Letter"), Credit Suisse
First Boston, New York branch has agreed to (i) structure, arrange and syndicate
and (ii) commit to provide for, and serve as administrative agent and lead
arranger for financing in the principal amount of $6,000,000,000 (the "Credit
Facility"). Under the terms of the Commitment Letter, the Credit Facility would
be used (i) to finance all or a portion of (a) the cash consideration paid in
the offer, (b) on the date of the merger, the remaining cash consideration
payable in respect of the merger, if any, (c) the existing indebtedness of
Champion to the extent required to be refinanced in connection with the offer
and the merger and (d) the related fees and expenses (including payment of a
termination fee payable in connection with the termination by Champion of the
Champion-UPM merger agreement and (ii) after the date of the merger, for our
other general corporate purposes.
RELATIONSHIPS WITH CHAMPION
Except as set forth herein, neither we nor, to the best of our knowledge,
any of our directors, executive officers or other affiliates has any contract,
arrangement, understanding or relationship with any other person with respect to
any securities of Champion, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any such securities, joint ventures, loan or option arrangements, puts or
calls, guaranties of loans, guaranties against loss or the giving or withholding
of proxies. Except as described herein, there have been no contacts,
negotiations or transactions since January 1, 1996, between us or, to the best
of our knowledge, any of our directors, executive officers or other affiliates
on the one hand, and Champion or its affiliates, on the other hand, concerning a
merger, consolidation or acquisition, a tender offer or other acquisition of
securities, an election of directors, or a sale or other transfer of a material
amount of assets. Neither we, nor, to the best of our knowledge, any of our
directors, executive officers or other affiliates has since January 1, 1996 had
any transaction with Champion or any of its executive
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officers, directors or affiliates that would require disclosure under the rules
and regulations of the SEC applicable to the offer.
On April 17, 2000, we purchased 1,000 Champion shares at a price of
$47.750. On April 24, 2000, we purchased 230,100 Champion shares at a price of
$50.9765. Except for the foregoing, (i) neither we nor, to the best of our
knowledge, any of our directors, executive officers or other affiliates
beneficially owns or has any right to acquire, directly or indirectly, any
Champion shares and (ii) neither we nor, to the best of our knowledge, any of
our directors, executive officers or other affiliates has effected any
transaction in the Champion shares during the past 60 days.
ACCOUNTING TREATMENT
The merger of Champion and IP will be accounted for as a "purchase," as
such term is used under generally accepted accounting principles, commonly
referred to as "GAAP", for accounting and financial reporting purposes. Champion
will be treated as the acquired corporation for such purposes. Champion's
assets, liabilities and other items will be adjusted to their estimated fair
value on the closing date of the merger and combined with the historical book
values of the assets and liabilities of IP. Applicable income tax effects of
such adjustments will be included as a component of the combined company's
deferred tax asset or liability. The difference between the estimated fair value
of the assets, liabilities and other items (adjusted as discussed above) and the
purchase price will be recorded as an intangible asset and amortized against the
combined company's earnings over a 40-year period following completion of the
merger. For further information concerning the amount of goodwill to be recorded
in connection with the merger and the amortization thereof, see Note (d) of
Notes to the Pro Forma Condensed Combined Financial Statements (Unaudited) on
page .
IP has prepared the unaudited pro forma financial information contained in
this prospectus using the purchase accounting method to account for the offer
and the merger. See "Pro Forma Condensed Combined Financial Statements
(Unaudited)" on page .
FEES AND EXPENSES
IP has retained Credit Suisse First Boston Corporation to act as the Dealer
Manager in connection with the offer and to provide certain financial advisory
services to IP in connection with the offer and the merger. Credit Suisse First
Boston will receive customary compensation for these services and will be
reimbursed for out-of-pocket expenses, including reasonable expenses of counsel
and other advisors. We have agreed to indemnify Credit Suisse First Boston and
related persons against certain liabilities and expenses in connection with its
services as the Dealer Manager and financial advisor, including certain
liabilities and expenses under the federal securities laws. From time to time,
Credit Suisse First Boston Corporation and its affiliates may actively trade the
debt and equity securities of Champion for their own account or for the accounts
of customers and, accordingly, may hold a long or short position in such
securities.
We have retained Innisfree M&A Incorporated as Information Agent in
connection with the offer. The Information Agent may contact holders of Champion
shares by mail, telephone, telex, telegraph and personal interview and may
request brokers, dealers and other nominee stockholders to forward material
relating to the offer to beneficial owners of Champion shares. We will pay the
Information Agent reasonable and customary compensation for these services in
addition to reimbursing the Information Agent for its reasonable out-of-pocket
expenses. We have agreed to indemnify the Information Agent against certain
liabilities and expenses in connection with the offer, including certain
liabilities under the U.S. federal securities laws.
In addition, we have retained ChaseMellon Shareholder Services, L.L.C. as
the Exchange Agent. We will pay the Exchange Agent reasonable and customary
compensation for its services in connection with the offer, will reimburse the
Exchange Agent for its reasonable out-of-pocket expenses and will indemnify the
Exchange Agent against certain liabilities and expenses, including certain
liabilities under the U.S. federal securities laws.
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Except as set forth above, we will not pay any fees or commissions to any
broker, dealer or other person for soliciting tenders of Champion shares
pursuant to the offer. We will reimburse brokers, dealers, commercial banks and
trust companies and other nominees, upon request, for customary clerical and
mailing expenses incurred by them in forwarding offering materials to their
customers.
STOCK EXCHANGE LISTING
Our common stock is listed on the NYSE under the symbol "IP". We will make
an application to list on the NYSE the common stock that we will issue pursuant
to the offer and the merger.
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THE MERGER AGREEMENT
The following description of the merger agreement describes the material
terms of the agreement but does not purport to describe all the terms of the
agreement. The complete text of the merger agreement is attached as Annex A to
this prospectus. All shareholders are urged to read the merger agreement in its
entirety because it is the legal document that governs the offer and the merger.
THE OFFER
Terms of the Offer. The merger agreement provides for the commencement by
Purchaser of this offer to purchase all outstanding shares of Champion common
stock for shares of IP common stock having a value of $25, subject to the
limitation described below, and $50 in cash for each outstanding share of common
stock of Champion that is validly tendered and not properly withdrawn. The
merger agreement also provides that the number of shares of IP common stock into
which each share of Champion common stock will be converted in the offer will be
determined by dividing $25 by the average (rounded to the nearest 1/10,000) of
the volume weighted averages (rounded to the nearest 1/10,000) of the trading
prices of IP common stock on the New York Stock Exchange for the 15 trading days
randomly selected by lot by IP and Champion together from the 30 consecutive
trading days ending on the third trading day prior to the expiration date. The
merger agreement further provides that if Purchaser does not close the offer on
June 16, 2000, the initial expiration date, by virtue of the failure of any of
the antitrust regulatory conditions to the offer to be satisfied, IP and
Purchaser will pay to the holders of shares of Champion common stock cash
interest at a rate of 8.00% per annum (calculated on the basis of a 365 day
calendar year) on the $75 per share offer consideration from and after the
initial expiration date of the offer until the acceptance for payment of shares
of Champion common stock validly tendered and not properly withdrawn in the
offer.
The merger agreement prohibits Purchaser, without the consent of Champion,
from amending or waiving the minimum tender condition or amending the offer to
change the form of consideration to be paid, decreasing the price per share of
Champion common stock or the number of shares of Champion common stock sought in
the offer, imposing additional conditions to the offer, extending the expiration
date of the offer except as described below or making any other change which is
adverse to the holders of the shares of Champion common stock.
Mandatory Extensions of the Offer. If any of the conditions to the offer
is not satisfied or waived on any scheduled expiration date of the offer, at the
request of Champion, Purchaser will extend the offer, if such condition or
conditions could reasonably be expected to be satisfied, from time to time until
such conditions are satisfied or waived; provided that Purchaser is not required
to extend the offer beyond September 30, 2000.
Optional Extensions of the Offer. Purchaser will have the right to extend
the offer (i) for one or more periods (not in excess of 10 business days each)
but in no event ending later than September 30, 2000 if, at the scheduled or
extended expiration date of the offer, any of the conditions to the offer has
not been satisfied or waived, until such conditions are satisfied or waived and
(ii) for any period required by any rule, regulation, interpretation or position
of the SEC or its staff applicable to the offer or any period required by
applicable law.
Prompt Payment for Champion Shares after the Closing of the Offer. Subject
to the conditions of the offer, Purchaser will accept for payment and pay for,
as promptly as practicable after the expiration of the offer, all shares of
Champion common stock validly tendered and not properly withdrawn pursuant to
the offer.
THE MERGER
The Merger. The merger agreement provides that Purchaser will be merged
with and into Champion as soon as practicable following the satisfaction or
waiver of the conditions set forth in the merger agreement. Under the terms of
the merger agreement, at the closing of the merger, each share of Champion
common stock will be converted into the right to receive from Purchaser the same
per share consideration paid to holders of Champion common stock who exchanged
their Champion shares in the offer. Notwithstanding the
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foregoing, the merger consideration will not be payable in respect of Champion
shares held by Champion, IP or any of their respective subsidiaries.
Effective Time of the Merger. The merger will become effective upon the
filing of a certificate of merger with the Secretary of State of New York or
such later time as is agreed by Champion and IP and specified in the certificate
of merger. The filing of the certificate of merger will take place as soon as
practicable after satisfaction or waiver of the conditions described below under
"The Merger Agreement -- Conditions of the Merger."
CHAMPION BOARD OF DIRECTORS
Upon the acceptance for payment of shares of Champion common stock pursuant
to the offer, IP will be entitled to designate a number of directors (rounded up
to the next whole number) that equals the product of (i) the total number of
directors on Champion's board of directors and (ii) the percentage that the
number of shares beneficially owned by IP and Purchaser bears to the total
number of shares of Champion common stock. Until the merger has become
effective, Champion's board of directors will consist of at least two members
who were directors of Champion prior to the consummation of the offer. The
merger agreement provides that, prior to the effective time of the merger, the
affirmative vote of a majority of the continuing Champion directors will be
required to
- terminate the agreement on behalf of Champion,
- amend the agreement when such amendment requires approval of Champion's
board of directors,
- extend the time for performance of IP or Purchaser's obligations under
the merger agreement or
- approve any other action of Champion which adversely affects the holders
of Champion common stock.
TREATMENT OF CHAMPION STOCK OPTIONS AND RESTRICTED STOCK UNITS
The merger agreement provides that each outstanding option to purchase
shares of Champion common stock which has been granted under Champion's stock
plans, programs, arrangements and agreements, including those granted to the
executive officers of Champion, whether or not vested or exercisable, will be
cancelled in exchange for a single lump cash payment by IP at the effective time
of the merger in an amount equal to the product of (i) the number of shares of
Champion common stock subject to such option immediately prior to the effective
time of the merger and (ii) the excess, if any, of $75 over the exercise price
per share subject to such option.
The merger agreement also provides that each restricted stock unit granted
to an employee or former employee of Champion, whether or not vested,
outstanding immediately prior to the effective time of the merger shall be
cancelled in exchange for a single lump sum cash payment of $75, payable by IP
at the effective time of the merger.
COVENANTS AND REPRESENTATIONS AND WARRANTIES
Reasonable Best Efforts. The merger agreement provides that each of IP and
Champion will use its reasonable best efforts to take all actions necessary to
close the offer and the merger.
Conduct of Business Pending Merger. The merger agreement obligates
Champion, until the closing of the merger, to conduct its operations in the
ordinary and usual course of business consistent with its past practice. The
merger agreement expressly restricts the ability of Champion to engage in
certain material transactions, such as purchases and sales of assets or the sale
or redemption of outstanding securities of Champion, without the prior written
consent of IP, which consent will not be unreasonably withheld or delayed.
No Solicitation of Alternative Transactions. The merger agreement provides
that, except in the circumstances described below, Champion will not (i)
directly or indirectly solicit, facilitate, initiate or
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encourage the making or submission of, any Takeover Proposal (as defined below),
(ii) enter into any agreement, arrangement or understanding with respect to any
Takeover Proposal or enter into any agreement, arrangement or understanding
requiring it to abandon, terminate or fail to consummate the offer or the
merger, (iii) initiate or participate in any way in any discussions or
negotiations regarding, or furnish or disclose to any third party any
information with respect to, or take any other action to facilitate or in
furtherance of any inquiries or the making of any proposal that constitutes, or
could reasonably be expected to lead to, any Takeover Proposal, or (iv) grant
any waiver or release under any standstill or similar agreement with respect to
any class of Champion's equity securities. However, the merger agreement does
provide that prior to the closing of the offer, in response to an unsolicited
Takeover Proposal that did not result from a breach by Champion of its
obligations not to solicit alternative transactions and following delivery to IP
of notice of the Takeover Proposal, Champion may participate in discussions or
negotiations with or furnish information (pursuant to a confidentiality
agreement with customary terms) to any third party which makes a bona fide
written Takeover Proposal if a majority of Champion's board of directors (i)
reasonably determines in good faith (after consultation with an independent,
nationally recognized investment bank) that taking such action would be
reasonably likely to lead to the delivery to Champion of a Superior Proposal (as
defined below) and (ii) determines in good faith (after receiving the advice of
outside legal counsel) that it is necessary to take such actions(s) in order to
comply with its fiduciary duties under applicable law.
"Takeover Proposal" means any inquiry, proposal or offer from any third
party relating to (i) any direct or indirect acquisition or purchase of 15% or
more of the assets of Champion or any of its significant subsidiaries or 15% or
more of any class of equity securities of Champion or any of its significant
subsidiaries, (ii) any tender offer or exchange offer that, if consummated,
would result in any third party beneficially owning all or any portion of any
class of equity securities of Champion or any of its significant subsidiaries or
(iii) any merger, consolidation, business combination, sale of all or any
substantial portion of the assets, recapitalization, liquidation or a
dissolution of, or similar transaction of Champion or any of its significant
subsidiaries other than the offer or the merger.
"Superior Proposal" means a bona fide written Takeover Proposal made by a
third party to purchase at least two-thirds of the outstanding equity securities
of Champion pursuant to a tender offer, exchange offer, merger or other business
combination (i) on terms which a majority of Champion's board of directors
determines in good faith (after consultation with an independent, nationally
recognized investment bank) to be superior to Champion and its stockholders from
a financial point of view (taking into account, among other things, all legal,
financial, regulatory and other aspects of the proposal and identity of the
offeror) as compared to the transactions contemplated by the merger agreement
and any alternative proposed by IP in accordance with the termination right
described below under "-- Termination of the Merger Agreement -- Termination by
Champion" below and (ii) which is reasonably capable of being consummated.
Duty to Recommend the Offer and the Merger. The merger agreement prohibits
Champion's board of directors from approving or recommending, or proposing to
approve or recommend, any Takeover Proposal or approving, recommending or
causing Champion to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement related to any Takeover
Proposal. However, the merger agreement does provide that prior to the closing
of the offer Champion may take any of such actions in connection with the
termination of the merger agreement as described below under "-- Termination of
the Merger Agreement -- Termination by Champion" if a third party makes a
Superior Proposal.
Antitrust Laws. Each of the parties to the merger agreement will take all
actions necessary to make the filings required under any applicable antitrust
laws in connection with the merger agreement and the transactions contemplated
by the merger agreement. The merger agreement provides that each of IP and
Champion will use its "reasonable best efforts" to resolve any objections which
may be asserted with respect to the transactions contemplated by the merger
agreement under any applicable antitrust law. As applied to both IP and
Champion, "reasonable best efforts" means that each party will
- file with the appropriate antitrust authorities at the earliest
practicable date a notification and report form with respect to the
transactions contemplated by the merger agreement,
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- substantially comply with a formal request for information and documents
from an antitrust authority at the earliest possible date following such
request, and
- oppose vigorously any litigation relating to the offer, the merger or any
other transaction contemplated by the merger agreement, including
appealing any adverse court order; provided that if any order, injunction
or decree prohibiting the offer, merger or other transactions
contemplated by the merger agreement remains in effect on September 30,
2000, then IP may terminate the merger agreement in accordance with its
provisions.
In addition, if Champion has complied with the above obligations and has
not frustrated or impeded IP's strategy or negotiating positions with any
antitrust authority, "reasonable best efforts" under the merger agreement
requires IP and Purchaser to accept an order requiring IP, Purchaser or Champion
to agree to commit to divest, hold separate, offer for sale, abandon, limit its
operations of or take similar action with respect to any assets or business
interests of it as are necessary to consummate the offer and merger. However,
the merger agreement does not require IP or Purchaser to comply with such order
of disposition which, if complied with, could reasonably be expected to have a
material adverse effect on IP.
Employee Benefits. See "The Offer -- Interests of Officers and Directors
in the Offer and the Merger".
Representations and Warranties. The merger agreement contains a number of
customary representations and warranties relating to each of the parties and
their ability to consummate the offer and the merger. All representations and
warranties of each party expire at the closing of the merger.
CONDITIONS OF THE OFFER
See "The Offer -- Conditions of Our Offer".
CONDITIONS OF THE MERGER
The obligations of IP, Purchaser and Champion to consummate the merger are
subject to the satisfaction of the following conditions:
- To the extent required by applicable law the merger agreement shall have
been approved and adopted by the Champion stockholders,
- No provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the
merger,
- IP common stock to be issued in the merger shall have been authorized for
listing on the NYSE, subject to official notice of issuance,
- The registration statement on Form S-4 relating to the merger shall have
become effective under the Securities Act and not be the subject of any
stop order or proceedings seeking a stop order, and
- Purchaser shall have purchased shares of Champion common stock in the
offer.
TERMINATION OF THE MERGER AGREEMENT
Termination by Mutual Agreement. The merger agreement may be terminated at
any time prior to the closing of the merger by mutual written consent of IP and
Champion.
Termination by either IP or Champion. The merger agreement may be
terminated by either IP or Champion if:
(1) the offer has not been consummated on or before September 30, 2000 (the
"Termination Date"), unless the failure to consummate the offer is the
result of a material breach or failure to fulfill a material obligation
of the merger agreement by the party seeking termination, or
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(2) any governmental authority shall have issued an order, decree or ruling
or taken any other action permanently restricting, enjoining,
restraining or otherwise prohibiting the closing of the offer or the
merger, and such order, decree, ruling or other action shall have
become final and nonappealable.
Termination by IP. The merger agreement may be terminated at any time
prior to the closing of the offer by IP if:
(1) Champion breaches in any material respect any representation, warranty,
covenant or other agreement contained in the merger agreement, which
would give rise to the failure of any of the conditions set forth in
paragraphs (4) and (5) under "The Offer -- Conditions of Our Offer --
Other Conditions of the Offer" and cannot be or has not been cured
prior to the Termination Date, or
(2) (i) Champion or Champion's board of directors (w) enters into any
agreement to effect any Takeover Proposal other than the offer or the
merger, (x) amends, conditions, qualifies, withdraws or modifies, or
proposes or resolves to do so, in a manner adverse to IP, its approval
and recommendation of the offer and the merger, or (y) approves or
recommends, or proposes to approve or recommend, any Takeover Proposal
other than the offer or the merger, or (ii) Champion or Champion's
board of directors resolves to do any of the foregoing; or
(3) Champion breaches any of its obligations under "Covenants and
Representations and Warranties -- No Solicitation of Alternative
Transactions" above, "Covenants and Representations and
Warranties -- Duty to Recommend the Offer and the Merger" above or
"-- Termination by Champion" below.
Termination by Champion. The merger agreement may be terminated at any
time prior to the closing of the offer by Champion if a Superior Proposal is
received by Champion and the Champion board of directors reasonably determines
in good faith (after receiving the advice of outside legal counsel) that it is
necessary to terminate the merger agreement and enter into an agreement to
effect the Superior Proposal to comply with its fiduciary duties under
applicable law; provided that Champion may not terminate the merger agreement
pursuant to the right described in this paragraph unless and until: (i) three
business days have elapsed following delivery to IP of a written notice of such
determination by the Champion board of directors and during such three business
day period Champion has fully cooperated with IP, including, without limitation,
informing IP of the terms and conditions of such Superior Proposal, and the
identity of the third party making such Superior Proposal, with the intent of
enabling IP and Champion to agree to a modification of the terms and conditions
of the merger agreement so that the offer and the merger may be effected; (ii)
at the end of such three business day period the Takeover Proposal continues to
constitute a Superior Proposal and the Champion board of directors confirms its
determination (after receiving the advice of outside legal counsel) that it is
necessary to terminate the merger agreement and enter into an agreement to
effect the Superior Proposal to comply with its fiduciary duties under
applicable law; and (iii) (x) at or prior to such termination, IP receives all
fees and expenses described under "Termination Fees" below and (y) immediately
following such termination Champion enters into a definitive acquisition, merger
or similar agreement to effect the Superior Proposal.
TERMINATION FEES
Termination Fees Payable by Champion to IP. In the event that the merger
agreement is terminated by IP as described under "-- Termination of the Merger
Agreement -- Termination by IP" (other than as described in clause (i)(x) of
paragraph (2) of such section) above or by Champion as described under
"-- Termination of the Merger Agreement -- Termination by Champion" above, then
Champion shall (i) reimburse IP for all of its Expenses (as defined below) and
(ii) pay to IP in immediately available funds a termination fee in an amount
equal to $300 million (the "Termination Fee").
If the merger agreement is terminated by IP or Champion as described in
paragraph (1) under "-- Termination of the Merger Agreement -- Termination by
either IP or Champion" above and (x) a Takeover Proposal has been made and
publicly announced or communicated to Champion's stockholders after
42
<PAGE> 48
the date of the merger agreement and prior to the Termination Date and, to the
extent applicable, (y) concurrently with or within twelve (12) months of the
date of such termination a Third Party Acquisition Event occurs, then Champion
shall (i) within one business day of the date of termination as described in the
first bullet point under "-- Termination of the Merger Agreement -- Termination
by either IP or Champion" above (A) pay to IP 50% of the Termination Fee and (B)
reimburse IP for all of its Expenses, and (ii) within one business day of the
occurrence of such a Third Party Acquisition Event pay to IP 50% of the
Termination Fee.
If the merger agreement is terminated by IP as described under clause
(i)(x) of paragraph (2) under "-- Termination of the Merger
Agreement -- Termination by IP" above, then (i) Champion shall (A) pay to IP 50%
of the Termination Fee and (B) reimburse IP for all of its Expenses and (ii) if
concurrently with or within 12 months after such termination a Third Party
Acquisition Event occurs, then Champion shall pay to IP 50% of the Termination
Fee within one business day of the occurrence of such a Third Party Acquisition
Event.
"Expenses" means documented and reasonable out-of-pocket fees and expenses
up to a maximum aggregate amount of $10 million incurred or paid in connection
with the merger or the consummation of any of the transactions contemplated by
the merger agreement, including, but not limited to, all filing fees, printing
fees and reasonable fees and expenses of law firms, commercial banks, investment
banking firms, accountants, experts and consultants.
"Third Party Acquisition Event" means (i) the consummation of a Takeover
Proposal involving the purchase of a majority of either the equity securities of
Champion or of the consolidated assets of Champion and its subsidiaries, taken
as a whole, or any such transaction that, if it had been proposed prior to the
termination of the merger agreement would have constituted a Takeover Proposal
or (ii) the entering into by Champion or any of its subsidiaries of a definitive
agreement with respect to any such transaction.
AMENDMENTS
The merger agreement may be amended by action taken by IP, Purchaser and
Champion at any time prior to the closing of the merger. However, no amendment
may be made which by law requires further approval by the shareholders of
Champion without such further approval. The merger agreement provides that
following the closing of the offer, any amendment of the merger agreement, any
termination of the merger agreement by Champion, any extension by Champion of
the time for the performance of any of the obligations or other acts of IP or
Purchaser or waiver of any of Champion's rights under the merger agreement will
require the concurrence of a majority of the Champion directors then in officer
who neither were designated by Purchaser nor are Champion employees.
43
<PAGE> 49
INTERESTS OF CERTAIN PERSONS
The information contained in the Information Statement attached as Schedule
I to the Schedule 14D-9 of Champion dated May 19, 2000 is incorporated herein by
reference. Each material agreement, arrangement or understanding and any actual
or potential conflict of interest between Champion or its affiliates and
Champion's executive officers, directors or affiliates, or between Champion or
its affiliates and IP or the Purchaser or their respective executive officers,
directors or affiliates, is either incorporated herein by reference as a result
of the previous sentence or set forth below.
Treatment of Options and Restricted Stock Units. The merger agreement
provides that each outstanding option to purchase Champion shares which has been
granted under Champion's stock plans, programs, arrangements and agreements,
including those granted to the executive officers of Champion, whether or not
vested or exercisable, will be cancelled in exchange for a single lump cash
payment by IP at the effective time of the merger in an amount equal to the
product of the number of Champion shares subject to such option immediately
prior to the effective time of the merger and the excess, if any, of $75 over
the exercise price per share of such option. The aggregate cash value (measured
by calculating the difference between $75 per share and the weighted average
exercise price) for all outstanding options held by Champion's executive
officers is approximately $30,000,000.
The merger agreement also provides that each restricted stock unit granted
to an employee or former employee of Champion, whether or not vested,
outstanding immediately prior to the effective time of the merger shall be
cancelled in exchange for a single lump sum cash payment of $75, payable by IP
at the effective time of the merger.
Employment and Severance Agreements. The merger will constitute a "change
in control" of Champion within the meaning of Champion's employment or severance
agreements with fourteen Champion executives. All of these agreements provide
for the payment in a lump sum of the following amounts if the executive is
terminated without cause (as defined in the relevant employment or severance
agreement) within three years after a change in control of Champion: (1)
severance pay and medical, dental and disability coverage, for two years in the
event of certain types of terminations or three years (except with respect to
one executive, who will only receive benefits measured by a deemed severance
period of two years) in the event of other types of terminations; (2) except
with respect to one executive, the present value of all of the executive's
retirement benefits, other than the portion attributable to Champion's qualified
pension plan, after providing credit for two additional years of service in the
event of certain types of terminations or three additional years of service in
the event of other types of terminations; and (3) an amount sufficient to make
the executive whole with respect to any applicable excise tax on benefits
received in connection with a change in control. In addition, Champion would be
required to pay the executive's legal expenses if Champion does not make the
required payments under the agreements.
Each agreement further provides that Champion will fund the foregoing
amounts through a trust when a potential change in control occurs. A potential
change in control occurred in connection with the signing of the Champion-UPM
merger agreement. Accordingly, Champion has previously placed into trust
approximately $159 million to fund its potential payment obligations. It is
anticipated that an additional approximately $40 million will be required
largely as a result of the treatment of options and restricted stock units in
the merger agreement.
With respect to nine of the fourteen Champion executives, the merger
agreement provides that, upon certain terminations of employment, those
executives will receive benefits measured by a deemed severance period of three
years (except with respect to one executive, who will receive benefits measured
by a deemed severance period of two years); provided that (1) such executive
continues to be employed by Champion after the closing date of the merger and
does not terminate his employment prior to December 31, 2000, (2) the date of
termination of such executive shall be at the election of IP if such termination
occurs before December 31, 2000, (3) such executive agrees that he will not
knowingly make any statement or take any action that would disparage or
otherwise harm IP, Champion or their respective businesses or reputations or
that of their officers, directors or shareholders and (4) such executive agrees
that until the earlier of December 31, 2000 or the termination of his employment
at the election of IP, he will fully cooperate with IP
44
<PAGE> 50
by providing it with such information about Champion (and other companies to the
extent such information is not covered by a confidentiality agreement) as it may
reasonably request and will use his reasonable best efforts to take all actions
necessary or desirable to effect an orderly and expeditious integration of
Champion and IP after the closing of the merger.
Deferred Compensation Plan. The merger agreement provides that IP will
honor all accrued obligations under Champion's deferred compensation and
supplemental retirement plans. Each unit of deferred compensation or
supplemental savings which is measured by, or deemed invested in, a share of
Champion common stock (a "Phantom Share") will, if issued under a plan which
gives the participants no investment alternatives, be automatically converted
into a number of shares of IP phantom stock equal to the sum of (1) $50 divided
by the average IP trading price for the 15 days during the pricing period prior
to the expiration date and (2) the exchange ratio for the stock portion of the
merger consideration. If a Phantom Share was issued under a plan which gives
participants investment alternatives, then (1) one-third of each Phantom Share
will automatically be converted into the number of phantom shares of IP common
stock equal to the exchange ratio for the stock portion of the merger
consideration; and (2) two-thirds of each Phantom Share will automatically be
deemed to be converted into $50 in cash available for alternative deemed
investments under the relevant plan.
Severance Plans. The merger agreement provides that IP will honor
Champion's severance policy in effect as of the effective time of the merger
through at least December 31, 2001. In addition, for at least two years
following the merger, IP will honor the Severance Plan for Key Employees, which
currently contains up to 201 participants. For at least one year following the
merger, IP will also honor the Reorganization Severance Plan which Champion will
establish prior to the effective time of the merger. This plan will cover
approximately 5,600 nonrepresented salaried and hourly employees, excluding any
employees who have individual agreements with Champion with respect to
severance.
Champion Benefit Plans. Pursuant to the terms of the merger agreement, IP
has agreed that, at least through December 31, 2001, all current and former
employees of Champion will be provided with salary and benefits under employee
benefit plans with terms that are at least as favorable, in the aggregate, as
those currently provided by Champion. Champion will also continue to honor
certain life insurance plans and agreements for its executive officers.
Bonus Plans. The merger agreement provides that Champion will pay a pro
rata bonus to certain of its employees, including its executive officers, with
respect to their employment with Champion during the year 2000 through the
effective time of the merger. If an employee is not terminated on or prior to
December 31, 2000, this bonus will be payable on or prior to February 28, 2001
in accordance with IP's standard policies in effect for year 2000 bonuses;
provided that the employee has not voluntarily terminated his or her employment
on or before the bonus payment date. If an employee is terminated without cause
(as defined in Champion's Severance Plan for Key Employees) prior to December
31, 2000, then the bonus will be payable within five days of termination. This
bonus amount will be determined by Champion in a manner consistent with past
practice and shall be reviewed with and be reasonably acceptable to IP.
Certain of Champion's employees, including its executive officers, will
also receive a pro rata bonus with respect to their employment with Champion or
IP during the year 2000 from the effective time of the merger through December
31, 2000; provided that similarly situated employees of IP participate in IP's
bonus plans. If an employee (1) is not terminated on or prior to December 31,
2000 and has not voluntarily terminated his or her employment on or before the
bonus payment date or (2) is terminated without cause prior to December 31,
2000, then this bonus will be payable on or prior to February 28, 2001 in
accordance with IP's standard policies in effect for year 2000 bonuses. This
bonus will be reasonably determined by IP by application of (1) Champion's
targets and (2) IP's performance measures, each as in effect on May 12, 2000.
Retention Plan. In addition, Champion will establish a retention plan for
certain of its employees. This plan will have an aggregate cost of up to
$11,500,000 and will include participants who are determined as reasonably and
mutually acceptable to IP and Champion. Payment under this plan will be made to
Champion's employees who are employed by Champion at the first anniversary of
the effective time of the merger or who have previously been terminated without
cause, terminated as a result of death or disability or
45
<PAGE> 51
constructively terminated. A participant's payment will be equal to 50% of his
or her salary as in effect immediately prior to the effective time of the
merger.
Directors' and Officers' Insurance; Indemnification. The merger agreement
provides that for a period of six years from the effective time of the merger,
the surviving corporation will maintain in effect Champion's existing directors'
and officers' liability insurance covering those persons who were covered under
such insurance on May 12, 2000 (the "Indemnified Parties"); provided that IP is
not required to expend an amount in excess of 225% of the annual premiums
currently paid by Champion for such insurance. If such insurance coverage is not
otherwise available, IP will cause its directors' and officers' liability
insurance then in effect to cover those persons who are covered on May 12, 2000
with respect to those matters covered by Champion's directors' and officers'
liability policy.
The surviving corporation of the merger will also indemnify all Indemnified
Parties to the fullest extent permitted by applicable law with respect to all
acts and omissions arising out of such individuals' service as officers,
directors, employees or agents of Champion or any of its subsidiaries or as
trustees or fiduciaries of any plan for the benefit of employees of Champion or
any of its subsidiaries occurring prior to the effective time of the merger,
including the transactions contemplated by the merger agreement. In the event
that any Indemnified Party becomes involved in any action, proceeding or
investigation in connection with any matter occurring prior to the effective
time of the merger, the surviving corporation will pay, as incurred, such
Indemnified Party's reasonable legal and other expenses (including the cost of
any investigation and preparation) incurred in connection therewith. Subject to
certain notice and cooperation provisions, the surviving corporation of the
merger will pay all reasonable expenses, including attorneys' fees, that may be
incurred by any Indemnified Party in enforcing the indemnification provisions of
the merger agreement or any action involving an Indemnified Party resulting from
the transactions contemplated by the merger agreement.
46
<PAGE> 52
COMPARATIVE STOCK PRICES AND DIVIDENDS
IP common stock is listed and traded on the NYSE under the symbol "IP."
Champion common stock is listed and traded on the NYSE under the symbol "CHA."
The following table sets forth, for the periods indicated, the high and low
sales prices per share of IP common stock and Champion common stock as reported
on the NYSE Composite Tape, and the quarterly cash dividends per share declared
with respect thereto.
<TABLE>
<CAPTION>
INTERNATIONAL PAPER COMMON STOCK CHAMPION COMMON STOCK
---------------------------------- ------------------------
HIGH LOW DIVIDENDS(A) HIGH LOW DIVIDENDS
------ ------ -------------- ---- --- ---------
<S> <C> <C> <C> <C> <C> <C>
1998
First Quarter............................ 52 5/8 40 7/8 $0.26 57 1/2 43 5/8 $0.05
Second Quarter........................... 55 1/4 42 1/2 0.26 58 7/16 44 3/4 0.05
Third Quarter............................ 49 3/8 35 1/2 0.26 49 15/16 29 1/2 0.05
Fourth Quarter........................... 49 3/16 40 3/16 0.27 44 1/2 25 11/16 0.05
1999
First Quarter............................ 47 1/4 39 1/2 $0.26 45 33 3/8 $0.05
Second Quarter........................... 59 1/2 42 11/16 0.25 61 3/4 41 0.05
Third Quarter............................ 56 1/16 46 15/16 0.25 64 1/2 47 9/16 0.05
Fourth Quarter........................... 57 11/16 43 9/16 0.25 64 48 9/16 0.10
2000
First Quarter............................ 58 5/8 33 3/8 $0.25 66 47 11/16 $0.15
Second Quarter (through May 12, 2000).... 43 5/8 36 3/4 0.25 73 3/8 49 7/8 --
</TABLE>
- ---------------
(a) IP's annual dividend has remained at $1.00 per common share since 1996.
However, cash dividends declared per common share have been restated to
include dividends declared by Union Camp Corporation, a company acquired by
IP in 1999 in a transaction accounted for as a pooling-of-interests.
On May 12, 2000, the last trading day prior to the announcement of the
execution of the merger agreement, the last sales price of Champion common stock
was $70 1/2 per share and the last sales price of IP common stock was $36 7/8
per share, as reported on the NYSE Composite Tape. On May 17, 2000, the most
recent practicable trading day prior to the printing of this prospectus, the
last sales price of Champion common stock was $73 1/4 per share and the last
sales price of IP common stock was $39 1/16 per share.
The market prices of shares of Champion common stock and IP common stock
are subject to fluctuation. As a result, Champion and IP shareholders are urged
to obtain current market quotations.
On May 16, 2000, there were approximately 13,548 holders of record of
Champion common stock and approximately 32,268 holders of record of IP common
stock.
IP DIVIDEND POLICY
The holders of IP common stock receive dividends if and when declared by
the IP board of directors out of funds legally available therefor. IP expects to
continue paying quarterly cash dividends on IP common stock. However, IP cannot
be certain that its dividend policy will remain unchanged after completion of
the merger. The declaration and payment of dividends after the merger will
depend upon business conditions, operating results, capital and reserve
requirements and the IP board of directors' consideration of other relevant
factors.
47
<PAGE> 53
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The unaudited pro forma condensed combined financial information presented
herein gives effect to the merger of IP and Champion. The Unaudited Pro Forma
Condensed Combined Balance Sheet combines the historical balance sheets of IP
and Champion as if the merger occurred as of March 31, 2000, after giving effect
to the purchase accounting and the other adjustments described in the notes
thereto. The Unaudited Pro Forma Condensed Combined Statements of Earnings for
the three months ended March 31, 2000 and the year ended December 31, 1999
assume that the merger occurred on January 1, 1999. The pro forma information
has been prepared assuming for purposes of these calculations that the IP share
price will equal $36.836, the final sales price on the NYSE Composite Tape on
May 12, 2000 and, therefore, the stock consideration for each of Champion's
common shares will be equal to .6787 shares of IP common stock, or an aggregate
of approximately 65.6 million shares of IP common stock.
The unaudited pro forma combined financial statements and accompanying
notes reflect the application of the purchase method of accounting. Under this
method of accounting, the purchase price will be allocated to the assets
acquired and liabilities assumed based on their estimated fair values at the
effective time of the merger. As described in the accompanying notes, estimates
of the fair values of Champion and its subsidiaries' assets and liabilities have
been combined with the recorded values of the assets and liabilities of IP and
its subsidiaries. However, changes to the adjustments included in the unaudited
pro forma condensed combined financial statements are expected as evaluations of
assets and liabilities are completed and as additional information becomes
available. In addition, the results of operations of Champion subsequent to
March 31, 2000 will affect the allocation of the purchase price. Accordingly,
the final pro forma combined amounts will differ from those set forth in the
unaudited pro forma condensed combined financial statements.
The Unaudited Pro Forma Condensed Combined Statements of Earnings exclude
any non-recurring costs of IP acquiring Champion. These amounts cannot be
determined until the merger is completed. IP expects to achieve certain
reductions in costs subsequent to the merger as a result of the combination and
consolidation of the operations of IP and Champion. To comply with the SEC's pro
forma reporting rules, the cost reductions reflected in the accompanying
Unaudited Pro Forma Condensed Combined Statements of Earnings have been limited
to specific salary and benefit costs that are expected to be eliminated after
the merger.
The unaudited pro forma condensed combined financial statements are
intended for informational purposes only and are not necessarily indicative of
the future financial position or future results of operations of the combined
company, or of the financial position or results of operations of the combined
company that would have actually occurred had the merger been in effect as of
the date or for the periods presented. These unaudited pro forma condensed
combined financial statements and the accompanying notes should be read in
conjunction with the consolidated financial statements, including accompanying
notes, of IP and Champion included in the documents described under "Where You
Can Find More Information."
48
<PAGE> 54
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
FOR THE QUARTER ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
INTERNATIONAL
PAPER CHAMPION PRO FORMA PRO FORMA
(HISTORICAL) (HISTORICAL) ADJUSTMENTS COMBINED
------------- ------------ ----------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
NET SALES................................. $6,371 $1,368 $ (28)(a) $7,711
------ ------ ----- ------
COSTS AND EXPENSES
Cost of products sold................... 4,564 1,087 (163)(b) 5,488
Selling and administrative expenses..... 521 88 (28)(c) 581
Depreciation and amortization........... 383 118(d) 501
Distribution expenses................... 266 63(e) 329
Taxes other than payroll and income
taxes................................ 63 63
Equity (earnings) losses from investment
in Scitex............................
Merger integration costs................ 8 8
Restructuring and other charges.........
Environmental remediation charge........
Provision for legal reserves............
------ ------ ----- ------
TOTAL COSTS AND EXPENSES.................. 5,805 1,175 (10) 6,970
Reversals of reserves no longer
required.............................
------ ------ ----- ------
EARNINGS BEFORE INTEREST, INCOME TAXES,
MINORITY INTEREST AND EXTRAORDINARY
ITEM.................................... 566 193 (18) 741
Interest expense, net................... 131 50 96(f) 277
Other (income) expense, net............. (6) (6)
------ ------ ----- ------
EARNINGS BEFORE INCOME TAXES, MINORITY
INTEREST AND EXTRAORDINARY ITEM......... 435 149 (114) 470
Income tax provision (benefit).......... 136 51 (36)(g) 151
Minority interest expense, net of
taxes................................ 55 55
------ ------ ----- ------
EARNINGS BEFORE EXTRAORDINARY ITEM........ $ 244 $ 98 $ (78) $ 264
====== ====== ===== ======
EARNINGS PER COMMON SHARE BEFORE --
EXTRAORDINARY ITEM...................... $ 0.59 $ 0.55(h)
====== ======
EARNINGS PER COMMON SHARE BEFORE --
EXTRAORDINARY ITEM -- ASSUMING
DILUTION................................ $ 0.59 $ 0.55(h)
====== ======
AVERAGE SHARES OF COMMON STOCK
OUTSTANDING............................. 413.5 479.0
====== ======
AVERAGE SHARES OF COMMON STOCK
OUTSTANDING -- ASSUMING DILUTION........ 423.0 488.5
====== ======
</TABLE>
The accompanying notes are an integral part of these
Unaudited Pro Forma Condensed Combined Financial Statements.
49
<PAGE> 55
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
INTERNATIONAL
PAPER CHAMPION PRO FORMA PRO FORMA
(HISTORICAL) (HISTORICAL) ADJUSTMENTS COMBINED
------------- ------------ ----------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
NET SALES.................................... $24,573 $5,268 $(104)(a) $29,737
------- ------ ----- -------
COSTS AND EXPENSES
Cost of products sold...................... 18,105 4,417 (659)(b) 21,863
Selling and administrative expenses........ 2,083 375 (110)(c) 2,348
Depreciation and amortization.............. 1,520 497(d) 2,017
Distribution expenses...................... 1,098 250(e) 1,348
Taxes other than payroll and income
taxes................................... 226 226
Equity (earnings) losses from investment in
Scitex.................................. (5) (5)
Merger integration costs................... 255 255
Restructuring and other charges............ 298 298
Environmental remediation charge........... 10 10
Provision for legal reserves............... 30 30
------- ------ ----- -------
TOTAL COSTS AND EXPENSES..................... 23,620 4,792 (22) 28,390
Reversals of reserves no longer required... 36 36
------- ------ ----- -------
EARNINGS BEFORE INTEREST, INCOME TAXES,
MINORITY INTEREST AND EXTRAORDINARY ITEM... 989 476 (82) 1,383
Interest expense, net...................... 541 243 398(f) 1,182
Other (income) expense, net................ (89) (89)
------- ------ ----- -------
EARNINGS BEFORE INCOME TAXES AND MINORITY
INTEREST................................... 448 322 (480) 290
Income tax provision (benefit)............. 86 85 (154)(g) 17
Minority interest expense, net of taxes.... 163 163
------- ------ ----- -------
EARNINGS BEFORE EXTRAORDINARY ITEM........... $ 199 $ 237 $(326) $ 110
======= ====== ===== =======
EARNINGS PER COMMON SHARE -- BEFORE
EXTRAORDINARY ITEM......................... $ 0.48 $ 0.23(h)
======= =======
EARNINGS PER COMMON SHARE BEFORE
EXTRAORDINARY ITEM -- ASSUMING DILUTION.... $ 0.48 $ 0.23(h)
======= =======
AVERAGE SHARES OF COMMON STOCK OUTSTANDING... 413.0 478.1
======= =======
AVERAGE SHARES OF COMMON STOCK OUTSTANDING --
ASSUMING DILUTION.......................... 416.1 481.2
======= =======
</TABLE>
The accompanying notes are an integral part of these
Unaudited Pro Forma Condensed Combined Financial Statements.
50
<PAGE> 56
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AT MARCH 31, 2000
<TABLE>
<CAPTION>
INTERNATIONAL
PAPER CHAMPION PRO FORMA PRO FORMA
(HISTORICAL) (HISTORICAL) ADJUSTMENTS COMBINED
------------- ------------ ----------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and temporary investments............. $ 1,574 $ 287 $ $ 1,861
Accounts and notes receivable, net......... 3,409 551 (3)(i) 3,957
Inventories................................ 3,306 473 51(j) 3,830
Other current assets....................... 384 100 215(k) 699
------- ------ ------- -------
TOTAL CURRENT ASSETS......................... 8,673 1,411 263 10,347
------- ------ ------- -------
Plants, Properties and Equipment, Net........ 14,389 3,873 775(l) 19,037
Forestlands.................................. 2,895 2,288 727(l) 5,910
Investments.................................. 169 169
Goodwill..................................... 3,207 3,559(m) 6,766
Deferred Charges and Other Assets............ 2,216 841 3,057
------- ------ ------- -------
TOTAL ASSETS................................. $31,549 $8,413 $ 5,324 $45,286
======= ====== ======= =======
LIABILITIES AND COMMON SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable and current maturities of
long-term debt.......................... $ 1,699 $ 239 $ 1,728(n) $ 3,666
Accounts payable and accrued liabilities... 3,776 661 549(o) 4,986
------- ------ ------- -------
Total Current Liabilities.................... 5,475 900 2,277 8,652
------- ------ ------- -------
Long-Term Debt............................... 7,250 2,526 3,184(p) 12,960
Deferred Income Taxes........................ 3,442 973 635(q) 5,050
Other Liabilities............................ 1,349 827 2,176
Minority Interest............................ 1,699 1,699
International Paper -- Obligated Mandatorily
Redeemable Preferred Securities of
Subsidiaries Holding International Paper
Debentures................................. 1,805 1,805
COMMON SHAREHOLDERS' EQUITY
Common stock............................... 415 56 9(r) 480
Paid-in capital............................ 4,076 1,733 617(r) 6,426
Retained earnings.......................... 6,887 2,521 (2,521)(r) 6,887
Accumulated other comprehensive income
(loss).................................. (799) (434) 434(r) (799)
Less: Common stock held in treasury, at
cost.................................... (50) (689) 689(r) (50)
------- ------ ------- -------
TOTAL COMMON SHAREHOLDERS' EQUITY............ 10,529 3,187 (772) 12,944
------- ------ ------- -------
TOTAL LIABILITIES AND COMMON SHAREHOLDERS'
EQUITY..................................... $31,549 $8,413 $ 5,324 $45,286
======= ====== ======= =======
</TABLE>
The accompanying notes are an integral part of these
Unaudited Pro Forma Condensed Combined Financial Statements.
51
<PAGE> 57
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The Unaudited Pro Forma Condensed Combined Statements of Earnings for the
three months ended March 31, 2000 and year ended December 31, 1999 have been
prepared as if the merger had occurred on January 1, 1999. The Unaudited Pro
Forma Condensed Combined Balance Sheet has been prepared as if the merger had
occurred on March 31, 2000. The merger has been accounted for under the purchase
method of accounting. The excess of the purchase price over the fair value of
the net assets acquired is being amortized on a straight-line basis over 40
years.
Preliminary allocation of the purchase price of Champion is summarized as
follows (in millions):
<TABLE>
<S> <C>
PURCHASE PRICE
Cash consideration (including transaction expenses)......... $4,890
Value of IP common stock exchanged for Champion common stock
outstanding............................................... 2,415
Cash consideration for all options and restricted share
units on Champion common stock............................ 138
------
$7,443
======
ALLOCATION OF PURCHASE PRICE
Net assets of Champion at March 31, 2000.................... $3,187
Increase (decrease) to Champion net asset value at March 31,
2000 as a result of estimated fair value adjustments:
Plants, properties and equipment, net..................... 775
Forestlands............................................... 727
Accounts payable and accrued liabilities.................. (522)
Deferred income taxes..................................... (450)
Other, net................................................ 167
Excess of the purchase price over the fair value of the net
assets acquired........................................... 3,559
------
Total purchase price................................... $7,443
======
</TABLE>
The following is a summary of reclassifications and adjustments reflected
in the Unaudited Pro Forma Condensed Combined Statements of Earnings (in
millions):
(a) Represents the elimination of net sales between Champion and IP
for the year ended December 31, 1999 and the three months ended March 31,
2000 of $104 and $28, respectively.
(b) Represents the reversal of the decrease in the LIFO reserve
recorded by Champion in 1999, the elimination of cost of sales related to
intercompany sales, an adjustment to the cost of timber harvested for an
increase in the basis of Champion's forestlands and a reclassification of
depreciation expense and distribution expenses to conform to IP's
presentation.
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE QUARTER
ENDED ENDED
DECEMBER 31, MARCH 31,
1999 2000
------------ ---------------
<S> <C> <C>
Reversal of decrease in the LIFO reserve......... $ 6 $ --
Elimination of cost of sales from intercompany
sales.......................................... (104) (28)
Cost of timber harvested on step-up of Champion's
timberlands.................................... 29 7
Reclassification of depreciation expense......... (340) (79)
Reclassification of distribution expenses........ (250) (63)
----- -----
$(659) $(163)
===== =====
</TABLE>
(c) Represents the planned reduction of salaries and benefits as a
result of eliminating duplicate office and administrative functions.
52
<PAGE> 58
(d) Represents additional depreciation and amortization expense as a
result of (i) the step-up of Champion's properties, plants and equipment;
(ii) a reclassification of depreciation expense to conform to IP's
presentation; and (iii) amortization of excess cost over net assets
acquired over 40 years.
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED QUARTER ENDED
DECEMBER 31, MARCH 31,
1999 2000
------------ -------------
<S> <C> <C>
Depreciation expense on step-up of Champion's
properties, plants and equipment................ $ 68 $ 17
Reclassification of depreciation expense.......... 340 79
Amortization of excess cost over Champion net
assets acquired................................. 89 22
---- ----
$497 $118
==== ====
</TABLE>
(e) Represents a reclassification of distribution expenses to conform
to IP's presentation.
(f) Represents acquisition interest expense based upon the Champion
debt at an assumed rate of 7.31%. Also included is the amortization of debt
issuance costs incurred to finance the merger, which are being amortized
over the terms of the debt, and amortization of a fair value adjustment on
Champion's long-term debt.
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED QUARTER ENDED
DECEMBER 31, MARCH 31,
1999 2000
------------ --------------
<S> <C> <C>
Interest expense.................................. $368 $92
Amortization of debt issuance cost................ 22 2
Amortization of fair value adjustment on long-term
debt............................................ 8 2
---- ---
$398 $96
==== ===
</TABLE>
The interest rate on the Champion debt is preliminary and is subject
to change based on various factors, including the prevailing market
interest rates, the form of the ultimate financing, and IP's credit rating.
(g) Represents the tax effect of the Unaudited Pro Forma Condensed
Combined Statements of Earnings adjustments, excluding goodwill
amortization, based upon the statutory tax rate.
(h) Pro forma combined earnings per share amounts, as presented in the
accompanying Unaudited Pro Forma Condensed Combined Statements of Earnings,
are based on the weighted average pro forma number of shares of IP
outstanding for each period presented.
The following is a summary of reclassifications and adjustments reflected
in the Unaudited Pro Forma Condensed Combined Balance Sheet (in millions):
(i) Represents the elimination of receivables between Champion and IP.
(j) Represents the elimination of Champion's LIFO inventory reserve.
(k) Represents capitalized debt issuance costs and related expenses of
$30 to finance the cash portion of the purchase of Champion shares, options
and restricted share units, and the current portion of deferred taxes on
the pro forma adjustments of $185.
(l) Represents the preliminary adjustments of assets and liabilities
to fair value.
(m) Represents the preliminary estimate of excess purchase price over
the fair value of Champion net assets acquired. The estimated purchase
price of Champion (estimated at $7,443) includes acquisition related
expenses and the value of options and restricted share units on Champion
common stock.
53
<PAGE> 59
(n) Represents the issuance of approximately $1,728 of short-term debt
to finance a portion of the cash consideration of the merger.
(o) Represents the accrual of estimated severance-related and other
expenses, including a termination fee (including expense reimbursement) of
$210, resulting from the merger and the elimination of payables between
Champion and IP.
<TABLE>
<CAPTION>
MARCH 31,
2000
---------
<S> <C>
Accrual of estimated severance-related expenses............. $272
Accrual of termination fee payable by Champion.............. 210
Accrual of estimated other expenses......................... 70
Elimination of intercompany payables........................ (3)
----
$549
====
</TABLE>
(p) Represents the issuance of approximately $3,300 of long-term debt
to finance the remainder of the cash consideration of the merger. Also
includes a fair value adjustment of $116 on Champion's long-term debt
assumed in the merger.
(q) Represents the noncurrent deferred income tax effect of the pro
forma adjustments.
(r) Represents the elimination of Champion's historical equity and the
issuance of shares by IP to acquire the outstanding shares of Champion.
Also represents the cost of redeeming outstanding options and restricted
share units of Champion common stock at March 31, 2000. The pro forma
adjustments to shareholders' equity are summarized as follows:
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMMON PAID-IN RETAINED COMPREHENSIVE TREASURY
STOCK CAPITAL EARNINGS INCOME (LOSS) STOCK
------ ------- -------- ------------- --------
<S> <C> <C> <C> <C> <C>
Reversal of Champion's
equity...................... $(56) $(1,733) $(2,521) $434 $689
Issuance of IP common stock
for Champion common stock
outstanding................. 65 2,350
---- ------- ------- ---- ----
$ 9 $ 617 $(2,521) $434 $689
==== ======= ======= ==== ====
</TABLE>
54
<PAGE> 60
DESCRIPTION OF IP CAPITAL STOCK
The following summary of the terms of IP capital stock prior to, and after
completion of, the offer and the merger is not meant to be complete and is
qualified by reference to the IP charter and IP by-laws. Copies of the IP
charter and IP by-laws are incorporated by reference and will be sent upon
request to shareholders of Champion common stock. See "Where You Can Find More
Information".
GENERAL
Under the IP charter, IP's authorized capital stock consists of:
- 990,850,000 shares of Common Stock with $1.00 par value,
- 8,750,000 shares of Serial Preferred Stock with $1.00 par value, and
- 400,000 shares of Preferred Stock with no par value ("IP $4 preferred
stock", together with Serial Preferred Stock, "preferred stock").
On May 16, 2000, there were outstanding:
- 413,514,154 shares of IP common stock,
- employee stock options to purchase an aggregate of approximately
19,130,873 shares of IP common stock, and
- 15,696 shares of IP preferred stock.
COMMON STOCK
IP Common Stock Outstanding. The outstanding shares of IP common stock
are, and the shares of IP common stock issued pursuant to the offer and the
merger will be, duly authorized, validly issued, fully paid and nonassessable.
Voting Rights. Each holder of IP common stock is entitled to one vote for
each share of IP common stock held of record on the applicable record date on
all matters submitted to a vote of shareholders. IP common stockholders do not
have cumulative voting rights.
Dividend Rights. Subject to the rights of any shares of IP preferred stock
which may at the time be outstanding, holders of IP common shares are entitled
to receive dividends as may be declared from time to time by the IP board of
directors out of funds legally available therefor. Dividends on the IP common
shares are, in effect, limited by the terms of the IP $4 preferred stock to the
amount of IP's retained earnings, which at March 31, 2000 were $6.9 billion. In
addition, under the IP charter, no dividends may be declared, paid, or set aside
for payment on the IP common stock unless full cumulative dividends are paid on
the issued and outstanding IP $4 preferred stock. If IP fails to pay dividends
on IP $4 preferred stock for four quarters, holders of IP $4 preferred stock
will have the right to elect one-third, or the nearest whole number thereto, of
the total number of directors to be elected at the next annual shareholders'
meeting and at each subsequent annual shareholders' meeting until all such
dividends have been paid.
Rights upon Liquidation or Dissolution. In the event of liquidation or
dissolution, each share of IP common stock is entitled to share pro rata in any
distribution of IP's assets after payment or providing for the payment of
liabilities and the liquidation preference of any outstanding IP $4 preferred
stock. IP common stockholders have no preferential, preemptive, conversion or
redemption rights.
PREFERRED STOCK
The following summary contains a description of the principal terms of
preferred stock. The description of the principal provisions of preferred stock
does not purport to be complete and is subject to and qualified in its entirety
by reference to the applicable provisions of the IP certificate of incorporation
relating to each particular series of preferred stock.
55
<PAGE> 61
Serial Preferred Stock. Under the IP charter, without further shareholder
action, the IP board of directors is authorized to provide for the issuance of
up to 8,750,000 shares of Serial Preferred Stock. Serial 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 IP, any sinking fund
provisions, any conversion provisions, any voting rights, and any other
preferences, privileges, powers, rights, qualifications, limitations and
restrictions as shall be set forth as and when established by the IP board of
directors.
The shares of any series of Serial Preferred Stock will be, when issued,
fully paid and nonassessable and the holders will have no preemptive rights in
connection with the securities in any class of IP.
IP $4 Preferred Stock. The IP charter authorizes the issuance of up to
400,000 shares of IP $4 preferred stock without par value. Pursuant to the
applicable provisions of the IP charter, holders of the IP $4 preferred stock
are entitled to receive when, as and if declared by IP's board of directors, out
of funds legally available for payment, cash dividends at the rate per annum of
$4.00 per share. Dividends are cumulative without interest. If dividends in full
on all outstanding shares of the IP $4 preferred stock for all past quarterly
dividend periods and the then current quarterly dividend period shall not have
been paid, no cash dividends may be paid or distributions made to the holders of
any class of stock ranking junior to the IP $4 preferred stock.
Except as expressly provided by law or in the IP charter, shareholders of
IP $4 preferred stock have no voting rights. If dividends payable on the IP $4
preferred stock are in arrears in an amount equal to four full quarterly
dividends, the holders of the IP $4 preferred stock will have the right to elect
one-third, or the nearest whole number thereto, of the total number of directors
to be elected at the next annual meeting of shareholders and at each subsequent
annual shareholders' meeting until all such dividends have been paid in full. IP
must obtain the approval of holders of two-thirds of the shares of the IP $4
preferred stock in order to:
- authorize, create or issue stock of any class ranking prior to the IP $4
preferred stock; or
- amend the certificate of authorization of new shares relating to the IP
$4 preferred stock or any provisions of the IP charter in a manner
materially prejudicial to such holders.
IP must obtain the affirmative vote of holders of a majority of the shares
of the IP $4 preferred stock in order to:
- increase the number of authorized shares of IP $4 preferred stock;
- authorize, create or issue stock of any class ranking on a parity with
the IP $4 preferred stock; or
- sell, lease or dispose of all or substantially all of the assets of IP,
other than by merger or consolidation.
In the event of a merger or consolidation of IP in which the holders of the
IP $4 preferred stock do not have appraisal rights under New York law, those
holders are entitled to receive $105.00 per share of IP $4 preferred stock,
unless by the terms of the merger or consolidation such holders are entitled to
shares or securities which have the relative ranking, rights and preferences of
the IP $4 preferred stock prior to such merger or consolidation. Under some
circumstances relating to aggregate net earnings of IP, approval of holders of a
majority of the IP $4 preferred stock may be required to purchase or redeem or
pay cash dividends in respect of stock which is junior to the IP $4 preferred
stock, including IP common shares.
Shares of IP $4 preferred stock may be redeemed at the option of IP in
whole or in part, at any time or from time to time, out of funds legally
available therefor, at $105.00 per share plus an amount equal to accrued and
unpaid dividends, if any, to the redemption date, whether or not earned or
declared.
Holders of shares of IP $4 preferred stock are entitled to a liquidation
preference of $105.00 per share, in the event of a voluntary liquidation,
dissolution or winding-up or $100.00 per share, if such liquidation, dissolution
or winding-up is involuntary, plus in each case any amount equal to all
dividends accrued and unpaid up to and including the date fixed for
distribution, whether or not earned or declared.
Blank Check Preferred Stock. Under the IP charter, the IP board of
directors has the authority, without shareholder approval, to create one or more
classes or series within a class of preferred stock, to issue shares of
56
<PAGE> 62
preferred stock in such class or series up to the maximum number of shares of
the relevant class or series of preferred stock authorized, and to determine the
preferences, rights, privileges and restrictions of any such class or series,
including the dividend rights, voting rights, the rights and terms of
redemption, the rights and terms of conversion, liquidation preferences, the
number of shares constituting any such class or series and the designation of
such class or series. Acting under this authority, the IP board of directors
could create and issue a class or series of preferred stock with rights,
privileges or restrictions, and adopt a shareholder rights plan, having the
effect of discriminating against an existing or prospective holder of securities
as a result of such shareholder beneficially owning or commencing a tender offer
for a substantial amount of IP common stock. One of the effects of authorized
but unissued and unreserved shares of capital stock may be to render more
difficult or discourage an attempt by a potential acquiror to obtain control of
IP by means of a merger, tender offer, proxy contest or otherwise, and thereby
protect the continuity of IP's management. The issuance of such shares of
capital stock may have the effect of delaying, deferring or preventing a change
in control of IP without any further action by the shareholders of IP. IP has no
present intention to adopt a shareholder rights plan, but could do so without
shareholder approval at any future time.
TRANSFER AGENT AND REGISTRAR
ChaseMellon Shareholder Services, L.L.C. is the transfer agent and
registrar for the IP common stock.
STOCK EXCHANGE LISTING; DELISTING AND DEREGISTRATION OF CHAMPION COMMON STOCK
It is a condition to the offer and the merger that the shares of IP common
stock issuable in the offer and the merger be approved for listing on the NYSE.
If the offer is completed, Champion common stock may cease to be listed on the
NYSE and, if the merger is completed, Champion common stock will cease to be
listed on the NYSE.
57
<PAGE> 63
COMPARISON OF STOCKHOLDER RIGHTS
IP and Champion are incorporated under the laws of the State of New York.
If the offer is completed, Champion stockholders exchanging their shares in the
offer, whose rights are currently governed by the NYBCL, the certificate of
incorporation of Champion and the bylaws of Champion, will, upon completion of
the offer, become stockholders of IP, and their rights as such will be governed
by the NYBCL, the IP certificate of incorporation and the bylaws of IP. The
material differences between the rights of holders of Champion common stock and
the rights of holders of IP common stock, resulting from the differences in
their governing documents, are summarized below.
The following summary does not purport to be a complete statement of the
rights of holders of IP common stock under applicable New York law, the IP
certificate of incorporation and the IP bylaws or the rights of the holders of
Champion common stock under applicable New York law, the Champion certificate of
incorporation and the Champion bylaws, or a complete description of the specific
provisions referred to herein. This summary contains a list of the material
differences but is not meant to be relied upon as an exhaustive list or a
detailed description of the provisions discussed and is qualified in its
entirety by reference to the NYBCL and the governing corporate instruments of IP
and Champion, to which the holders of Champion common stock are referred. Copies
of such governing corporate instruments of IP and Champion are available,
without charge, to any person, including any beneficial owner to whom this
prospectus is delivered, by following the instructions listed under "Where You
Can Find More Information."
SUMMARY OF MATERIAL DIFFERENCES BETWEEN THE RIGHTS OF CHAMPION STOCKHOLDERS
AND THE RIGHTS OF IP STOCKHOLDERS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
CHAMPION STOCKHOLDER RIGHTS IP STOCKHOLDER RIGHTS
- ---------------------------------------------------------------------------------------------
<C> <S> <C>
Authorized The authorized capital stock of The authorized capital stock of IP
Capital Champion is 258,531,431 shares, is 1,000,000,000 shares,
Stock: 8,531,431 shares of which are 990,850,000 shares of which are
Preference Stock, $1 par value per Common Stock, $1.00 par value per
share, and 250,000,000 shares of share, 8,750,000 shares of which
which are Common Stock, $.50 par are Serial Preferred Stock, $1.00
value per share. par value per share, and 400,000
shares of which are Cumulative $4
Preferred Stock, no par value.
- ---------------------------------------------------------------------------------------------
Number of The Champion board of directors The IP board of directors currently
Directors: currently consists of 10 directors consists of 14 directors classified
classified into three classes of into three classes of directors.
directors.
- ---------------------------------------------------------------------------------------------
Removal of Champion directors may be removed IP directors may be removed only
Directors: with or without cause by the for cause and by the affirmative
affirmative vote of a majority of vote of at least 80% of the
the outstanding shares of Champion outstanding shares of IP common
common stock. stock.
- ---------------------------------------------------------------------------------------------
Shareholder Champion does have a shareholder IP does not presently have a
Rights Plan: rights plan. shareholder rights plan.
Champion's shareholder rights plan While IP has no present intention
does not apply to the offer and the to adopt a shareholder rights plan,
merger or any other tender or the IP board of directors, pursuant
exchange offer for all outstanding to its authority to issue preferred
shares of Champion common stock or stock, could do so without
to any merger or similar shareholder approval at any time in
transaction approved by the the future. See "Description of IP
Champion board of directors. Capital Stock -- IP Preferred
Stock -- Blank Check Preferred
Stock".
- ---------------------------------------------------------------------------------------------
</TABLE>
58
<PAGE> 64
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
CHAMPION STOCKHOLDER RIGHTS IP STOCKHOLDER RIGHTS
- ---------------------------------------------------------------------------------------------
<C> <S> <C>
Amendment of The Champion charter may be amended Except for the matters specified
Charter with the approval of a majority of below, the IP charter may be
the Champion board of directors and amended with the approval of a
a majority of the outstanding majority of the IP board of
shares of Champion common stock. directors and a majority of the
outstanding shares of IP common
stock.
The approval of at least 80% of the
outstanding shares of IP common
stock (as well as the approval of a
majority of the IP board of
directors) is required to amend the
provisions of the IP charter
relating to:
- classification of the IP board of
directors and the term served by
each class of IP directors,
- establishment of criteria for the
removal of IP directors,
- an increase or decrease in the
size of the IP board of directors
or a class of directors of the IP
board of directors, and
- the indemnification of IP
directors.
- ---------------------------------------------------------------------------------------------
</TABLE>
LEGAL MATTERS
The validity of the IP common stock offered hereby will be passed upon for
IP by Davis Polk & Wardwell, New York, New York.
EXPERTS
The consolidated financial statements and related financial statement
schedule of IP included in IP's Annual Report on Form 10-K for its fiscal year
ended December 31, 1999 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 such reports.
The audited financial statements of Union Camp Corporation as of December
31, 1998 and for each of the two years in the period ended December 31, 1998,
not separately presented in IP's Annual Report on Form 10-K, have been audited
by PricewaterhouseCoopers LLP, independent accountants, whose report appears
therein, and are incorporated by reference in this Registration Statement. Such
financial statements, to the extent they have been included in the financial
statements of IP have been so included in reliance on the report of such
independent accountants given on the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements of Champion included in Champion's
Annual Report on Form 10-K for the year ended December 31, 1999 have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report with respect thereto and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and in giving
such report.
59
<PAGE> 65
FORWARD-LOOKING STATEMENTS
This prospectus, including information included or incorporated by
reference in this document, contains certain forward-looking statements
concerning the financial condition, results of operations and business of IP
following the consummation of its proposed acquisition of Champion, the
anticipated financial and other benefits of such proposed acquisition and the
plans and objectives of IP's management following such proposed acquisition,
including, without limitation, statements relating to the cost savings expected
to result from the proposed acquisition, anticipated results of operations of
the combined company following the proposed acquisition, projected earnings per
share of the combined company following the proposed acquisition and the
restructuring charges estimated to be incurred in connection with the proposed
acquisition. Generally, the words "will," "may," "should," "continue,"
"believes," "expects," "intends," "anticipates" or similar expressions identify
forward-looking statements.
These forward-looking statements involve certain risks and uncertainties.
Factors that could cause actual results to differ materially from those
contemplated by the forward-looking statements include, among others, the
following factors:
- cost savings expected to result from the proposed acquisition may not be
fully realized or realized within the expected time frame,
- operating results following the proposed acquisition may be lower than
expected,
- competitive pressure among companies in our industry may increase
significantly,
- costs or difficulties related to the integration of the businesses of IP
and Champion may be greater than expected,
- adverse changes in the interest rate environment may reduce interest
margins or adversely affect asset values of the combined company,
- general economic conditions, whether nationally or in the market areas in
which IP and Champion conduct business, may be less favorable than
expected,
- legislation or regulatory changes may adversely affect the businesses in
which IP and Champion are engaged, or
- adverse changes may occur in the securities markets.
See "Where You Can Find More Information."
60
<PAGE> 66
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF IP AND PURCHASER
DIRECTORS AND EXECUTIVE OFFICERS OF IP
Set forth in the table below are the name and the present principal
occupations or employment and the name, principal business and address of any
corporation or other organization in which such occupation or employment is
conducted, and the five-year employment history of each of the directors and
executive officers of IP. Each person identified below is a United States
citizen. The principal business address of IP and, unless otherwise indicated,
the business address of each person identified below is Two Manhattanville Road,
Purchase, New York 10577.
IP DIRECTORS
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---- --------------------------------------------------
<S> <C>
Peter I. Bijur Director since July 8, 1997. Chairman and chief executive
Texaco Inc. officer of Texaco Inc. He joined Texaco in 1966 and was
2000 Westchester Avenue elected senior vice president in May of 1992. He became vice
White Plains, NY 10650 chairman of the board in January 1996, and was elected to
his current position in July 1996. He is also chairman of
the American Petroleum Institute, a member of The Business
Council, the Business Council of New York State, Inc., The
Business Roundtable, the National Petroleum Council, and the
Council on Foreign Relations and serves on the Board of
Trustees of The Conference Board.
John T. Dillon Director since March 1, 1991. Chairman of the board and
chief executive officer of IP since 1996. Prior thereto he
was president and chief operating officer in 1995. He is
also a director of Caterpillar Inc. He is chairman of the
board of The National Council on Economic Education and a
member of The Business Roundtable.
Robert J. Eaton Director since January 10, 1995. Chairman of the board of
CIMS 480-01-01 management of DaimlerChrysler AG from 1999 to April 2000,
1000 Chrysler Drive and chairman of Chrysler from 1993 to 1998. He is a fellow
Auburn Hills, MI 48326-2766 of both the Society of Automotive Engineers and the
Engineering Society of Detroit and chairman of the National
Academy of Engineering. He is a member of The Business
Roundtable and the Business Council.
Samir G. Gibara Director since March 9, 1999. Chairman of the board, chief
The Goodyear Tire & Rubber Company executive officer and president of The Goodyear Tire &
1144 East Market Street Rubber Company since 1996. Prior to that time he served in
Akron, OH 44316-0001 various managerial posts and became vice president of
finance and chief financial officer in 1992. He was elected
president and chief operating officer in 1995. He is a
member of The Business Roundtable.
James A. Henderson Director since February 1, 1999. Chairman and chief
301 Washington Avenue executive officer of Cummins Engine Company, Inc. from 1995
P.O. Box 808 to December 1999. He is a director of SBC Communications
Columbus, IN 47202 Inc., Rohm and Haas Company, Ryerson Tull, Inc. and Landmark
Communications, Inc. He is also a member of The Business
Roundtable and The Business Council.
</TABLE>
I-1
<PAGE> 67
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---- --------------------------------------------------
<S> <C>
John R. Kennedy Director since March 12, 1996. President and chief executive
JRK Financial Corporation officer of Federal Paper Board Company, Inc. from 1975 to
125 Elm Street 1996. He is a director of DeVlieg Bullard, Inc., Chase Brass
New Canaan, CT 06840 Industries, Inc., Holnam, Inc., Pioneer Companies, Inc.,
Spartech Corporation and Modis Professional Services. He is
director and chairman of the board of Georgetown University,
on the board of governors of the United Nations Association
of the United States of America, and one of the directors
for the Foreign Policy Association.
Robert D. Kennedy Director since May 4, 1999. Chairman of the board and chief
39 Old Ridgebury Road executive officer of Union Carbide Corporation from 1986 to
Section J-4 1995. He was retired from 1995 until March 1998. From March
Danbury, CT 06817-0001 1998 until September 1999, he was chairman of UCAR
International Inc. He is on the board of Union Carbide
Corporation, Kmart Corporation, LionOre Mining International
Ltd., Sunoco Inc., and Chase Industries. He is also on the
Advisory Board of The Blackstone Group and RFE Investment
Partners.
W. Craig McClelland Director since May 4, 1999. Chairman of the board and chief
50 Tice Boulevard executive officer of Union Camp Corporation from 1994 until
Woodcliff Lake, NJ 07675 April 1999. Previously he served as president and chief
operating officer from 1989 to 1994. He is a director of
Allegheny Teledyne, Inc., WaterPik Technologies, Inc. and
PNC Financial Corporation and serves as co-chairman of the
Global Advisory Council, an affiliate of The Conference
Board.
Donald F. McHenry Director since April 14, 1981. Distinguished Professor of
The IRC Group LLC Diplomacy at Georgetown University since 1981. He is
1320 19th Street, N.W. president of the IRC Group LLC and a director of AT&T, The
Suite 41 Coca-Cola Company, Fleet Boston Financial, the First
Washington, DC 20016 National Bank of Boston, SmithKline Beecham plc, and the
Institute for International Economics. He is a trustee of
Columbia University and chairman of the board of Africare.
Patrick F. Noonan Director since December 14, 1993. Chairman of the board of
The Conservation Fund The Conservation Fund (a nonprofit organization dedicated to
Suite 1120 conserving America's land and water resources) and
1800 North Kent Street previously also its chief executive officer since 1985.
Arlington, VA 22209 Prior thereto he was president of The Nature Conservancy. He
is a trustee of The National Geographic Society. He is also
a director of Ashland, Inc., the Fund for Government
Investors, Saul Centers REIT, and the American Gas
Association Index Fund. He is a member of the Board of
Visitors of Duke University School of the Environment.
Jane C. Pfeiffer Director since June 14, 1977. Management consultant. She is
1050 Beach Road a director of Ashland, Inc., J.C. Penney Company, Inc., and
Johns Island The MONY Group. She is a trustee of The Conference Board,
Vero Beach, FL 32963 the University of Notre Dame and the Overseas Development
Council and a member of The Council on Foreign Relations.
Jeremiah J. Sheehan Director since May 4, 1999. Chairman of the board and chief
11901 Aberdeen Landing Terrace executive officer of Reynolds Metals Company from 1996 to
Midlothian, VA 23113 2000. Prior to that he was president and chief operating
officer from 1994 until 1996. He is a director of the
Federal Reserve Bank of Richmond and Universal Corporation.
</TABLE>
I-2
<PAGE> 68
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---- --------------------------------------------------
<S> <C>
Charles R. Shoemate Director since November 1, 1994. Chairman, president and
Bestfoods chief executive officer of Bestfoods. He was elected
International Plaza president and a member of its board of directors in 1988,
700 Sylvan Avenue chief executive officer in August 1990, and chairman in
P.O. Box 8000 September 1990. He is a director of CIGNA Corporation,
Englewood Cliffs, NJ 07632 Texaco Inc., and the Grocery Manufacturers of America, Inc.
He is a member of The Business Roundtable and chairman of
The Conference Board.
C. Wesley Smith Director since December 12, 1995. Executive vice
6400 Poplar Avenue president-operating group of IP since 1998. Prior thereto he
Memphis, TN 38197 was executive vice president- printing papers from 1992.
</TABLE>
IP EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---- --------------------------------------------------
<S> <C>
John T. Dillon Director since March 1, 1991. Chairman of the board and
chief executive officer of IP since 1996. Prior thereto he
was president and chief operating officer in 1995. He is
also a director of Caterpillar Inc. He is chairman of the
board of The National Council on Economic Education and a
member of The Business Roundtable.
John V. Faraci Senior vice president and chief financial officer since
1999. Prior thereto he was chief executive officer and
managing director of Carter Holt Harvey since 1995.
Andrew R. Lessin Vice president-finance since April 2000 and prior to that
vice president and controller since 1995.
William B. Lytton Senior vice president and general counsel since January
1999. Prior thereto he was vice president and general
counsel since 1996, and vice president and general counsel
for Lockheed Martin Electronics from 1995 to 1996.
James P. Melican Executive vice president-legal and external affairs. He
assumed his current position in 1991.
David W. Oskin Executive vice president-consumer packaging since 1995.
Prior thereto he was chief executive officer and managing
director of Carter Holt Harvey Limited of New Zealand from
1992 to 1995.
Marianne M. Parrs Executive vice president-administration since 1999. Prior
thereto she was executive vice president and chief financial
officer from 1995 to 1999. She was staff vice president-tax
from 1993 to 1995.
C. Wesley Smith Executive vice president-operations group since 1998. From
1992 to 1998, he was executive vice president-printing
papers. He has been a director since 1995.
</TABLE>
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<PAGE> 69
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
Set forth in the table below are the name and the present principal
occupations or employment and the name, principal business and address of any
corporation or other organization in which such occupation or employment is
conducted, and the five-year employment history of each of the directors and
executive officers of Purchaser. Each person identified below is a United States
citizen. The principal business address of Purchaser and, unless otherwise
indicated, the business address of each person identified below is Two
Manhattanville Road, Purchase, New York 10577.
<TABLE>
<S> <C>
C. Cato Ealy Director and Vice President of Condor Acquisition
Corporation since March 1, 2000. Vice President -- Corporate
Development of IP.
William B. Lytton Director and President of Condor Acquisition Corporation
since May 1, 2000. Senior vice president and general counsel
of IP since January 1999. Prior thereto he was vice
president and general counsel of IP since 1996, and vice
president and general counsel for Lockheed Martin
Electronics from 1995 to 1996.
Carol M. Samalin Secretary of Condor Acquisition Corporation since March 1,
2000. Assistant Secretary of IP.
Julius A. Weiss Treasurer of Condor Acquisition Corporation since March 1,
2000. Assistant Treasurer of IP since 1993. Prior thereto he
was controller of the Container Division of IP.
</TABLE>
I-4
<PAGE> 70
ANNEX A
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
INTERNATIONAL PAPER COMPANY,
CONDOR ACQUISITION CORPORATION
AND
CHAMPION INTERNATIONAL CORPORATION
DATED AS OF MAY 12, 2000
- --------------------------------------------------------------------------------
<PAGE> 71
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C> <C>
ARTICLE 1
DEFINITIONS
Section 1.01. Definitions................................................. A-1
ARTICLE 2
THE OFFER
Section 2.01. The Offer................................................... A-5
Section 2.02. Company Action.............................................. A-6
Section 2.03. Directors................................................... A-7
ARTICLE 3
THE MERGER
Section 3.01. The Merger.................................................. A-8
Section 3.02. Certificate of Incorporation of the Surviving Corporation... A-8
Section 3.03. By-Laws of the Surviving Corporation........................ A-8
Section 3.04. Directors and Officers of the Surviving Corporation......... A-8
Section 3.05. Closing..................................................... A-8
ARTICLE 4
CONVERSION OF SHARES AND RELATED MATTERS
Section 4.01. Conversion of Capital Stock................................. A-8
Section 4.02. Exchange of Shares.......................................... A-9
Section 4.03. Exchange of Certificates.................................... A-9
Section 4.04. Company Stock Options and Stock Rights...................... A-11
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 5.01. Due Organization, Good Standing and Corporate Power......... A-12
Section 5.02. Authorization and Validity of Agreement..................... A-13
Section 5.03. Capitalization.............................................. A-13
Section 5.04. Consents and Approvals; No Violations....................... A-14
Section 5.05. Company Reports and Financial Statements.................... A-14
Section 5.06. Information to Be Supplied.................................. A-15
Section 5.07. Absence of Certain Events................................... A-15
Section 5.08. Litigation.................................................. A-15
Section 5.09. Title to Properties; Encumbrances........................... A-16
Section 5.10. Compliance with Laws........................................ A-16
Section 5.11. Company Employee Benefit Plans.............................. A-16
Section 5.12. Employment Relations and Agreement.......................... A-18
Section 5.13. Taxes....................................................... A-18
Section 5.14. Intellectual Property....................................... A-19
Section 5.15. Broker's or Finder's Fee.................................... A-19
Section 5.16. Environmental Laws and Regulations.......................... A-19
Section 5.17. State Takeover Statutes..................................... A-20
Section 5.18. Voting Requirements; Board Approval; Appraisal Rights....... A-20
</TABLE>
i
<PAGE> 72
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
Section 5.19. Opinion of Financial Advisor................................ A-21
Section 5.20. Trust Agreement............................................. A-21
Section 5.21. Termination of Existing Agreements.......................... A-21
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Section 6.01. Due Organization, Good Standing and Corporate Power......... A-21
Section 6.02. Authorization and Validity of Agreement..................... A-21
Section 6.03. Capitalization.............................................. A-22
Section 6.04. Consents and Approvals; No Violations....................... A-22
Section 6.05. Parent Reports and Financial Statements..................... A-23
Section 6.06. Information to Be Supplied.................................. A-24
Section 6.07. Absence of Certain Events................................... A-24
Section 6.08. Litigation.................................................. A-24
Section 6.09. Title to Properties; Encumbrances........................... A-24
Section 6.10. Compliance with Laws........................................ A-25
Section 6.11. Parent Employee Benefit Plans............................... A-25
Section 6.12. Employment Relations and Agreement.......................... A-26
Section 6.13. Taxes....................................................... A-26
Section 6.14. Intellectual Property....................................... A-27
Section 6.15. Broker's or Finder's Fee.................................... A-27
Section 6.16. Environmental Laws and Regulations.......................... A-28
Section 6.17. Ownership of Capital Stock.................................. A-28
Section 6.18. No Prior Activities......................................... A-28
Section 6.19. Financing................................................... A-28
ARTICLE 7
TRANSACTIONS PRIOR TO CLOSING DATE
Section 7.01. Access to Information Concerning Properties and Records..... A-28
Section 7.02. Confidentiality............................................. A-28
Section 7.03. Conduct of the Business of the Company Pending the Closing
Date........................................................ A-29
Section 7.04. Conduct of the Business of Parent Pending the Closing
Date........................................................ A-31
Section 7.05. Company Shareholder Meeting; Preparation of Proxy
Statement/Prospectus........................................ A-32
Section 7.06. Reasonable Best Efforts..................................... A-33
Section 7.07. No Solicitation............................................. A-33
Section 7.08. Notification of Certain Matters............................. A-35
Section 7.09. Antitrust Laws.............................................. A-35
Section 7.10. Directors' and Officers' Insurance.......................... A-36
Section 7.11. Public Announcements........................................ A-37
Section 7.12. Transfer Tax................................................ A-37
Section 7.13. NYSE Listing................................................ A-37
Section 7.14. Affiliates of the Company................................... A-37
Section 7.15. Employee Benefits........................................... A-37
Section 7.16. Section 16 Matters.......................................... A-40
Section 7.17. Voting of Shares............................................ A-41
</TABLE>
ii
<PAGE> 73
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
ARTICLE 8
CONDITIONS TO THE MERGER
Section 8.01. Conditions to Obligations of Each Party..................... A-41
Section 8.02. Conditions To the Obligations of Parent and Merger Sub...... A-41
ARTICLE 9
TERMINATION AND ABANDONMENT
Section 9.01. Termination................................................. A-41
Section 9.02. Effect of Termination....................................... A-42
Section 9.03. Payment of Certain Fees..................................... A-42
ARTICLE 10
MISCELLANEOUS
Section 10.01. Representations and Warranties.............................. A-43
Section 10.02. Extension; Waiver........................................... A-43
Section 10.03. Notices..................................................... A-44
Section 10.04. Entire Agreement............................................ A-44
Section 10.05. Binding Effect; Benefit; Assignment......................... A-44
Section 10.06. Amendment and Modification.................................. A-45
Section 10.07. Further Actions............................................. A-45
Section 10.08. Headings.................................................... A-45
Section 10.09. Enforcement................................................. A-45
Section 10.10. Counterparts................................................ A-45
Section 10.11. Applicable Law.............................................. A-45
Section 10.12. Severability................................................ A-45
Section 10.13. Waiver of Jury Trial........................................ A-45
EXHIBITS
Exhibit A Rule 145 Affiliate Agreement
SCHEDULES
Company Disclosure Letter
Parent Disclosure Letter
</TABLE>
iii
<PAGE> 74
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 12, 2000 (this "AGREEMENT"),
by and among INTERNATIONAL PAPER COMPANY, a New York corporation ("PARENT"),
CONDOR ACQUISITION CORPORATION, a New York corporation and a direct wholly-owned
subsidiary of Parent ("MERGER SUB"), and CHAMPION INTERNATIONAL CORPORATION, a
New York corporation (the "COMPANY").
WHEREAS, the Boards of Directors of Parent and the Company each have
determined that it is advisable and in the best interests of each corporation
and their respective shareholders to effect a business combination between
Parent and the Company, and accordingly have agreed to effect the merger of
Merger Sub with and into the Company, with the Company as the surviving
corporation, upon the terms and subject to the conditions set forth herein (the
"MERGER"); and
WHEREAS, by resolutions duly adopted, the respective Boards of Directors of
the Company, Parent and Merger Sub have approved and adopted this Agreement and
the transactions contemplated hereby;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01. Definitions. When used in this Agreement, the following
terms shall have the respective meanings specified therefor below (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined).
"ACQUISITION AGREEMENT" shall have the meaning set forth in Section
7.07(b).
"AFFILIATE" of any Person shall mean any Person directly or indirectly
controlling, controlled by, or under common control with, such Person; provided
that, for the purposes of this definition, "control" (including with correlative
meanings, the terms "controlled by" and "under common control with"), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or partnership
interests, by contract or otherwise.
"AGREEMENT" shall have the meaning set forth in the preamble hereto.
"ANTITRUST AUTHORITIES" shall have the meaning set forth in Section
7.09(d).
"ANTITRUST LAW" shall have the meaning set forth in Section 7.09(d).
"AVERAGE PRICE" shall have the meaning set forth in Section 2.01(a).
"BCL" shall have the meaning set forth in Section 2.02(a).
"BUSINESS DAY" means a day other than a Saturday, a Sunday or a day on
which banks in New York, New York are permitted or required to close.
"CERTIFICATE OF MERGER" shall have the meaning set forth in Section
3.01(a).
"CERTIFICATE" shall have the meaning set forth in Section 4.01(c).
"CLAIMS" shall have the meaning set forth in Section 5.16.
"CLOSING" shall have the meaning set forth in Section 3.05.
"CLOSING DATE" shall have the meaning set forth in Section 3.05.
"CODE" shall have the meaning set forth in Section 5.11(a).
"COMPANY" shall have the meaning set forth in the preamble hereto.
<PAGE> 75
"COMPANY COMMON STOCK" shall mean the Company's common stock, par value
$0.50 per share, including the associated rights (the "RIGHTS") to purchase the
Series C Participating Cumulative Preference Stock of the Company issued
pursuant to the Rights Agreement between the Company and the rights agent
thereunder.
"COMPANY DISCLOSURE LETTER" shall have the meaning set forth in Article 5.
"COMPANY EMPLOYEE BENEFIT PLANS" shall have the meaning set forth in
Section 5.11(a).
"COMPANY INTELLECTUAL PROPERTY" shall have the meaning set forth in Section
5.14(a).
"COMPANY MATERIAL ADVERSE EFFECT" shall mean any event, change, occurrence,
effect, fact or circumstance that is materially adverse to (i) the ability of
the Company to perform its obligations under this Agreement or to consummate the
transactions contemplated hereby or (ii) the business, assets, liabilities,
results of operations or financial condition of the Company and its
Subsidiaries, taken as a whole, but shall exclude any material adverse effect
arising out of (i) any change in (x) U.S. or global economic or industry
conditions, (y) changes in U.S. or global financial markets or conditions or (z)
any generally applicable change in law, rule or regulation or GAAP or
interpretation of any of the foregoing and/or (ii) the announcement of this
Agreement or the transactions contemplated hereby or the termination of the
Agreement and Plan of Merger, dated as of February 17, 2000, by and among the
Company, UPM-Kymmene Corporation and Blue Acquisition, Inc.
"COMPANY MULTIEMPLOYER PLANS" shall have the meaning set forth in Section
5.11(b).
"COMPANY OPTIONS" shall mean the options to purchase shares of the Company
Common Stock, whether issued pursuant to a Company Employee Benefit Plan or
otherwise.
"COMPANY PREFERRED STOCK" shall have the meaning set forth in Section
5.03(a).
"COMPANY PROPERTY" shall have the meaning set forth in Section 5.16.
"COMPANY RECOMMENDATION" shall have the meaning set forth in Section
7.05(a).
"COMPANY SEC REPORTS" shall have the meaning set forth in Section 5.05(a).
"COMPANY SECURITIES" shall mean shares of the Company Common Stock and the
Company Options.
"COMPANY SHAREHOLDER APPROVAL" shall mean the approval of not less than
two-thirds of the vote of all outstanding shares of Company Common Stock of this
Agreement and the Merger at the Company Shareholder Meeting.
"COMPANY SHAREHOLDER MEETING" shall have the meaning set forth in Section
7.05(a).
"COMPANY STOCK PLANS" shall have the meaning set forth in Section 4.04(a).
"COMPANY STOCK RIGHTS" shall have the meaning set forth in Section 4.04(a).
"COMPETITION ACT" shall have the meaning set forth in Section 5.04.
"CONTINUING DIRECTORS" shall have the meaning set forth in Section 2.03(a).
"CONTRACTS" shall have the meaning set forth in Section 5.04.
"EFFECTIVE TIME" shall have the meaning set forth in Section 3.01(a).
"ENVIRONMENTAL CLAIMS" shall have the meaning set forth in Section 5.16.
"ENVIRONMENTAL LAW" shall have the meaning set forth in Section 5.16.
"ERISA" shall have the meaning set forth in Section 5.11(a).
"EUROPEAN ANTITRUST LAWS" shall have the meaning set forth in Section 5.04.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
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"EXCHANGE AGENT" shall have the meaning set forth in Section 4.02.
"EXCHANGE FUND" shall have the meaning set forth in Section 4.03(a).
"EXCHANGE RATIO" shall have the meaning set forth in Section 2.01(a).
"EXPENSES" shall have the meaning set forth in Section 9.03(b).
"FUNDING AMOUNT" shall have the meaning set forth in Section 5.20.
"GAAP" shall mean generally accepted accounting principles of the United
States of America, as in effect from time to time.
"GOVERNMENTAL AUTHORITY" shall have the meaning set forth in Section 5.04.
"HAZARDOUS MATERIALS" shall have the meaning set forth in Section 5.16.
"HSR ACT" shall have the meaning set forth in Section 5.04.
"INDEMNIFIED PARTIES" shall have the meaning set forth in Section 7.10(b).
"ISSUANCE OBLIGATION" shall have the meaning set forth in Section 5.03(a).
"LAWS" shall have the meaning set forth in Section 5.04.
"LIENS" shall have the meaning set forth in Section 6.03(b).
"MERGER" shall have the meaning set forth in the first recital hereto.
"MERGER REGISTRATION STATEMENT" shall have the meaning set forth in Section
6.06(a).
"MERGER SUB" shall have the meaning set forth in the preamble hereto.
"MERGER SUB COMMON STOCK" shall mean Merger Sub's common stock, par value
$1.00 per share.
"MINIMUM CONDITION" shall have the meaning set forth in Section 2.01(a).
"NAMED EXECUTIVE" shall have the meaning set forth in Section 7.15(j).
"NYSE" shall mean the New York Stock Exchange, Inc.
"OFFER" shall have the meaning set forth in Section 2.01(a).
"OFFER DOCUMENTS" shall have the meaning set forth in Section 2.01(b).
"OFFER REGISTRATION STATEMENT" shall have the meaning set forth in Section
2.01(b).
"OPTION" shall have the meaning set forth in Section 4.04(a).
"ORDERS" shall have the meaning set forth in Section 5.04.
"ORDERS OF DISPOSITION" shall have the meaning set forth in Section
7.09(b)(iii).
"PARENT" shall have the meaning set forth in the preamble hereto.
"PARENT COMMON STOCK" shall mean Parent's common stock, par value $1.00 per
share.
"PARENT DISCLOSURE LETTER" shall have the meaning set forth in Article 6.
"PARENT EMPLOYEE BENEFIT PLANS" shall have the meaning set forth in Section
6.11(a).
"PARENT INTELLECTUAL PROPERTY" shall have the meaning set forth in Section
6.14(a).
"PARENT MATERIAL ADVERSE EFFECT" shall mean any event, change, occurrence,
effect, fact or circumstance that is materially adverse to (i) the ability of
Parent to perform its obligations under this Agreement or to consummate the
transactions contemplated hereby or (ii) the business, assets, liabilities,
results of operations or financial condition of Parent and its Subsidiaries,
taken as a whole, but shall exclude any material adverse effect arising out of
(i) any change in (x) U.S. or global economic or industry conditions, (y)
changes in U.S.
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<PAGE> 77
or global financial markets or conditions or (z) any generally applicable change
in law, rule or regulation, GAAP or interpretation of any of the foregoing
and/or (ii) the announcement of this Agreement or the transactions contemplated
hereby.
"PARENT MULTIEMPLOYER PLAN" shall have the meaning set forth in Section
6.11(b).
"PARENT PREFERRED STOCK" shall have the meaning set forth in Section
6.03(a).
"PARENT PROPERTY" shall have the meaning set forth in Section 6.16.
"PARENT SEC REPORTS" shall have the meaning set forth in Section 6.05(a).
"PERMITS" shall have the meaning set forth in Section 5.10(b).
"PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization, a limited
liability company, a group and a government or other department or agency
thereof.
"PHANTOM SHARE" shall have the meaning set forth in Section 7.15(b).
"POST-CLOSING PERIOD" shall have the meaning set forth in Section 7.15(i).
"PROXY STATEMENT/PROSPECTUS" shall mean the proxy statement/prospectus
included in the Merger Registration Statement relating to the Company
Shareholder Meeting.
"RELEASE" shall have the meaning set forth in Section 5.16.
"RETURNS" shall have the meaning set forth in Section 5.13(a).
"RULE 145 AFFILIATES" shall have the meaning set forth in Section 7.14.
"RULE 145 AFFILIATE AGREEMENT" shall have the meaning set forth in Section
7.14.
"SCHEDULE 14D-9" shall have the meaning set forth in Section 2.02(b).
"SCHEDULE TO" shall have the meaning set forth in Section 2.01(b).
"SEC" shall mean the U.S. Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SIGNIFICANT SUBSIDIARY" with respect to a Person shall mean any Subsidiary
that constitutes a "significant subsidiary" of such Person within the meaning of
Rule 1-02 of Regulation S-X of the Exchange Act.
"SUBSIDIARY" with respect to a Person shall mean (x) any partnership of
which such Person or any of its Subsidiaries is a general partner or (y) any
other entity in which such Person or any of its Subsidiaries owns or has the
power to vote more than 50% of the equity interests in such entity having
general voting power to participate in the election of the governing body of
such entity.
"SUPERIOR PROPOSAL" shall have the meaning set forth in Section 7.07(a).
"SURVIVING CORPORATION" shall have the meaning set forth in Section
3.01(b).
"TAKEOVER PROPOSAL" shall have the meaning set forth in Section 7.07(a).
"TAXES" shall have the meaning set forth in Section 5.13(a).
"TERMINATION DATE" shall have the meaning set forth in Section 9.01(d)(i).
"TERMINATION FEE" shall have the meaning set forth in Section 9.03(a).
"THIRD PARTY ACQUISITION EVENT" shall have the meaning set forth in Section
9.03(b).
"TRADING DAY" shall mean any day on which securities are traded on the
NYSE.
"TRANSFER TAXES" shall have the meaning set forth in Section 7.12.
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"TRUST AGREEMENT" shall have the meaning set forth in Section 5.20.
"VOTING DEBT" shall have the meaning set forth in Section 5.03(a).
ARTICLE 2
THE OFFER
Section 2.01. The Offer. (a) Provided that nothing shall have occurred
that, had the Offer referred to below been commenced, would give rise to a right
to terminate the Offer pursuant to any of the conditions set forth in Annex I
hereto, as promptly as practicable after the date hereof following the public
announcement of the terms of this Agreement (but in no event later than five
Business Days after the date hereof), Merger Sub shall commence an offer (the
"OFFER") to purchase all of the outstanding shares of Company Common Stock at a
price for each share of Company Common Stock of $50, net to the seller in cash,
and a number of shares of Parent Common Stock equal to the Exchange Ratio. The
Offer shall be subject only to the condition that there shall be validly
tendered in accordance with the terms of the Offer, prior to the expiration date
of the Offer and not withdrawn, a number of shares of Company Common Stock that,
together with the shares of Company Common Stock then owned by Parent and/or
Merger Sub, represents at least two-thirds of the shares of Company Common Stock
outstanding on a fully-diluted basis (the "MINIMUM CONDITION") and to the other
conditions set forth in Annex I hereto. Merger Sub expressly reserves the right
to waive any of the conditions to the Offer and to make any change in the terms
of or conditions to the Offer; provided that (i) the Minimum Condition may be
amended or waived only with the prior written consent of the Company and (ii) no
change may be made that changes the form of consideration to be paid, decreases
the price per share of Company Common Stock or the number of shares of Company
Common Stock sought in the Offer, imposes conditions to the Offer in addition to
those set forth in Annex I, extends the expiration date of the Offer beyond the
initial expiration date of the Offer (which shall be the 20th Business Day after
the commencement of the Offer) or makes any other change which is adverse to the
holders of the shares of Company Common Stock. Notwithstanding the foregoing,
without the consent of the Company, Merger Sub shall have the right to extend
the Offer (i) for one or more periods (not in excess of 10 Business Days each)
but in no event ending later than September 30, 2000 if, at the scheduled or
extended expiration date of the Offer, any of the conditions to the Offer shall
not have been satisfied or waived, until such conditions are satisfied or waived
and (ii) for any period required by any rule, regulation, interpretation or
position of the SEC or the staff thereof applicable to the Offer or any period
required by applicable law. If any of the conditions to the Offer is not
satisfied or waived on any scheduled expiration date of the Offer, at the
request of the Company, Parent shall cause Merger Sub to, and Merger Sub shall,
extend the Offer, if such condition or conditions could reasonably be expected
to be satisfied, from time to time until such conditions are satisfied or
waived; provided that Merger Sub shall not be required to extend the Offer
beyond September 30, 2000. Subject to the foregoing and upon the terms and
subject to the conditions of the Offer, Merger Sub shall, and Parent shall cause
it to, accept for payment and pay for, as promptly as practicable after the
expiration of the Offer, all shares of Company Common Stock validly tendered and
not withdrawn pursuant to the Offer. If Merger Sub does not accept for payment
the shares of Company Common Stock in the Offer on the initial expiration date
of the Offer by virtue of the failure of any of the regulatory conditions to the
Offer specified in clause (i)(B) of the preamble to Annex I or clauses (c) or
(d) of Annex I to be satisfied, Parent and Merger Sub hereby agree to pay to the
holders of shares of Company Common Stock cash interest at a rate of 8.00% per
annum (calculated on the basis of a 365 day calendar year) on the $75 per share
offer consideration from and after the initial expiration date of the Offer
until the acceptance for payment of shares of Company Common Stock validly
tendered and not withdrawn in the Offer. "EXCHANGE RATIO" (as the same may be
adjusted pursuant to Section 4.01(d)) shall be equal to (i) $25 divided by the
Average Price (as defined below), if the Average Price is greater than or equal
to $34.00; or (ii) .7353, if the Average Price is less than $34.00. "AVERAGE
PRICE" means the average (rounded to the nearest 1/10,000) of the volume
weighted averages (rounded to the nearest 1/10,000) of the trading prices of
Parent Common Stock on the NYSE, as reported by Bloomberg Financial Markets (or
such other source as the parties shall agree in writing), for the 15 Trading
Days randomly selected by lot by Parent and the Company together from the 30
consecutive Trading Days ending
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on the third Trading Day immediately preceding the date on which all of the
conditions to the Offer set forth in Annex I hereto have been satisfied or
waived.
(b) As soon as practicable on the date of commencement of the Offer, Parent
and Merger Sub shall file with the SEC a Tender Offer Statement on Schedule TO
(the "SCHEDULE TO") and a Registration Statement on Form S-4 (the "OFFER
REGISTRATION STATEMENT") with respect to the Offer (the Schedule TO, the Offer
Registration Statement and such documents included therein pursuant to which the
Offer will be made, together with any supplements or amendments thereto, the
"OFFER DOCUMENTS"). Parent, Merger Sub and the Company each agrees promptly to
correct any information provided by it for use in the Offer Documents if and to
the extent that such information shall have become false or misleading in any
material respect. Parent and Merger Sub agree to take all steps necessary to
cause the Schedule TO and the Offer Registration Statement as so corrected to be
filed with the SEC and the other Offer Documents as so corrected to be
disseminated to holders of shares of Company Common Stock, in each case as and
to the extent required by applicable federal securities laws. The Company and
its counsel shall be given an opportunity to review and comment on the Offer
Documents prior to their being filed with the SEC or disseminated to the holders
of shares of Company Common Stock. Each of Parent and Merger Sub agrees to
provide the Company and its counsel with any comments Parent and Merger Sub or
their counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments and shall provide the
Company and its counsel an opportunity to participate in the response of Parent
or Merger Sub to such comments, including by participating with Parent and
Merger Sub or their counsel in any discussions with the SEC or its staff.
Section 2.02. Company Action. (a) The Company hereby consents to the
Offer and represents that its Board of Directors, at a meeting duly called and
held, has (i) unanimously determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, are fair to and in the
best interests of the Company's stockholders, (ii) unanimously approved and
adopted this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, in accordance with the requirements of the New York
Business Corporation Law (the "BCL") and (iii) subject to Section 7.07,
unanimously resolved to recommend acceptance of the Offer and approval and
adoption of this Agreement and the Merger by its stockholders. The Company
further represents that Goldman, Sachs & Co. has delivered to the Company's
Board of Directors its opinion as of the date hereof that the consideration to
be paid in the Offer and the Merger is fair to the holders of shares of Company
Common Stock from a financial point of view. The Company has been advised that
all of its directors and executive officers who own shares of Company Common
Stock intend either to tender their shares of Company Common Stock pursuant to
the Offer or to vote in favor of the Merger. The Company will promptly furnish
Parent with a list of its stockholders, mailing labels and any available listing
or computer file containing the names and addresses of all record holders of
shares of Company Common Stock and lists of securities positions of shares of
Company Common Stock held in stock depositories, in each case true and correct
as of the most recent practicable date, and will provide to Parent such
additional information (including updated lists of stockholders, mailing labels
and lists of securities positions) and such other assistance as Parent may
reasonably request in connection with the Offer.
(b) As soon as practicable on the day that the Offer is commenced, the
Company shall file with the SEC and disseminate to holders of shares of Company
Common Stock, in each case as and to the extent required by applicable federal
securities laws, a Solicitation/Recommendation Statement on Schedule 14D-9
(together with any amendments or supplements thereto, the "SCHEDULE 14D-9")
that, subject to Section 7.07, shall reflect the recommendations of the
Company's Board of Directors referred to above; provided, however, that prior to
the consummation of the Offer, the Board of Directors of the Company may amend,
modify, withdraw, condition or qualify such recommendations or may take any
action or make any statement inconsistent with such recommendations, to the
extent a majority of the Company's Board of Directors concludes in its good
faith judgment, after receiving the advice of outside legal counsel, that it is
necessary to take such action in order to comply with its fiduciary duties to
shareholders under applicable law. The Company agrees to provide Parent and its
counsel with any comments the Company or its counsel may receive from the SEC or
its staff with respect to the Schedule 14D-9 promptly after the receipt of such
comments and shall provide Parent and its counsel an opportunity to participate
in the response of the Company to such
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comments, including by participating with the Company or its counsel in any
discussions with the SEC or its staff. The Company, Parent and Merger Sub each
agree promptly to correct any information provided by it for use in the Schedule
14D-9 if and to the extent that it shall have become false or misleading in any
material respect. The Company agrees to take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated
to holders of shares of Company Common Stock, in each case as and to the extent
required by applicable federal securities laws. Parent and its counsel shall be
given an opportunity to review and comment on the Schedule 14D-9 prior to its
being filed with the SEC.
Section 2.03. Directors. (a) Effective upon the acceptance for payment of
any shares of Company Common Stock pursuant to the Offer, Parent shall be
entitled to designate the number of directors, rounded up to the next whole
number, on the Company's Board of Directors that equals the product of (i) the
total number of directors on the Company's Board of Directors (giving effect to
the election of any additional directors pursuant to this Section) and (ii) the
percentage that the number of shares of Company Common Stock beneficially owned
by Parent and/or Merger Sub (including shares of Company Common Stock accepted
for payment) bears to the total number of shares of Company Common Stock
outstanding, and the Company shall take all action necessary to cause Parent's
designees to be elected or appointed to the Company's Board of Directors,
including increasing the number of directors, and seeking and accepting
resignations of incumbent directors. At such time, the Company will also use its
best efforts to cause individuals designated by Parent to constitute the number
of members, rounded up to the next whole number, on (i) each committee of the
Board and (ii) each board of directors of each Subsidiary of the Company (and
each committee thereof) that represents the same percentage as such individuals
represent on the Board of Directors of the Company. Notwithstanding the
provisions of this Section 2.03, the parties hereto shall use their respective
best efforts to ensure that at least two of the members of the Company's Board
of Directors shall, at all times prior to the Effective Time, be directors of
the Company who were directors of the Company on the date hereof (the
"CONTINUING DIRECTORS"); provided that if there shall be in office fewer than
two Continuing Directors for any reason, the Company's Board of Directors shall
cause a person designated by the remaining Continuing Director to fill such
vacancy who shall be deemed to be a Continuing Director for all purposes of this
Agreement, or if no Continuing Directors then remain, the other directors of the
Company then in office shall designate two persons to fill such vacancies who
will not be officers or employees or affiliates of the Company, Parent or Merger
Sub or any of their respective Subsidiaries and such persons shall be deemed to
be Continuing Directors for all purposes of this Agreement.
(b) The Company's obligations to appoint Parent's designees to the
Company's Board of Directors shall be subject to Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder. The Company shall promptly take all
actions, and shall include in the Schedule 14D-9 such information with respect
to the Company and its officers and directors, as Section 14(f) and Rule 14f-1
require in order to fulfill its obligations under this Section, so long as
Parent shall have provided to the Company on a timely basis the information
referred to in the following sentence. Parent shall supply to the Company in
writing and be solely responsible for any information with respect to itself and
its nominees, officers, directors and affiliates required by Section 14(f) and
Rule 14f-1.
(c) Following the election or appointment of Parent's designees pursuant to
Section 2.03(a) and until the Effective Time, the approval of a majority of the
Continuing Directors shall be required to authorize (and such authorization
shall constitute the authorization of the Company's Board of Directors and no
other action on the part of the Company, including any action by any other
director of the Company, shall be required to authorize) any termination of this
Agreement by the Company, any amendment of this Agreement requiring action by
the Company's Board of Directors, any extension of time for performance of any
obligation or action hereunder by Parent or Merger Sub, any waiver of compliance
with any of the agreements or conditions contained herein for the benefit of the
Company, any consent or action by the Board of Directors of the Company
hereunder and any other action of the Company hereunder which adversely affects
the holders of shares of Company Common Stock (other than Parent or Purchaser).
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ARTICLE 3
THE MERGER
Section 3.01. The Merger. (a) Upon the terms and subject to the
conditions of this Agreement, as soon as practicable after satisfaction or, to
the extent permitted hereby, waiver of all conditions to the Merger set forth
herein, a certificate of merger (the "CERTIFICATE OF MERGER") shall be duly
prepared, executed and acknowledged by Merger Sub and the Company in accordance
with the BCL and shall be filed with the Secretary of State of New York. The
Merger shall become effective upon the filing of the Certificate of Merger (or
at such later time reflected in such Certificate of Merger as shall be agreed to
by Parent and the Company). The date and time when the Merger shall become
effective is hereinafter referred to as the "EFFECTIVE TIME."
(b) At the Effective Time, Merger Sub shall be merged with and into the
Company and the separate corporate existence of Merger Sub shall cease, and the
Company shall continue as the surviving corporation under the laws of the State
of New York (the "SURVIVING CORPORATION").
(c) From and after the Effective Time, the Merger shall have the effects
set forth in this Agreement and in Section 906 of BCL.
Section 3.02. Certificate of Incorporation of the Surviving
Corporation. The Certificate of Incorporation of the Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation.
Section 3.03. By-Laws of the Surviving Corporation. The By-Laws of the
Merger Sub, as in effect immediately prior to the Effective Time, shall be the
By-Laws of the Surviving Corporation.
Section 3.04. Directors and Officers of the Surviving Corporation. At the
Effective Time, the directors of Merger Sub immediately prior to the Effective
Time shall be the directors of the Surviving Corporation, each of such directors
to hold office, subject to the applicable provisions of the BCL and the
Certificate of Incorporation and By-Laws of the Surviving Corporation, until the
next annual shareholders' meeting of the Surviving Corporation and until their
respective successors shall be duly elected or appointed and qualified. At the
Effective Time, the officers of the Company immediately prior to the Effective
Time shall, subject to the applicable provisions of the Certificate of
Incorporation and By-Laws of the Surviving Corporation, be the officers of the
Surviving Corporation until their respective successors shall be duly elected or
appointed and qualified.
Section 3.05. Closing. The closing of the Merger (the "CLOSING") shall be
held at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York,
New York 10017 as soon as practicable, but in any event within three (3)
Business Days after the last of the conditions (excluding conditions that, by
their nature, cannot be satisfied until the Closing Date) set forth in Article 8
hereof is satisfied or waived or at such other time and date as the parties
hereto shall agree in writing. Such date is herein referred to as the "CLOSING
DATE."
ARTICLE 4
CONVERSION OF SHARES AND RELATED MATTERS
Section 4.01. Conversion of Capital Stock. At the Effective Time, by
virtue of the Merger:
(a) Cancellation of Treasury Stock and Stock Owned by Parent and
Merger Sub. All shares of Company Common Stock owned by the Company as
treasury stock and any shares of Company Common Stock owned by Parent,
Merger Sub or any Subsidiary of Parent or Merger Sub immediately prior to
the Effective Time shall, by virtue of the Merger, and without any action
on the part of the holder thereof, no longer be outstanding, shall be
canceled and retired without payment of any consideration therefor and
shall cease to exist.
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(b) Capital Stock of Merger Sub. Each share of Merger Sub Common
Stock outstanding immediately prior to the Effective Time shall be
converted into and become one share of common stock of the Surviving
Corporation.
(c) Conversion of Company Common Stock. Except as provided in clause
(a) of this Section 4.01, each share of Company Common Stock outstanding
immediately prior to the Effective Time shall be converted into and shall
be canceled in exchange for the right to receive from Parent the same
amount of cash (including any cash interest payable pursuant to Section
2.01) and the same number of shares of Parent Common Stock paid in the
Offer. At the Effective Time, all Company Common Stock shall no longer be
outstanding, shall be canceled and retired and shall cease to exist, and
each certificate (a "CERTIFICATE") formerly representing any of such
Company Common Stock shall thereafter represent only the right to receive
cash and the number of whole shares of Parent Common Stock into which the
Company Common Stock represented by such Certificate is converted pursuant
to this Section 4.01(c) and the right, if any, to receive pursuant to
Section 4.03(e) cash in lieu of fractional shares of Parent Common Stock
and any dividend or distribution pursuant to Section 4.03(c), in each case
without interest.
(d) In the event that, subsequent to the date of this Agreement but
prior to the Effective Time, the Company changes the number of shares of
Company Common Stock, or Parent changes the number of shares of Parent
Common Stock, issued and outstanding as a result of a stock split, stock
combination, stock dividend, recapitalization, redenomination of share
capital or other similar transaction, the Exchange Ratio and other items
dependent thereon shall be appropriately adjusted.
Section 4.02. Exchange of Shares. Prior to the Effective Time, Parent
shall appoint a bank or trust company reasonably acceptable to the Company as
exchange agent (the "EXCHANGE AGENT") for the purposes of exchanging the
Certificates for cash and the whole number of shares of Parent Common Stock into
which the shares of Company Common Stock formerly represented thereby have been
converted and cash in lieu of fractional shares of Parent Common Stock. Promptly
after the Effective Time, Parent will send, or will cause the Exchange Agent to
send, to each holder of record of Company Common Stock as of the Effective Time
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall be in customary
form and have such other customary provisions as the Surviving Corporation or
Parent may reasonably specify) providing instructions for use in effecting the
surrender of Certificates in exchange for cash and the whole number of shares of
Parent Common Stock into which the shares of Company Common Stock formerly
represented thereby have been converted and cash in lieu of fractional shares of
Parent Common Stock.
Section 4.03. Exchange of Certificates. (a) Exchange Agent. Within three
Business Days following the Effective Time, Parent shall deposit with the
Exchange Agent (i) as nominee for the benefit of the holders of Company Common
Stock, the aggregate amount of cash (including any cash interest payable under
Section 2.01) and the aggregate number of shares of Parent Common Stock to be
issued pursuant to Section 4.01(c) and (ii) an amount of cash sufficient to
permit the Exchange Agent to make the necessary payments of cash in lieu of
fractional shares of Parent Common Stock in accordance with Section 4.03(e)
(such cash and shares of Parent Common Stock, together with any dividends or
distributions with respect thereto being hereinafter referred to as the
"EXCHANGE FUND"), to be held for the benefit of and distributed to the holders
of Company Common Stock in accordance with this Section. The Exchange Agent
shall invest any cash included in the Exchange Fund as directed by the Surviving
Corporation on a daily basis in direct obligations of the United States,
obligations for which the full faith and credit of the United States is pledged
to provide for the payment of principal and interest, commercial paper rated the
highest quality by Moody's Investors Services, Inc. or Standard & Poor's Ratings
Group or certificates of deposit, bank repurchase agreements or bankers'
acceptances of a commercial bank having at least $100,000,000 in assets, or in
money market funds which are invested in the foregoing; provided that no such
investment or loss thereon shall affect the amounts payable to the Company's
shareholders pursuant to this Article 4. Parent and the Surviving Corporation
shall replace any monies lost through an investment made pursuant to this
Section 4.03. Any interest and other income resulting from such investments
shall promptly be paid to the Surviving Corporation.
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(b) Exchange Procedures. Upon surrender of a Certificate for cancellation
to the Exchange Agent, together with the letter of transmittal referred to in
Section 4.02 duly executed and completed in accordance with its terms, the
holder of such Certificate shall be entitled to receive in exchange therefor (i)
the amount of cash and a certificate or certificates representing the whole
number of shares of Parent Common Stock into which the shares of Company Common
Stock represented by such Certificate have been converted in accordance with
Section 4.01(c), (ii) the amount of dividends or other distributions, if any,
with a record date on or after the Effective Time which theretofore became
payable with respect to such shares of Parent Common Stock, and (iii) the cash
amount payable in lieu of fractional shares of Parent Common Stock in accordance
with Section 4.03(e), in each case which such holder has the right to receive
pursuant to the provisions of this Article 4, and the Certificate so surrendered
shall forthwith be canceled. In no event shall the holder of any Certificate be
entitled to receive interest on any funds to be received in the Merger. In the
event of a transfer of ownership of shares of Company Common Stock which is not
registered in the transfer records of the Company, the amount of cash and a
certificate or certificates representing that whole number of shares of Parent
Common Stock into which such shares of Company Common Stock have been converted
in accordance with Section 4.01(c), plus the cash amount payable in lieu of
fractional shares of Parent Common Stock in accordance with Section 4.03(e), may
be issued to a transferee if the Certificate representing such Company Common
Stock is presented to the Exchange Agent accompanied by all documents required
to evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
4.03(b) and subject to Section 4.03(c), each Certificate shall, after the
Effective Time, represent for all purposes only the right to receive the amount
of cash and the whole number of shares of Parent Common Stock into which the
number of shares of Company Common Stock shown thereon has been converted in
accordance with Section 4.01(c), plus the cash amount payable in lieu of
fractional shares of Parent Common Stock in accordance with Section 4.03(e).
Notwithstanding the foregoing, certificates representing Company Common Stock
surrendered for exchange by any Person constituting an "Affiliate" of the
Company for purposes of Section 7.14 shall not be exchanged until Parent has
received a Rule 145 Affiliate Agreement (as defined in Section 7.14) as provided
in Section 7.14.
(c) Distributions With Respect To Unexchanged Shares. No dividends or
other distributions declared, made or paid after the Effective Time with respect
to shares of Parent Common Stock with a record date on or after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with respect
to the shares of Parent Common Stock represented thereby and no cash payment in
lieu of fractional shares of Parent Common Stock shall be paid to any such
holder pursuant to Section 4.03(e) until the holder of record of such
Certificate shall surrender such Certificate in accordance with this Section.
Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be paid to the record holder of the certificates
representing shares of Parent Common Stock, without interest, (i) at the time of
such surrender, the amount of dividends or other distributions, if any, with a
record date on or after the Effective Time which theretofore became payable, but
which were not paid by reason of the immediately preceding sentence, with
respect to such shares of Parent Common Stock and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record date
on or after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such shares of Parent Common
Stock. Dividends or other distributions with a record date on or after the
Effective Time but prior to surrender of Certificates by holders thereof payable
in respect of shares of Parent Common Stock held by the Exchange Agent shall be
held in trust for the benefit of such holders of Certificates.
(d) No Further Ownership Rights In Company Common Stock. All shares of
Parent Common Stock issued and all cash paid upon the surrender for exchange of
Certificates in accordance with the terms hereof (including any cash paid
pursuant to Section 4.03(e)) shall be deemed to have been issued at the
Effective Time in full satisfaction of all rights pertaining to the shares of
Company Common Stock represented thereby, subject, however, to the Surviving
Corporation's obligation to pay any dividends which may have been declared by
the Company on the shares of Company Common Stock in accordance with the terms
of this Agreement and which remained unpaid at the Effective Time. From and
after the Effective Time, the stock transfer books of the Company shall be
closed and there shall be no further registration of transfers thereon of the
shares of Company Common Stock which were outstanding immediately prior to the
Effective Time. If,
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after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Section.
(e) No Fractional Shares. No certificate or scrip representing fractional
shares of Parent Common Stock will be issued in the Offer or the Merger upon the
surrender for exchange of Certificates, and such fractional shares of Parent
Common Stock will not entitle the owner thereof to vote or to any rights of a
holder of shares of Parent Common Stock. In lieu of any such fractional shares
of Parent Common Stock, each holder of Certificates who would otherwise have
been entitled to a fraction of a share of Parent Common Stock in exchange for
such Certificates (after taking into account all Certificates delivered by such
holder) pursuant to this Section shall receive from the Exchange Agent, as
applicable, a cash payment in lieu of such fractional share of Parent Common
Stock, determined by multiplying (A) the average of the last reported sales
prices of Parent Common Stock, as reported on the NYSE, on each of the 20
Trading Days ending on the third Trading Day immediately preceding the
acceptance for payment of shares of Company Common Stock in the Offer by (B) the
fractional share of Parent Common Stock to which such holder would otherwise be
entitled.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the shareholders of the Company for one (1) year after
the Effective Time shall be delivered to or as directed by Parent, upon demand,
and any holders of Certificates who have not theretofore complied with this
Article 4 shall thereafter look only to Parent (subject to abandoned property,
escheat and other similar laws) as a general creditor for payment of their claim
for shares of Parent Common Stock, any cash in lieu of fractional shares of
Parent Common Stock and any dividends or distributions with respect to shares of
Parent Common Stock. Neither Parent nor the Surviving Corporation shall be
liable to any holder of any Certificate for cash or shares of Parent Common
Stock (or dividends or distributions with respect thereto), or cash payable in
respect of fractional shares of Parent Common Stock, delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
Any securities or cash amounts remaining unclaimed by holders of Certificates
five years after the Effective Time (or such earlier date immediately prior to
such time as such amounts would otherwise escheat to or become property of any
governmental entity) shall, to the extent permitted by applicable law, become
the property of the Surviving Corporation free and clear of any claims or
interest of any Person previously entitled thereto.
(g) Lost, Stolen or Destroyed Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such person of a bond in such reasonable
amount as Parent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will deliver in
exchange for such lost, stolen or destroyed Certificate the cash and the whole
number of shares of Parent Common Stock into which the shares of Company Common
Stock formerly represented thereby have been converted, any cash in lieu of
fractional shares of Parent Common Stock, and unpaid dividends and distributions
in respect of or on shares of Parent Common Stock deliverable in respect
thereof, pursuant to this Agreement.
(h) Withholding Rights. Each of the Surviving Corporation and Parent shall
be entitled to deduct and withhold from the cash and the shares of Parent Common
Stock (and any dividends or distributions thereon) and cash in lieu of
fractional shares of Parent Common Stock otherwise payable hereunder to any
holder of Certificates in respect of the shares of Company Common Stock formerly
represented thereby such amounts as it is required to deduct and withhold with
respect to the making of such payment under any provision of federal, state,
local or foreign income tax law. To the extent that the Surviving Corporation or
Parent so withholds those amounts, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of Company
Common Stock in respect of which such deduction and withholding was made by the
Surviving Corporation or Parent, as the case may be.
Section 4.04. Company Stock Options and Stock Rights. (a) As soon as
practicable following the date of this Agreement, the Board of Directors of the
Company (or the appropriate committee thereof) shall adopt
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such resolutions, take such actions and obtain such consents as may be required
to effect the following, effective at the Effective Time:
(i) each option granted to an employee or former employee of the
Company (each, an "OPTION") to purchase shares of Company Common Stock
theretofore granted under the Company's stock plans, programs, arrangements
or agreements ("COMPANY STOCK PLANS") which is outstanding and unexercised
immediately prior to the Effective Time, whether or not vested or
exercisable, shall be cancelled in exchange for a single lump sum cash
payment (less any applicable income or employment tax withholding) payable
by Parent at the Effective Time and equal to the product of (x) the number
of shares of Company Common Stock subject to such Option immediately prior
to the Effective Time and (y) the excess, if any, of $75 over the exercise
price per share of Company Common Stock of such Option; and
(ii) each restricted stock unit granted to an employee or former
employee of the Company (each, a "COMPANY STOCK RIGHT") under any Company
Stock Plan, whether or not vested, outstanding immediately prior to the
Effective Time shall be cancelled in exchange for a single lump sum cash
payment (less any applicable income or employment tax withholding) payable
by Parent at the Effective Time and equal to $75.
(b) Prior to the Effective Time, the Company shall use its reasonable best
efforts to take all actions (including, if appropriate, amending the terms of
the Company's stock option or compensation plans or arrangements) and obtain
such consents as are necessary to give the effect to the transactions
contemplated by Section 4.04(a).
(c) As soon as practicable after the Effective Time, Parent shall deliver
to the holders of Options and Company Stock Rights appropriate notices setting
forth such holders' rights pursuant to the applicable Company Stock Plans, and
the agreements evidencing the grants of such Options and Company Stock Rights
shall continue in effect on the same terms and conditions (subject to the
adjustments required by this Section 4.04 after giving effect to the Merger).
(d) Except as disclosed in writing to Parent prior to the date hereof, the
Company agrees that it will not grant any stock options, stock appreciation
rights, stock units, deferred stock awards or other rights to acquire Company
Common Stock or any other interest in Company Common Stock or any other equity
security of the Company and will not take any action to accelerate the
exercisability or vesting of Options or Company Stock Rights, and/or permit cash
payments to holders of Options or Company Stock Rights with respect to such
Options or Company Stock Rights.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in (i) the Company's disclosure letter delivered
concurrently with the delivery of this Agreement (the "COMPANY DISCLOSURE
LETTER") or (ii) the Company SEC Reports (as defined below) made or filed prior
to the date of this Agreement, the Company hereby represents and warrants to
Parent and Merger Sub as follows:
Section 5.01. Due Organization, Good Standing and Corporate Power. Each
of the Company and its Significant Subsidiaries is a corporation duly organized,
validly existing and in good standing (with respect to jurisdictions which
recognize the concept of good standing) under the laws of the jurisdiction of
its incorporation and each such Person has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to be so organized, existing
and in good standing or to have such power and authority could not reasonably be
expected to, individually or in the aggregate, have a Company Material Adverse
Effect. The Company and each of its Significant Subsidiaries is duly qualified
or licensed to do business and is in good standing in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except in such jurisdictions
where the failure to be so qualified or licensed and in good standing could not
reasonably be expected to, individually or in the aggregate, have a Company
Material
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Adverse Effect. Other than as set forth in Section 5.01 of the Company
Disclosure Letter, the respective Certificates of Incorporation and By-Laws or
other organizational documents of the Significant Subsidiaries of the Company do
not contain any provision limiting or otherwise restricting the ability of the
Company to control its Significant Subsidiaries. Section 5.01 of the Company
Disclosure Letter sets forth a list of all Significant Subsidiaries of the
Company and their respective jurisdictions of incorporation or organization and
identifies the Company's (direct or indirect) percentage of equity ownership
therein.
Section 5.02. Authorization and Validity of Agreement. The Company has
full corporate power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and, subject to obtaining the Company
Shareholder Approval, to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement by the Company, and the
consummation by it of the transactions contemplated hereby, have been duly
authorized and unanimously approved by its Board of Directors and no other
corporate action on the part of the Company is necessary to authorize the
execution, delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby, other than obtaining the
Company Shareholder Approval. This Agreement has been duly executed and
delivered by the Company and is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except to the
extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
Section 5.03. Capitalization. (a) The authorized capital stock of the
Company consists of 250,000,000 shares of Company Common Stock and 8,531,431
shares of preferred stock, par value $1.00 per share (the "COMPANY PREFERRED
STOCK"). At the close of business on May 11, 2000: (i) 96,851,138 shares of
Company Common Stock were issued and outstanding, (ii) 3,900,736 shares of
Company Common Stock were reserved for issuance under the Company's stock option
and stock benefit plans and arrangements, (iii) no shares of Company Preferred
Stock were issued and outstanding and (iv) 15,427,059 shares of Company Common
Stock were held by the Company in its treasury. All issued and outstanding
shares of capital stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable. Except as set forth in Section
5.03(a) of the Company Disclosure Letter and other than the Rights, there are no
outstanding or authorized options, warrants, rights, subscriptions, claims of
any character, agreements, obligations, convertible or exchangeable securities,
or other commitments, contingent or otherwise, relating to shares of capital
stock or other equity interests of the Company or any of its Subsidiaries,
pursuant to which the Company or any of its Subsidiaries is or may become
obligated to issue shares of its capital stock or other equity interests or any
securities convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of the capital stock or other equity interests of the
Company or any of its Subsidiaries (each an "ISSUANCE OBLIGATION"). There are no
outstanding obligations of the Company to repurchase, redeem or otherwise
acquire any outstanding securities of the Company. The Company has no authorized
or outstanding bonds, debentures, notes or other indebtedness the holders of
which have the right to vote (or convertible or exchangeable into or exercisable
for securities the holders of which have the right to vote) with the
shareholders of the Company on any matter ("VOTING DEBT"). Except as set forth
in Section 5.03(a) of the Company Disclosure Letter, there are no restrictions
of any kind which prevent or restrict the payment of dividends by the Company or
any of its Subsidiaries and there are no limitations or restrictions on the
right to vote, sell or otherwise dispose of such capital stock or other
ownership interests.
(b) All of the issued and outstanding shares of capital stock of each
Significant Subsidiary are validly existing, fully paid and non-assessable.
Except as set forth in the Company SEC Reports or Section 5.03(b) of the Company
Disclosure Letter, no Significant Subsidiary of the Company has outstanding
Voting Debt and no Significant Subsidiary of the Company is bound by, obligated
under, or party to an Issuance Obligation with respect to any security of the
Company or any Significant Subsidiary of the Company and there are no
obligations of the Company or any of its Significant Subsidiaries to repurchase,
redeem or otherwise acquire any outstanding securities of any of its Significant
Subsidiaries or any capital stock of, or other ownership interests in, any of
its Significant Subsidiaries.
(c) Except for the Company's interest in its Significant Subsidiaries, and
as set forth in the Company SEC Reports or Section 5.03(c) of the Company
Disclosure Letter, the Company does not directly or
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indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture, limited liability company or other
business association or entity which is material to the Company and its
Subsidiaries, taken as a whole.
Section 5.04. Consents and Approvals; No Violations. Assuming (i) the
filings required under applicable Brazilian antitrust or competition laws, the
Competition Act Canada (the "COMPETITION ACT") and the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), are made and the
waiting periods thereunder (if applicable) have been terminated or expired, (ii)
the prior notification and reporting requirements of the German Act Against
Restraints in Competition and other antitrust laws of the member states of the
European Union as may be applicable (collectively, the "EUROPEAN ANTITRUST
LAWS") are satisfied and any antitrust filings/notifications which must or may
be effected at the national level in countries having jurisdiction are made and
any applicable waiting periods thereunder have been terminated or expired, (iii)
the prior notification and reporting requirements of other antitrust or
competition laws as may be applicable are satisfied and any antitrust
filings/notifications which must or may be effected in countries having
jurisdiction are made, (iv) the applicable requirements of the Securities Act
and the Exchange Act are met, (v) the requirements under any applicable foreign
or state securities or blue sky laws are met, (vi) the filing of the Certificate
of Merger and other appropriate merger documents, if any, as required by the
BCL, are made, (vii) in the case of this Agreement the Company Shareholder
Approval is received, and (viii) the requirements of any applicable state law
relating to the transfer of contaminated property are met, the execution and
delivery of this Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby do not and will not: (A) violate or
conflict with any provision of the Company's Certificate of Incorporation or the
Company's By-Laws or the comparable governing documents of any of its
Subsidiaries; (B) violate or conflict with any statute, law, ordinance, rule or
regulation (together, "LAWS") or any order, judgment, decree, writ, permit or
license (together, "ORDERS"), of any court, tribunal, arbitrator, authority,
agency, commission, official or other instrumentality of the United States, any
foreign country or any domestic or foreign state, county, city or other
political subdivision (a "GOVERNMENTAL AUTHORITY") applicable to the Company or
any of its Subsidiaries or by which any of their respective properties or assets
may be bound; (C) except as set forth in Section 5.04 of the Company Disclosure
Letter, require any filing with, or permit, consent or approval of, or the
giving of any notice to, any Governmental Authority; or (D) except as set forth
in Section 5.04 of the Company Disclosure Letter, result in a violation or
breach of, conflict with, constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation,
payment or acceleration) under, or result in the creation of any Lien upon any
of the properties or assets of the Company or any of its Significant
Subsidiaries under, or give rise to any obligation, right of termination,
cancellation, acceleration or increase of any obligation or a loss of a material
benefit under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, franchise, permit, agreement, contract, lease,
franchise agreement or other instrument or obligation of any kind ("CONTRACTS")
to which the Company or any of its Significant Subsidiaries is a party, or by
which any such Person or any of its properties or assets are bound, excluding
from the foregoing clauses (B), (C) and (D) conflicts, violations, breaches,
defaults, rights of payment and reimbursement, terminations, modifications,
accelerations and creations and impositions of Liens which could not reasonably
be expected to, individually or in the aggregate, have a Company Material
Adverse Effect.
Section 5.05. Company Reports and Financial Statements. (a) Since
December 31, 1997, the Company and, to the extent applicable, its Subsidiaries,
have filed all forms, reports and documents with the SEC required to be filed by
it pursuant to the federal securities laws and the SEC rules and regulations
thereunder, and all forms, reports, schedules, registration statements and other
documents filed with the SEC by the Company and, to the extent applicable, its
Subsidiaries have complied in all material respects with all applicable
requirements of the federal securities laws and the SEC rules and regulations
promulgated thereunder. The Company has, prior to the date of this Agreement,
made available to Parent true and complete copies of all forms, reports,
registration statements and other filings filed by the Company and its
Subsidiaries with the SEC since December 31, 1997 (such forms, reports,
registration statements and other filings, together with any exhibits, any
amendments thereto and information incorporated by reference therein, are
sometimes collectively referred to as the "COMPANY SEC REPORTS"). As of their
respective dates, the Company SEC Reports did not contain any untrue statement
of a material fact or omit to state a material fact
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required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and the unaudited consolidated interim
financial statements of the Company included in the Company SEC Reports were
prepared in accordance with GAAP applied on a consistent basis (except as may be
indicated therein or in the notes or schedules thereto) and present fairly, in
all material respects, the consolidated financial position of the Company and
its consolidated Subsidiaries as of the dates thereof and their consolidated
results of operations and changes in financial position for the periods then
ended. The Company has heretofore provided Parent with true and correct copies
of any amendments and/or modifications to any Company SEC Reports which have not
yet been filed with the SEC but that are required to be filed with the SEC in
accordance with applicable federal securities laws and the SEC rules.
(b) Except as set forth or provided in the Company SEC Reports or Section
5.05(b) of the Company Disclosure Letter, neither the Company nor any of its
Subsidiaries has any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise), in each case that is required by GAAP to be
set forth on a consolidated balance sheet of the Company, except for (i)
liabilities and obligations under this Agreement or incurred in connection with
the transactions contemplated hereby and (ii) liabilities and obligations
incurred in the ordinary course of business consistent with past practice since
September 30, 1999 which could not reasonably be expected to, individually or in
the aggregate, have a Company Material Adverse Effect. Neither the Company nor
any of its Subsidiaries is in default in respect of the material terms and
conditions of any indebtedness or other agreement which could reasonably be
expected to, individually or in the aggregate, have a Company Material Adverse
Effect.
Section 5.06. Information to Be Supplied. (a) Each of the Schedule 14D-9
and the Proxy Statement/ Prospectus and the other documents required to be filed
by the Company with the SEC in connection with the Offer, the Merger and the
other transactions contemplated hereby will comply as to form in all material
respects with the requirements of the Exchange Act and the Securities Act, as
the case may be, and will not, on the date of its filing or, in the case of the
Proxy Statement/Prospectus, on the dates it is mailed to shareholders of the
Company and at the time of the Company Shareholder Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
(b) Notwithstanding the foregoing provisions of this Section 5.06, no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference in the Merger Registration Statement, the
Proxy Statement/Prospectus or the Schedule 14D-9 based on information supplied
by Parent or Merger Sub expressly for inclusion or incorporation by reference
therein or based on information which is not made in or incorporated by
reference in such documents but which should have been disclosed pursuant to
Section 6.06.
Section 5.07. Absence of Certain Events. Except as disclosed in the
Company SEC Reports or in Section 5.07 of the Company Disclosure Letter or as
required or expressly permitted by this Agreement, since December 31, 1998, the
Company and its Subsidiaries have operated their respective businesses only in
the ordinary course and, except as disclosed in the Company SEC Reports or in
Section 5.07 of the Company Disclosure Letter, there has not occurred (i) any
event, occurrence or conditions which could reasonably be expected to,
individually or in the aggregate, have a Company Material Adverse Effect; (ii)
any damage, destruction or loss which, individually or in the aggregate,
resulted in or could reasonably be expected to result in, a Company Material
Adverse Effect; or (iii) any increase in the compensation of, or change of
control agreement with, any officer of the Company or any of its Subsidiaries or
any general salary or benefits increase to the employees of the Company or any
of its Subsidiaries other than in the ordinary course of business.
Section 5.08. Litigation. Except as disclosed in Section 5.08 of the
Company Disclosure Letter, there are no investigations, actions, suits or
proceedings pending against the Company or its Subsidiaries or, to the knowledge
of the Company, threatened against the Company or its Subsidiaries (or any of
their respective properties, rights or franchises), at law or in equity, or
before or by any federal or state commission, board, bureau, agency, regulatory
or administrative instrumentality or other Governmental Authority or any
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arbitrator or arbitration tribunal, that could reasonably be expected to,
individually or in the aggregate, have a Company Material Adverse Effect, and,
to the knowledge of the Company, no development has occurred with respect to any
pending or threatened action, suit or proceeding that could reasonably be
expected to result in a Company Material Adverse Effect or could reasonably be
expected to prevent, materially impair or materially delay the consummation of
the transactions contemplated hereby. Neither the Company nor any of its
Subsidiaries is subject to any judgment, order or decree entered in any lawsuit
or proceeding which could reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect.
Section 5.09. Title to Properties; Encumbrances. Except as disclosed in
Section 5.09 of the Company Disclosure Letter, the Company and each of its
Significant Subsidiaries has good, valid and marketable title to, or, in the
case of leased properties and assets, valid leasehold interests in, all of its
tangible properties and assets except where the failure to have such good, valid
and marketable title could not reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect; in each case subject to no
Liens, except for (A) Liens reflected in the consolidated balance sheet as of
September 30, 1999, (B) Liens consisting of zoning or planning restrictions,
easements, permits and other restrictions or limitations on the use of real
property or irregularities in title thereto which do not materially detract from
the value of, or impair the use of, such property by the Company or any of its
Significant Subsidiaries in the operation of its respective business, (C) Liens
for current Taxes, assessments or governmental charges or levies on property not
yet due or which are being contested in good faith and (D) Liens which could not
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect. Except as could not reasonably be expected to,
individually or in the aggregate, have a Company Material Adverse Effect, (i)
the Company and each of its Significant Subsidiaries are in compliance with the
terms of all leases of tangible properties to which they are a party and under
which they are in occupancy, and all such leases are in full force and effect
and (ii) the Company and each of its Significant Subsidiaries enjoys peaceful
and undisturbed possession under all such leases.
Section 5.10. Compliance with Laws. Except as disclosed in the Company
SEC Reports and except as disclosed in Section 5.10 of the Company Disclosure
Letter:
(a) The Company and its Subsidiaries are in compliance with all
applicable federal, state, local and foreign statutes, laws, regulations,
orders, judgments and decrees except where the failure to so comply could
not reasonably be expected to, individually or in the aggregate, have a
Company Material Adverse Effect.
(b) The Company and its Subsidiaries hold, to the extent legally
required, all federal, state, local and foreign permits, approvals,
licenses, authorizations, certificates, rights, exemptions and orders from
Governmental Authorities (the "Permits") that are required for the
operation of the respective businesses of the Company and/or its
Subsidiaries as now conducted, except where the failure to hold any such
Permit could not reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect, and there has not
occurred any default under any such Permit, except to the extent that such
default could not reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect.
Section 5.11. Company Employee Benefit Plans. (a) Set forth in Section
5.11(a) of the Company Disclosure Letter is an accurate and complete list of
each material domestic or foreign employee benefit plan, within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations thereunder ("ERISA"), whether or not subject to
ERISA, and each stock option, stock appreciation right, restricted stock, stock
purchase, stock unit, performance share, incentive, bonus, profit-sharing,
savings, deferred compensation, health, medical, dental, life insurance,
disability, accident, supplemental unemployment or retirement, employment,
severance or salary or benefits continuation or fringe benefit plan, program,
arrangement, or agreement maintained by the Company or any Affiliate thereof
(including, for this purpose and for the purpose of all of the representations
in this Section 5.11, all employers (whether or not incorporated) that would be
treated together with the Company and/or any such Affiliate as a single employer
within the meaning of Section 414 of the Internal Revenue Code of 1986, as
amended, and the rules and regulations thereunder (the "CODE")) or to which the
Company or any Affiliate
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thereof contributes (or has any obligation to contribute), has any liability or
is a party (collectively, the "COMPANY EMPLOYEE BENEFIT PLANS").
(b) Except as set forth in Section 5.11(b) of the Company Disclosure Letter
or disclosed in the Company SEC Reports, (i) each Company Employee Benefit Plan
is in compliance with all applicable laws (including, without limitation, ERISA
and the Code) and has been administered and operated in accordance with its
terms, in each case except as would not have a Company Material Adverse Effect;
(ii) each Company Employee Benefit Plan which is intended to be "qualified"
within the meaning of Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service and, to the best
knowledge of the Company, no event has occurred and no condition exists which
could reasonably be expected to result in the revocation of any such
determination; (iii) the actuarial present value of the accumulated plan
benefits (whether or not vested) under each Company Employee Benefit Plan
covered by Title IV of ERISA, or which otherwise is a pension plan (as defined
in Section 3(2) of ERISA) or provides for actuarially-determined benefits (other
than any Company Employee Benefit Plan which is a "multiemployer plan" (as
defined in Section 4001(a)(3) of ERISA) (a "COMPANY MULTIEMPLOYER PLAN")), as of
the close of its most recent plan year did not exceed the market value of the
assets allocable thereto; (iv) no Company Employee Benefit Plan covered by Title
IV of ERISA has been terminated and no proceedings have been instituted to
terminate or appoint a trustee under Title IV of ERISA to administer any such
plan; (v) no Company Employee Benefit Plan (other than any Company Multiemployer
Plan) subject to Section 412 of the Code or Section 302 of ERISA has incurred
any accumulated funding deficiency within the meaning of Section 412 of the Code
or Section 302 of ERISA, or obtained a waiver of any minimum funding standard or
an extension of any amortization period under Section 412 of the Code or Section
303 or 304 of ERISA; (vi) as of the date of this Agreement, neither the Company
nor any of its Affiliates has incurred any unsatisfied withdrawal liability
under Part 1 of Subtitle E of Title IV of ERISA to any Company Multiemployer
Plan, and the aggregate liabilities of the Company and its Affiliates to all
Company Multiemployer Plans in the event of a complete withdrawal therefrom, as
of the close of the most recent fiscal year of each Company Multiemployer Plan
ended prior to the date hereof, would not have a Company Material Adverse
Effect; (vii) the execution of this Agreement and the consummation of the
transactions contemplated hereby do not constitute a triggering event under any
Company Employee Benefit Plan, policy, arrangement, statement, commitment or
agreement, which (either alone or upon the occurrence of any additional or
subsequent event) will result in any "excess parachute payment," as such term is
defined in Section 280G of the Code, or will result in any severance, bonus,
retirement, job security or similar-type benefit, or increase any benefits or
accelerate the payment or vesting of any benefits to any employee or former
employee or director of the Company or its Affiliates, other than any benefits,
payments, accelerations or increases (1) under any Company Employee Benefit Plan
that is subject to the laws of a jurisdiction outside of the United States or
(2) mandated by applicable law; (viii) no liability, claim, action, litigation,
audit, examination, investigation or administrative proceeding has been made,
commenced or, to the best knowledge of the Company, threatened with respect to
any Company Employee Benefit Plan (other than routine claims for benefits
payable in the ordinary course) which would have a Company Material Adverse
Effect; (ix) except as required to maintain the tax-qualified status of any
Company Employee Benefit Plan intended to qualify under Section 401(a) of the
Code, no condition or circumstance exists that would prevent the amendment or
termination of any Company Employee Benefit Plan; and (x) there has been no
amendment to, written interpretation or announcement (whether or not written)
relating to, or change in employee participation or coverage under, any Company
Employee Benefit Plan which would increase materially the expense of maintaining
such Company Employee Benefit Plan above the level of such expense incurred for
the most recently ended fiscal year.
(c) The Company has delivered or caused to be delivered to Parent or its
counsel true and complete copies of each Company Employee Benefit Plan and any
related trust agreement or funding vehicle, together with all amendments
thereto, and, to the extent applicable with respect thereto, (i) the current
summary plan description; (ii) the most recent annual report on Internal Revenue
Service Form 5500-series, including any attachments thereto; (iii) the most
recent financial report; (iv) the most recent actuarial valuation report; and
(v) the most recent determination letter received from the Internal Revenue
Service.
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Section 5.12. Employment Relations and Agreement. Except as could not
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect or as disclosed in the Company SEC Reports or Section
5.12 of the Company Disclosure Letter, (i) each of the Company and its
Subsidiaries is, and at all times has been, in compliance with all federal,
state or other applicable laws respecting employment and employment practices,
terms and conditions of employment and wages and hours, and has not and is not
engaged in any unfair labor practice; (ii) no unfair labor practice complaint
against the Company or any of its Subsidiaries is pending before the National
Labor Relations Board; (iii) during the last three years there has not been any
labor strike, dispute, slowdown or stoppage or, to the Company's knowledge,
threatened against or involving the Company or any of its Subsidiaries; (iv) no
representation question exists respecting the employees of the Company or any of
its Subsidiaries; (v) no arbitration proceeding arising out of or under any
collective bargaining agreement is pending and no claim therefor has been
asserted; and (vi) no collective bargaining agreement is currently being
negotiated by the Company or any of its Subsidiaries.
Section 5.13. Taxes. Except as set forth in Section 5.13 of the Company
Disclosure Letter:
(a) Tax Returns. The Company and each of its Subsidiaries has timely
filed or caused to be timely filed with the appropriate Taxing authorities
all Federal income and all other material returns, statements, forms and
reports for Taxes (as hereinafter defined) ("RETURNS") that are required to
be filed by, or with respect to, the Company and such Subsidiaries on or
prior to the Closing Date. The Returns as filed were correct and complete
in all material respects. "TAXES" shall mean all taxes, assessments,
charges, duties, fees, levies or other governmental charges including,
without limitation, all Federal, state, local, foreign and other income,
franchise, profits, capital gains, capital stock, transfer, sales, use,
occupation, property, excise, severance, windfall profits, stamp, license,
payroll, withholding and other taxes, assessments, charges, duties, fees,
levies or other governmental charges of any kind whatsoever (whether
payable directly or by withholding and whether or not requiring the filing
of a Return), all estimated taxes, deficiency assessments, additions to
tax, penalties and interest and shall include any liability for such
amounts as a result either of being a member of a combined, consolidated,
unitary or affiliated group or of a contractual obligation to indemnify any
person or other entity.
(b) Payment of Taxes. All material Taxes and Tax liabilities of the
Company and its Subsidiaries that have become due and payable have been
timely paid or fully provided for as a liability on the financial
statements of the Company and its Subsidiaries in accordance with GAAP.
(c) Other Tax Matters. Neither the Company nor any of its
Subsidiaries has been or is the subject of an audit, other examination,
matter in controversy, proposed adjustment, refund litigation or other
proceeding with respect to Taxes by the Tax authorities of any nation,
state or locality which could reasonably be expected to result in a
material Tax liability, nor has the Company or any of its Subsidiaries
received any notices from any Tax authority relating to any issue which
could reasonably be expected to result in a material Tax liability.
(d) Neither the Company nor any of its Subsidiaries has been included
in any "consolidated," "unitary" or "combined" Return (other than Returns
which include only the Company and any Subsidiaries of the Company)
provided for under the laws of the United States, any foreign jurisdiction
or any state or locality with respect to material Taxes for any taxable
period for which the statute of limitations has not expired.
(e) All material Taxes which the Company or any of its Subsidiaries is
(or was) required by law to withhold or collect have been duly withheld or
collected, and have been timely paid over to the proper authorities to the
extent due and payable.
(f) There are no Tax sharing, allocation, indemnification or similar
agreements (in writing) in effect as between the Company, any of its
Subsidiaries, or any predecessor or Affiliate of any of them and any other
party under which the Company (or any of its Subsidiaries) could be liable
for any material Taxes of any party other than the Company or any
Subsidiary of the Company.
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(g) Neither the Company nor any of its Subsidiaries has applied for,
been granted, or agreed to any accounting method change for which it will
be required to take into account any adjustment under Section 481 of the
Code or any similar provision of the Tax laws of any nation, state or
locality.
(h) Neither the Company nor any of its Subsidiaries has, as of the
Closing Date, entered into an agreement or waiver extending any statute of
limitations relating to the payment or collection of U.S. Federal income
Taxes of the Company or any of its Subsidiaries.
(i) No election under Section 341(f) of the Code has been made or
shall be made prior to the Closing Date to treat the Company or any of its
Subsidiaries as a consenting corporation, as defined in Section 341 of the
Code.
Section 5.14. Intellectual Property. Except as could not, individually or
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect:
(a) The Company or one of its Subsidiaries exclusively owns,
without restrictions, or is licensed to use, the rights to all patents,
trademarks, trade names, service marks, copyrights together with any
registrations and applications therefor, Internet domain names, net
lists, schematics, inventories, technology, trade secrets, source codes,
know-how, computer software programs or applications including, without
limitation, all object and source codes and tangible or intangible
proprietary information or material that are used in the business of the
Company and any of its Subsidiaries as currently conducted (the "COMPANY
INTELLECTUAL PROPERTY"). Neither the Company nor any of its Subsidiaries
is, or as a result of the execution, delivery or performance of the
Company's obligations hereunder will be, in violation of, or lose any
rights pursuant to, any Company Intellectual Property.
(b) No claims with respect to the Company Intellectual Property
have been asserted or, to the knowledge of the Company, are threatened
by any Person nor does the Company or any of its Subsidiaries know of
any valid grounds for any bona fide claims against the use by the
Company or any of its Subsidiaries of any Company Intellectual Property,
or challenging the ownership, validity, enforceability or effectiveness
of any of the Company Intellectual Property. All granted and issued
patents and all registered trademarks and service marks and all
copyrights held by the Company or any of its Subsidiaries are valid,
enforceable and subsisting. To the Company's knowledge, there has not
been and there is not any unauthorized use, infringement or
misappropriation of any of the Company Intellectual Property by any
third Person, including, without limitation, any employee or former
employee.
(c) Except as set forth in Section 5.14(c) of the Company
Disclosure Letter, no owned Company Intellectual Property is subject to
any outstanding order, judgment, decree, stipulation or agreement
restricting in any manner the licensing thereof by the Company or any of
its Subsidiaries.
Section 5.15. Broker's or Finder's Fee. Except for the fees of Goldman,
Sachs & Co. (whose fees and expenses will be paid by the Company in accordance
with the Company's agreement with such firm, a true and correct copy of which
has been previously delivered to Parent by the Company), no agent, broker,
Person or firm acting on behalf of the Company is, or will be, entitled to any
fee, commission or broker's or finder's fees from any of the parties hereto, or
from any Person controlling, controlled by, or under common control with any of
the parties hereto, in connection with this Agreement or any of the transactions
contemplated hereby.
Section 5.16. Environmental Laws and Regulations. Except as could not
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect and except as set forth in Section 5.16 of the Company
Disclosure Letter, (i) Hazardous Materials have not been generated, used,
treated or stored on, transported to or from or Released or disposed of on, any
Company Property except in compliance with applicable Environmental Laws, (ii)
the Company and each of its Subsidiaries are in compliance with all applicable
Environmental Laws and the requirements of any permits issued under such
Environmental Laws with respect to any Company Property, (iii) there are no
past, pending or, to the Company's knowledge, threatened Environmental Claims
against the Company or any of its Subsidiaries or
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any Company Property and (iv) there are no facts or circumstances, conditions or
occurrences regarding the business, assets or operations of the Company or any
Company Property that could reasonably be anticipated to form the basis of an
Environmental Claim against the Company or any of its Subsidiaries or any
Company Property.
For purposes of this Agreement, (i) "COMPANY PROPERTY" means any real
property and improvements owned, leased or operated by the Company or any of its
Subsidiaries; (ii) "HAZARDOUS MATERIALS" means (A) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, transformers or other equipment that contain dielectric fluid
containing levels of polychlorinated biphenyls, and radon gas; (B) any
chemicals, materials or substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "extremely hazardous substances," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," or words of similar import,
under any applicable Environmental Law; and (C) any other chemical, material or
substance, exposure to which is prohibited, limited or regulated by any
Governmental Authority; (iii) "ENVIRONMENTAL LAW" means any federal, state,
foreign or local statute, law, rule, regulation, ordinance, code or rule of
common law and any judicial or administrative interpretation thereof binding on
the Company or its operations or property as of the date hereof and Closing
Date, including any judicial or administrative order, consent decree or
judgment, relating to the environment, health or Hazardous Materials, including,
without limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. sec. 9601 et seq.; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. sec. 6901 et seq.; the
Federal Water Pollution Control Act, as amended, 33 U.S.C. sec. 1251 et seq.;
the Toxic Substances Control Act, 15 U.S.C. sec. 2601 et seq.; the Clean Air
Act, 42 U.S.C. sec. 7401 et seq.; Oil Pollution Act of 1990, 33 U.S.C. sec. 2701
et seq.; the Safe Drinking Water Act, 42 U.S.C. sec. 300f et seq.; and their
state and local counterparts and equivalents; (iv) "ENVIRONMENTAL CLAIMS" means
any and all administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings under any Environmental Law or any permit issued
under any such Environmental Law (for purposes of this subclause (iv),
"CLAIMS"), including, without limitation, (A) any and all Claims by Governmental
Authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law and (B) any and
all Claims by any third party seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief resulting from Hazardous
Materials or arising from alleged injury or threat of injury to health, safety
or the environment; and (v) "RELEASE" means disposing, discharging, injecting,
spilling, leaking, leaching, dumping, emitting, escaping, emptying or seeping
into or upon any land or water or air, or otherwise entering into the
environment.
Section 5.17. State Takeover Statutes. The Board of Directors of the
Company has approved the Offer, the Merger and this Agreement and such approval
is sufficient to render inapplicable to the Offer, the Merger, this Agreement
and the other transactions contemplated hereby the provisions of Section 912 of
the BCL. Except for Section 912 of the BCL (which has been rendered
inapplicable), no other takeover statute or similar statute or regulation of any
state is applicable to the Offer, the Merger, this Agreement and the other
transactions contemplated hereby.
Section 5.18. Voting Requirements; Board Approval; Appraisal Rights. (a)
The affirmative vote of the holders of at least two-thirds of the outstanding
shares of the Company Common Stock (voting as one class, with each share of the
Company Common Stock having one (1) vote) entitled to be cast approving this
Agreement is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve this Agreement, the Merger and the
transactions contemplated hereby.
(b) The Board of Directors of the Company has, as of the date of this
Agreement, (i) determined that the Offer and the Merger are advisable and fair
to, and in the best interests of the Company and its shareholders, (ii) approved
this Agreement and the transactions contemplated hereby and (iii) resolved to
recommend that the shareholders of the Company approve and adopt this Agreement,
the Offer and the Merger.
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(c) No holder of Company Common Stock will have appraisal rights under
Section 910 of the BCL as a result of, or in connection with, the Offer or the
Merger.
Section 5.19. Opinion of Financial Advisor. The Company has received the
opinion of Goldman, Sachs & Co. to the effect that, as of the date of this
Agreement, the consideration payable in the Offer and the Merger to the holders
of the Company Common Stock is fair to such holders from a financial point of
view, and a copy of such opinion has been, or promptly upon receipt thereof will
be, delivered to Parent; it being understood and acknowledged by Parent and
Merger Sub that such opinion has been rendered for the benefit of the Board of
Directors of the Company, and is not intended to, and may not, be relied upon by
Parent, its Affiliates or their respective shareholders.
Section 5.20. Trust Agreement. Section 5.20 of the Company Disclosure
Letter sets forth the total amount of funds (the "FUNDING AMOUNT") required to
fund the Company's obligation under the Trust Agreement, dated as of February
19, 1987, between the Company and Fleet National Bank of Connecticut, as amended
(the "TRUST AGREEMENT"), with respect to the executives listed therein. The
Funding Amount was determined in good faith based on all relevant information
which was reasonably necessary for the Company to determine the Funding Amount.
Section 5.21. Termination of Existing Agreements. Each of the Agreement
and Plan of Merger dated as of February 17, 2000 by and among UPM-Kymmene
Corporation, Blue Acquisition, Inc. and the Company, the Stock Option Agreement
dated as of February 17, 2000 between UPM-Kymmene Corporation and the Company
and any other related agreement between UPM-Kymmene Corporation and the Company
(other than the Confidentiality Agreement dated April 20, 1999) has been duly
terminated.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed in (i) Parent's disclosure letter delivered
concurrently with the delivery of this Agreement (the "PARENT DISCLOSURE
LETTER") or (ii) the Parent SEC Reports (as defined below) made or filed prior
to the date of this Agreement, Parent and Merger Sub hereby represent and
warrant, jointly and severally, to the Company as follows:
Section 6.01. Due Organization, Good Standing and Corporate Power. Each
of Parent and its Significant Subsidiaries is a corporation duly organized,
validly existing and in good standing (with respect to jurisdictions which
recognize the concept of good standing) under the laws of the jurisdiction of
its incorporation and each such Person has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to be so organized, existing
and in good standing or to have such power and authority could not reasonably be
expected to, individually or in the aggregate, have a Parent Material Adverse
Effect. Parent and each of its Significant Subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except in such jurisdictions
where the failure to be so qualified or licensed and in good standing could not
reasonably be expected to, individually or in the aggregate, have a Parent
Material Adverse Effect. Other than as set forth in Section 6.01 of the Parent
Disclosure Letter, the respective Certificates of Incorporation and By-Laws or
other organizational documents of the Significant Subsidiaries of Parent do not
contain any provision limiting or otherwise restricting the ability of Parent to
control its Significant Subsidiaries. Section 6.01 of the Parent Disclosure
Letter sets forth a list of all Significant Subsidiaries of Parent and their
respective jurisdictions of incorporation or organization and identifies
Parent's (direct or indirect) percentages of equity ownership therein.
Section 6.02. Authorization and Validity of Agreement. Each of Parent and
Merger Sub has full corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Parent and Merger Sub, and the consummation by each such party
of the transactions contemplated hereby, have been duly authorized and
unanimously approved by the respective Board of
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Directors of Parent and the Merger Sub and no other corporate action on the part
of either of Parent or Merger Sub is necessary to authorize the execution,
delivery and performance of this Agreement by each of Parent and Merger Sub and
the consummation of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by each of Parent and Merger Sub and is a valid
and binding obligation of each of Parent and Merger Sub, enforceable against
each of Parent and Merger Sub in accordance with its terms, except to the extent
that its enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
Section 6.03. Capitalization. (a) The authorized capital stock of Parent
consists of 990,850,000 shares of Parent Common Stock and 9,150,000 shares of
preferred stock (the "PARENT PREFERRED STOCK"). At the close of business on May
11, 2000: (i) 413,091,346 shares of Parent Common Stock were issued and
outstanding, (ii) 19,128,373 shares of Parent Common Stock were reserved for
issuance under Parent's stock option and stock benefit plans and arrangements,
(iii) 15,696 shares of Parent Preferred Stock were issued and outstanding and
(iv) 1,839,121 shares of Parent Common Stock were held by Parent in its
treasury. All issued and outstanding shares of capital stock of Parent are, and
all shares of Parent Common Stock to be issued hereunder will be, upon issuance,
duly authorized, validly issued, fully paid and nonassessable. Except as set
forth in Section 6.03(a) of the Parent Disclosure Letter, (i) Parent is not
bound by, obligated under, or party to an Issuance Obligation with respect to
any security of Parent or any Significant Subsidiary of Parent and (ii) there is
no outstanding Voting Debt of Parent. There are no outstanding obligations of
Parent to repurchase, redeem or otherwise acquire any outstanding securities of
Parent. Except as set forth in Section 6.03(a) of the Parent Disclosure Letter,
there are no restrictions of any kind which prevent or restrict the payment of
dividends by Parent or any of its Subsidiaries and there are no limitations or
restrictions on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests.
(b) The authorized capital stock of Merger Sub consists of 100 shares of
common stock, par value $1.00 per share, all of which are validly issued and
outstanding, fully paid and nonassessable and are owned by Parent free and clear
of all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, charges or other encumbrances of any nature or any other
limitation or restriction (including any restriction on the right to vote or
sell the same, except as may be provided under applicable Federal or state
securities laws) (collectively, "LIENS").
(c) All of the issued and outstanding shares of capital stock of each
Significant Subsidiary are validly existing, fully paid and non-assessable.
Except as set forth in the Parent SEC Reports or Section 6.03(c) of the Parent
Disclosure Letter, no Significant Subsidiary of Parent has outstanding Voting
Debt and no Significant Subsidiary of Parent is bound by, obligated under, or
party to an Issuance Obligation with respect to any security of Parent or any
Significant Subsidiary of Parent and there are no obligations of Parent or any
of its Significant Subsidiaries to repurchase, redeem or otherwise acquire any
outstanding securities of any of its Significant Subsidiaries or any capital
stock of, or other ownership interests in, any of its Significant Subsidiaries.
(d) Except for Parent's interest in its Significant Subsidiaries, and as
set forth in the Parent SEC Reports or Section 6.03(d) of the Parent Disclosure
Letter, Parent does not directly or indirectly own any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable for
any equity or similar interest in, any corporation, partnership, joint venture,
limited liability company or other business association or entity which is
material to Parent and its Subsidiaries,
taken as a whole.
Section 6.04. Consents and Approvals; No Violations. Assuming (i) the
filings required under applicable Brazilian antitrust or competition laws, the
Competition Act and the HSR Act are made and the waiting periods thereunder (if
applicable) have been terminated or expired, (ii) the prior notification and
reporting requirements of the European Antitrust Laws are satisfied and any
antitrust filings/notifications which must or may be effected at the national
level in countries having jurisdiction are made and any applicable waiting
periods thereunder have been terminated or expired, (iii) the prior notification
and reporting requirements of other antitrust or competition laws as may be
applicable are satisfied and any
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antitrust filings/notifications which must or may be effected in countries
having jurisdiction are made, (iv) the applicable requirements of the Securities
Act and the Exchange Act are met, (v) the requirements under any applicable
foreign or state securities or blue sky laws are met, (vi) the requirements of
the NYSE in respect of the listing of the shares of Parent Common Stock to be
issued hereunder are met, (vii) the filing of the Certificate of Merger and
other appropriate merger documents, if any, as required by the BCL, are made,
and (viii) the requirements of any applicable state law relating to the transfer
of contaminated property are met, the execution and delivery of this Agreement
by Parent and Merger Sub and the consummation by Parent and Merger Sub of the
transactions contemplated hereby do not and will not: (A) violate or conflict
with any provision of Parent's Certificate of Incorporation or Parent's By-Laws
or the comparable governing documents of any of its Subsidiaries; (B) violate or
conflict with any Laws or Orders of any Governmental Authority applicable to
Parent or any of its Subsidiaries or by which any of their respective properties
or assets may be bound; (C) except as set forth in Section 6.04 of the Parent
Disclosure Letter, require any filing with, or permit, consent or approval of,
or the giving of any notice to, any Governmental Authority; or (D) except as set
forth in Section 6.04 of the Parent Disclosure Letter, result in a violation or
breach of, conflict with, constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under, or result in the creation of any Lien upon any of the
properties or assets of Parent or any of its Significant Subsidiaries under, or
give rise to any obligation, right of termination, cancellation, acceleration or
increase of any obligation or a loss of a material benefit under, any of the
terms, conditions or provisions of any Contracts to which Parent or any of its
Significant Subsidiaries is a party, or by which any such Person or any of its
properties or assets are bound, excluding from the foregoing clauses (B), (C)
and (D) conflicts, violations, breaches, defaults, rights of payment and
reimbursement, terminations, modifications, accelerations and creations and
impositions of Liens which could not reasonably be expected to, individually or
in the aggregate, have a Parent Material Adverse Effect.
Section 6.05. Parent Reports and Financial Statements. (a) Since December
31, 1997, Parent and, to the extent applicable, its Subsidiaries have filed all
forms, reports and documents with the SEC required to be filed by it pursuant to
the federal securities laws and the SEC rules and regulations thereunder, and
all forms, reports, schedules, registration statements and other documents filed
with the SEC by Parent and, to the extent applicable, its Subsidiaries have
complied in all material respects with all applicable requirements of the
federal securities laws and the SEC rules and regulations thereunder. Parent
has, prior to the date of this Agreement, made available to the Company true and
complete copies of all forms, reports, registration statements and other filings
filed by Parent and its Subsidiaries with the SEC since December 31, 1997 (such
forms, reports, registration statements and other filings, together with any
exhibits, any amendments thereto and information incorporated by reference
therein, are sometimes collectively referred to as the "PARENT SEC REPORTS"). As
of their respective dates, the Parent SEC Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and the unaudited consolidated interim
financial statements of Parent included in the Parent SEC Reports were prepared
in accordance with GAAP applied on a consistent basis (except as may be
indicated therein or in the notes or schedules thereto) and present fairly, in
all material respects, the consolidated financial position of Parent and its
consolidated Subsidiaries as of the dates thereof and their consolidated results
of operations and changes in financial position for the periods then ended.
Parent has heretofore provided to the Company with true and correct copies of
any amendments and/or modifications to any Parent SEC Reports which have not yet
been filed with the SEC but that are required to be filed with the SEC in
accordance with applicable federal securities laws and the SEC rules.
(b) Except as set forth or provided in the Parent SEC Reports or Section
6.05(b) of the Parent Disclosure Letter, neither Parent nor any of its
Subsidiaries has any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise), in each case that is required by GAAP to be
set forth on a consolidated balance sheet of Parent, except for (i) liabilities
and obligations disclosed or provided for in the Parent SEC Reports; (ii)
liabilities and obligations under this Agreement or incurred in connection with
the transactions contemplated hereby; and (iii) liabilities and obligations
incurred in the ordinary course of business consistent with past practice since
September 30, 1999 which could not reasonably be expected to, individually or in
the aggregate, have a Parent Material Adverse Effect. Neither Parent nor any of
its
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Subsidiaries is in default in respect of the material terms and conditions of
any indebtedness or other agreement which could reasonably be expected to,
individually or in the aggregate, have a Parent Material Adverse Effect.
Section 6.06. Information to Be Supplied. (a) Each of the registration
statement on Form S-4 to be filed with the SEC by Parent in connection with the
issuance of Parent Common Stock in the Merger, as amended or supplemented from
time to time (as so amended and supplemented, the "MERGER REGISTRATION
STATEMENT"), the Offer Documents and the other documents required to be filed by
Parent with the SEC in connection with the Offer, the Merger and the other
transactions contemplated hereby will comply as to form, in all material
respects, with the requirements of the Exchange Act and the Securities Act, as
the case may be, and will not, on the date of its filing or, in the case of the
Offer Registration Statement and the Merger Registration Statement, at the time
they become effective under the Securities Act, or on the dates the Proxy
Statement/Prospectus is mailed to shareholders of the Company and at the time of
the Company Shareholder Meeting, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
(b) Notwithstanding the foregoing provisions of this Section 6.06, no
representation or warranty is made by Parent with respect to statements made or
incorporated by reference in the Merger Registration Statement or the Offer
Documents based on information supplied by the Company expressly for inclusion
or incorporation by reference therein or based on information which is not made
in or incorporated by reference in such documents but which should have been
disclosed pursuant to Section 5.06.
Section 6.07. Absence of Certain Events. Except as disclosed in the
Parent SEC Reports or in Section 6.07 of the Parent Disclosure Letter or as
required or expressly permitted by this Agreement, since December 31, 1998,
Parent and its Subsidiaries have operated their respective businesses only in
the ordinary course and, except as disclosed in the Parent SEC Reports or in
Section 6.07 of the Parent Disclosure Letter, there has not occurred (i) any
event, occurrence or conditions which could reasonably be expected to,
individually or in the aggregate, have a Parent Material Adverse Effect; (ii)
any damage, destruction or loss which, individually or in the aggregate,
resulted in or could reasonably be expected to result in, a Parent Material
Adverse Effect; or (iii) any increase in the compensation of any officer of
Parent or any of its Subsidiaries or any general salary or benefits increase to
the employees of Parent or any of its Subsidiaries other than in the ordinary
course of business.
Section 6.08. Litigation. Except as disclosed in Section 6.08 of Parent
Disclosure Letter, there are no investigations, actions, suits or proceedings
pending against Parent or its Subsidiaries or, to the knowledge of Parent,
threatened against Parent or its Subsidiaries (or any of their respective
properties, rights or franchises), at law or in equity, or before or by any
federal or state commission, board, bureau, agency, regulatory or administrative
instrumentality or other Governmental Authority or any arbitrator or arbitration
tribunal, that could reasonably be expected to, individually or in the
aggregate, have a Parent Material Adverse Effect, and, to the knowledge of
Parent, no development has occurred with respect to any pending or threatened
action, suit or proceeding that could reasonably be expected to result in a
Parent Material Adverse Effect or could reasonably be expected to prevent,
materially impair or materially delay the consummation of the transactions
contemplated hereby. Neither Parent nor any of its Subsidiaries is subject to
any judgment, order or decree entered in any lawsuit or proceeding which could
reasonably be expected to, individually or in the aggregate, have a Parent
Material Adverse Effect.
Section 6.09. Title to Properties; Encumbrances. Except as disclosed in
Section 6.09 of the Parent Disclosure Letter, Parent and each of its
Subsidiaries has good, valid and marketable title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of its tangible
properties and assets except where the failure to have such good, valid and
marketable title could not reasonably be expected to, individually or in the
aggregate, have a Parent Material Adverse Effect; in each case subject to no
Liens, except for (A) Liens reflected in the consolidated balance sheet as of
September 30, 1999, (B) Liens consisting of zoning or planning restrictions,
easements, permits and other restrictions or limitations on the use of real
property or irregularities in title thereto which do not materially detract from
the value of, or impair the use of, such
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property by Parent or any of its Significant Subsidiaries in the operation of
its respective business, (C) Liens for current Taxes, assessments or
governmental charges or levies on property not yet due or which are being
contested in good faith and (D) Liens which could not reasonably be expected to,
individually or in the aggregate, have a Parent Material Adverse Effect. Except
as could not reasonably be expected to, individually or in the aggregate, have a
Parent Material Adverse Effect, (i) Parent and each of its Significant
Subsidiaries are in compliance with the terms of all leases of tangible
properties to which they are a party and under which they are in occupancy, and
all such leases are in full force and effect and (ii) Parent and each of its
Significant Subsidiaries enjoys peaceful and undisturbed possession under all
such leases.
Section 6.10. Compliance with Laws. Except as disclosed in the Parent SEC
Reports and except as disclosed in Section 6.10 of the Parent Disclosure Letter:
(a) Parent and its Subsidiaries are in compliance with all applicable
federal, state, local and foreign statutes, laws, regulations, orders,
judgments and decrees except where the failure to so comply could not
reasonably be expected to, individually or in the aggregate, have a Parent
Material Adverse Effect.
(b) Parent and its Subsidiaries hold, to the extent legally required,
all Permits that are required for the operation of the respective
businesses of Parent and/or its Subsidiaries as now conducted, except where
the failure to hold any such Permit could not reasonably be expected to,
individually or in the aggregate, have a Parent Material Adverse Effect,
and there has not occurred any default under any such Permit, except to the
extent that such default could not reasonably be expected to, individually
or in the aggregate, have a Parent Material Adverse Effect.
Section 6.11. Parent Employee Benefit Plans. (a) Set forth in Section
6.11(a) of the Parent Disclosure Letter is an accurate and complete list of each
material domestic or foreign employee benefit plan, within the meaning of
Section 3(3) of ERISA, whether or not subject to ERISA, and each stock option,
stock appreciation right, restricted stock, stock purchase, stock unit,
performance share, incentive, bonus, profit-sharing, savings, deferred
compensation, health, medical, dental, life insurance, disability, accident,
supplemental unemployment or retirement, employment, severance or salary or
benefits continuation or fringe benefit plan, program, arrangement, or agreement
maintained by Parent or any Affiliate thereof (including, for this purpose and
for the purpose of all of the representations in this Section 6.11, all
employers (whether or not incorporated) that would be treated together with
Parent and/or any such Affiliate as a single employer within the meaning of
Section 414 of the Code) or to which Parent or any Affiliate thereof contributes
(or has any obligation to contribute), has any liability or is a party
(collectively, the "PARENT EMPLOYEE BENEFIT PLANS").
(b) Except as set forth in Section 6.11(b) of the Parent Disclosure Letter
or disclosed in the Parent SEC Reports, (i) each Parent Employee Benefit Plan is
in compliance with all applicable laws (including, without limitation, ERISA and
the Code) and has been administered and operated in accordance with its terms,
in each case except as would not have a Parent Material Adverse Effect; (ii)
each Parent Employee Benefit Plan which is intended to be "qualified" within the
meaning of Section 401(a) of the Code has received a favorable determination
letter from the Internal Revenue Service and, to the best knowledge of Parent,
no event has occurred and no condition exists which could reasonably be expected
to result in the revocation of any such determination; (iii) the actuarial
present value of the accumulated plan benefits (whether or not vested) under
each Parent Employee Benefit Plan covered by Title IV of ERISA, or which
otherwise is a pension plan (as defined in Section 3(2) of ERISA) or provides
for actuarially-determined benefits (other than any Parent Employee Benefit Plan
which is a "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) (a
"Parent Multiemployer Plan")), as of the close of its most recent plan year did
not exceed the market value of the assets allocable thereto; (iv) no Parent
Employee Benefit Plan covered by Title IV of ERISA has been terminated and no
proceedings have been instituted to terminate or appoint a trustee under Title
IV of ERISA to administer any such plan; (v) no Parent Employee Benefit Plan
(other than any Parent Multiemployer Plan) subject to Section 412 of the Code or
Section 302 of ERISA has incurred any accumulated funding deficiency within the
meaning of Section 412 of the Code or Section 302 of ERISA, or obtained a waiver
of any minimum funding standard or an extension of any amortization period
within the meaning of Section 412 of the Code or Section 303 or 304 of ERISA;
(vi) as of the date of this Agreement, neither Parent nor any of its Affiliates
has incurred any unsatisfied withdrawal liability under
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Part 1 of Subtitle E of Title IV of ERISA to any Parent Multiemployer Plan, and
the aggregate liabilities of Parent and its Affiliates to all Parent
Multiemployer Plans in the event of a complete withdrawal therefrom, as of the
close of the most recent fiscal year of each Parent Multiemployer Plan ended
prior to the date hereof, would not have a Parent Material Adverse Effect; (vii)
the execution of this Agreement and the consummation of the transactions
contemplated hereby do not constitute a triggering event under any Parent
Employee Benefit Plan, policy, arrangement, statement, commitment or agreement,
which (either alone or upon the occurrence of any additional or subsequent
event) will result in any "excess parachute payment," as such term is defined in
Section 280G of the Code, or will result in any severance, bonus, retirement,
job security or similar-type benefit, or increase any benefits or accelerate the
payment or vesting of any benefits to any employee or former employee or
director of Parent or its Affiliates, other than any benefits, payments,
accelerations or increases (1) under any Parent Employee Benefit Plan that is
subject to the laws of a jurisdiction outside of the United States or (2)
mandated by applicable law; (viii) no liability, claim, action, litigation,
audit, examination, investigation or administrative proceeding has been made,
commenced or, to the best knowledge of Parent, threatened with respect to any
Parent Employee Benefit Plan (other than routine claims for benefits payable in
the ordinary course) which would have a Parent Material Adverse Effect; (ix)
except as required to maintain the tax-qualified status of any Parent Employee
Benefit Plan intended to qualify under Section 401(a) of the Code, no condition
or circumstance exists that would prevent the amendment or termination of any
Parent Employee Benefit Plan; and (x) there has been no amendment to, written
interpretation or announcement (whether or not written) relating to, or change
in employee participation or coverage under, any Parent Employee Benefit Plan
which would increase materially the expense of maintaining such Parent Employee
Benefit Plan above the level of such expense incurred for the most recently
ended fiscal year.
(c) Parent has delivered or caused to be delivered to the Company or its
counsel true and complete copies of each Parent Employee Benefit Plan and any
related trust agreement or funding vehicle, together with all amendments
thereto, and, to the extent applicable with respect thereto, (i) the current
summary plan description; (ii) the most recent annual report on Internal Revenue
Service Form 5500-series, including any attachments thereto; (iii) the most
recent financial report; (iv) the most recent actuarial valuation report; and
(v) the most recent determination letter received from the Internal Revenue
Service.
Section 6.12. Employment Relations and Agreement. Except as could not
reasonably be expected to, individually or in the aggregate, have a Parent
Material Adverse Effect or as disclosed in the Parent SEC Reports or Section
6.12 of the Parent Disclosure Letter, (i) each of Parent and its Subsidiaries
is, and at all times has been, in compliance with all federal, state or other
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and has not and is not engaged in
any unfair labor practice; (ii) no unfair labor practice complaint against
Parent or any of its Subsidiaries is pending before the National Labor Relations
Board; (iii) during the last three years there has not been any labor strike,
dispute, slowdown or stoppage or, to Parent's knowledge, threatened against or
involving Parent or any of its Subsidiaries; (iv) no representation question
exists respecting the employees of Parent or any of its Subsidiaries; (v) no
arbitration proceeding arising out of or under any collective bargaining
agreement is pending and no claim therefor has been asserted; and (vi) no
collective bargaining agreement is currently being negotiated by Parent or any
of its Subsidiaries.
Section 6.13. Taxes. Except as set forth in Section 6.13 of the Parent
Disclosure Letter:
(a) Tax Returns. Parent and each of its Subsidiaries has timely filed
or caused to be timely filed with the appropriate Taxing authorities all
material Returns that are required to be filed by, or with respect to,
Parent and such Subsidiaries on or prior to the Closing Date. The Returns
as filed were correct and complete in all material respects.
(b) Payment of Taxes. All material Taxes and Tax liabilities of
Parent and its Subsidiaries that have become due and payable have been
timely paid or fully provided for as a liability on the financial
statements of Parent and its Subsidiaries in accordance with GAAP.
(c) Other Tax Matters. Neither Parent nor any of its Subsidiaries has
been or is the subject of an audit, other examination, matter in
controversy, proposed adjustment, refund litigation or other
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proceeding with respect to Taxes by the Tax authorities of any nation,
state or locality which could reasonably be expected to result in a
material Tax liability, nor has Parent or any of its Subsidiaries received
any notices from any Tax authority relating to any issue which could
reasonably be expected to result in a material Tax liability.
(d) Neither Parent nor any of its Subsidiaries has been included in
any "consolidated," "unitary" or "combined" Return (other than Returns
which include only Parent and any Subsidiaries of Parent) provided for
under the laws of the United States, any foreign jurisdiction or any state
or locality with respect to material Taxes for any taxable period for which
the statute of limitations has not expired.
(e) All material Taxes which Parent or any of its Subsidiaries is (or
was) required by law to withhold or collect have been duly withheld or
collected, and have been timely paid over to the proper authorities to the
extent due and payable.
(f) There are no Tax sharing, allocation, indemnification or similar
agreements (in writing) in effect as between Parent, any of its
Subsidiaries, or any predecessor or Affiliate of any of them and any other
party under which Parent (or any of its Subsidiaries) could be liable for
any material Taxes of any party other than Parent or any Subsidiary of
Parent.
(g) Neither Parent nor any of its Subsidiaries has, as of the Closing
Date entered into an agreement or waiver extending any statute of
limitations relating to the payment or collection of U.S. Federal income
Taxes of Parent or any of its Subsidiaries.
Section 6.14. Intellectual Property. Except as could not reasonably be
expected to, individually or in the aggregate, have a Parent Material Adverse
Effect:
(a) Parent or one of its Subsidiaries exclusively owns, without
restrictions, or is licensed to use, the rights to all patents, trademarks,
trade names, service marks, copyrights together with any registrations and
applications therefor, Internet domain names, net lists, schematics,
inventories, technology, trade secrets, source codes, know-how, computer
software programs or applications including, without limitation, all object
and source codes and tangible or intangible proprietary information or
material that are used in the business of Parent and any of its
Subsidiaries as currently conducted (the "Parent Intellectual Property").
Neither Parent nor any of its Subsidiaries is, or as a result of the
execution, delivery or performance of Parent's obligations hereunder will
be, in violation of, or lose any rights pursuant to, any Parent
Intellectual Property.
(b) No claims with respect to Parent Intellectual Property have been
asserted or, to the knowledge of Parent, are threatened by any Person nor
does Parent or any of its Subsidiaries know of any valid grounds for any
bona fide claims against the use by Parent or any of its Subsidiaries of
any Parent Intellectual Property, or challenging the ownership, validity,
enforceability or effectiveness of any of the Parent Intellectual Property.
All granted and issued patents and all registered trademarks and service
marks and all copyrights held by Parent or any of its Subsidiaries are
valid, enforceable and subsisting. To Parent's best knowledge, there has
not been and there is not any unauthorized use, infringement or
misappropriation of any of the Parent Intellectual Property by any third
Person, including, without limitation, any employee or former employee.
(c) Except as set forth in Section 6.14(c) of the Parent Disclosure
Letter, no owned Parent Intellectual Property is subject to any outstanding
order, judgment, decree, stipulation or agreement restricting in any
material manner the licensing thereof by Parent or any of its Subsidiaries.
Section 6.15. Broker's or Finder's Fee. Except for Credit Suisse First
Boston (whose fees and expenses will be paid by Parent or Merger Sub in
accordance with their agreement with such firm, a true and correct copy of which
has been previously delivered to the Company by Parent), no agent, broker,
Person or firm acting on behalf of Parent or Merger Sub is, or will be, entitled
to any fee, commission or broker's or finder's fees from any of the parties
hereto, or from any Person controlling, controlled by, or under common control
with any of the parties hereto, in connection with this Agreement or any of the
transactions contemplated hereby.
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Section 6.16. Environmental Laws and Regulations. Except as could not
reasonably be expected to, individually or in the aggregate, have a Parent
Material Adverse Effect and except as set forth in Section 6.16 of the Parent
Disclosure Letter, (i) Hazardous Materials have not been generated, used,
treated or stored on, transported to or from or Released or disposed of on, any
Parent Property except in compliance with applicable Environmental Laws, (ii)
Parent and each of its Subsidiaries are in compliance with all applicable
Environmental Laws and the requirements of any permits issued under such
Environmental Laws with respect to any Parent Property, (iii) there are no past,
pending or, to Parent's knowledge, threatened Environmental Claims against
Parent or any of its Subsidiaries or any Parent Property and (iv) there are no
facts or circumstances, conditions or occurrences regarding the business, assets
or operations of Parent or any Parent Property that could reasonably be
anticipated to form the basis of an Environmental Claim against Parent or any of
its Subsidiaries or any Parent Property.
For purposes of this Agreement, "PARENT PROPERTY" means any real property
and improvements owned, leased or operated by Parent or any of its Subsidiaries.
Section 6.17. Ownership of Capital Stock. Except as set forth in Section
6.17 of the Parent Disclosure Letter, neither Parent nor any of its Subsidiaries
beneficially owns, directly or indirectly, any capital stock of the Company or
is a party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any capital stock of the Company,
other than as contemplated by this Agreement.
Section 6.18. No Prior Activities. Merger Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement, has no
Subsidiaries and has undertaken no business or activities other than in
connection with entering into this Agreement and engaging in the transactions
contemplated hereby.
Section 6.19. Financing. Parent has, or will have prior to the expiration
of the Offer and the Merger, sufficient cash, available lines of credit or other
sources of immediately available funds to enable it to purchase all of the
shares of Company Common Stock outstanding on a fully-diluted basis and to pay
all related fees and expenses in connection therewith. Parent has provided the
Company true and complete copies of all commitment letters that Parent and
Merger Sub have received with respect to their financing of the Offer, the
Merger and the other transactions contemplated hereby.
ARTICLE 7
TRANSACTIONS PRIOR TO CLOSING DATE
Section 7.01. Access to Information Concerning Properties and
Records. During the period commencing on the date hereof and ending on the
earlier of (i) the Closing Date and (ii) the date on which this Agreement is
terminated pursuant to Section 9.01 hereof, each of the Company and Parent
shall, and each shall cause each of its Subsidiaries to, upon reasonable notice,
afford the other party, and its respective counsel, accountants, consultants and
other authorized representatives, access during normal business hours to its and
its Subsidiaries' employees, properties, books and records in order that they
may have the opportunity to make such investigations as they shall desire of its
and its Subsidiaries' affairs; such investigation shall not, however, affect the
representations and warranties made by the Company or Parent in this Agreement.
The Company shall furnish promptly to Parent and Merger Sub and Parent and
Merger Sub shall furnish promptly to the Company (x) a copy of each form,
report, schedule, statement, registration statement and other document filed by
it or its Subsidiaries during such period pursuant to the requirements of
Federal, state or foreign securities laws and (y) all other information
concerning its or its Subsidiaries' business, properties and personnel as
Parent, Merger Sub or the Company may reasonably request. Each of the Company
and Parent agrees to cause its officers and employees to furnish such additional
financial and operating data and other information and respond to such inquiries
as the other party shall from time to time reasonably request.
Section 7.02. Confidentiality. Prior to the Effective Time and after any
termination of this Agreement, each of Parent and the Company will hold, and
will use its best efforts to cause its officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold, in confidence,
unless compelled to
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disclose by judicial or administrative process or by other requirements of law,
all confidential documents and information concerning the other party furnished
to it or its Affiliates in connection with the transactions contemplated by this
Agreement, except to the extent that such information can be shown to have been
(i) previously known on a nonconfidential basis by such party, (ii) in the
public domain through no fault of such party or (iii) later lawfully acquired by
such party from sources other than the other party; provided that each of Parent
and the Company may disclose such information to its officers, directors,
employees, accountants, counsel, consultants, advisors, lenders and agents in
connection with the transactions contemplated by this Agreement so long as such
party informs such Persons of the confidential nature of such information and
directs them to treat it confidentially. Each of Parent and the Company shall
satisfy its obligation to hold any such information in confidence if it
exercises the same care with respect to such information as it would take to
preserve the confidentiality of its own similar information. If this Agreement
is terminated, each of Parent and the Company will, and will use its best
efforts to cause its officers, directors, employees, accountants, counsel,
consultants, advisors and agents to, destroy or deliver to the other party, upon
request, all documents and other materials, and all copies thereof, that it or
its Affiliates obtained, or that were obtained on their behalf, from the other
party in connection with this Agreement and that are subject to such confidence.
Section 7.03. Conduct of the Business of the Company Pending the Closing
Date. The Company agrees that, except as permitted, required or specifically
contemplated by, or otherwise described in, this Agreement or otherwise
consented to or approved in writing by Parent (which consent or approval shall
not be unreasonably withheld or delayed), during the period commencing on the
date hereof until the Effective Time:
(a) the Company and each of its Subsidiaries shall conduct their
respective operations in all material respects only according to their
ordinary and usual course of business consistent with past practice and
shall use their reasonable best efforts to preserve intact their respective
business organization, keep available the services of their officers and
employees and maintain satisfactory relationships with licensors,
suppliers, distributors, clients, joint venture partners and others having
significant business relationships with them; and
(b) Except as set forth in Section 7.03(b) of the Company Disclosure
Letter or as expressly contemplated by this Agreement, neither the Company
nor any of its Subsidiaries shall:
(i) make any change in or amendment to the Company's Certificate of
Incorporation or its By-Laws;
(ii) issue or sell, or authorize to issue or sell, any shares of
its capital stock or any other securities, or issue or sell, or
authorize to issue or sell, any securities convertible into, or options,
warrants or rights to purchase or subscribe for, or enter into any
arrangement or contract with respect to the issuance or sale of, any
shares of its capital stock or any other securities, or make any other
changes in its capital structure, other than (i) the issuance of Company
Common Stock upon the exercise of Options or in connection with Company
Stock Rights outstanding on the date hereof, in each case in accordance
with their present terms or pursuant to Options or other Company Stock
Rights granted pursuant to clause (ii) below, (ii) the granting of
Options or Company Stock Rights granted under the Company Stock Plans in
effect on the date hereof in the ordinary course of business consistent
with past practice not in excess of the amounts set forth in Section
7.03(b) of the Company Disclosure Letter, (iii) issuances by a
wholly-owned Subsidiary of the Company of capital stock to such
Subsidiary's parent, the Company or another wholly-owned Subsidiary of
the Company or (iv) issuances of Company Common Stock upon the
conversion of convertible securities of the Company outstanding as of
the date of this Agreement;
(iii) declare, pay or set aside any dividend or other distribution
or payment with respect to, or split, combine, redeem or reclassify, or
purchase or otherwise acquire, any shares of its capital stock or its
other securities, other than dividends payable by a wholly-owned
Subsidiary of the Company to the Company or another wholly-owned
Subsidiary of the Company (it being understood that the Company's Board
of Directors may declare and the Company may pay quarterly dividends of
not
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more than $0.25 per share on the schedule which has been publicly
announced by the Company on or prior to the date of this Agreement);
(iv) other than in connection with transactions permitted by
Section 7.03(b)(v), incur any capital expenditures or any obligations or
liabilities in respect thereof, except for those (A) contemplated by the
capital expenditure budgets for the Company and its Subsidiaries made
available to Parent, (B) incurred in the ordinary course of business of
the Company and its Subsidiaries or (C) not otherwise described in
clauses (A) and (B) which, in the aggregate, do not exceed $25 million;
(v) acquire (whether pursuant to merger, stock or asset purchase or
otherwise) in one transaction or series of related transactions (A) any
assets (including any equity interests) having a fair market value in
excess of $25 million, or (B) all or substantially all of the equity
interests of any Person or any business or division of any Person having
a fair market value in excess of $25 million;
(vi) except in the ordinary course of business consistent with past
practice and except to the extent required under existing employee and
director benefit plans, agreements or arrangements as in effect on the
date of this Agreement, increase the compensation or fringe benefits of
any of its directors, officers or employees or grant any severance or
termination pay not currently required to be paid under existing
severance plans or enter into any employment, consulting or severance
agreement or arrangement with any present or former director, officer or
other employee of the Company or any of its Subsidiaries, or establish,
adopt, enter into or amend in any material respect or terminate any
collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any
directors, officers or employees;
(vii) transfer, lease, license, guarantee, sell, mortgage, pledge,
dispose of, encumber or subject to any Lien, any material assets, other
than in the ordinary course of business;
(viii) except as required by applicable law or GAAP, make any
material change in its method of accounting;
(ix) adopt or enter into a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of the Company or any of its Subsidiaries (other
than the Merger) or any agreement relating to a Takeover Proposal,
except as provided for in Section 7.07;
(x) (A) incur any material indebtedness for borrowed money or
guarantee any such indebtedness of another Person, other than
indebtedness owing to or guarantees of indebtedness owing to the Company
or any direct or indirect wholly-owned Subsidiary of the Company or (B)
make any loans or advances to any other Person, other than to the
Company or to any direct or indirect wholly-owned Subsidiary of the
Company, except, in the case of clause (A), for borrowings in the
ordinary course of business consistent with past practice, including
without limitation borrowings under existing credit facilities described
in the Company SEC Reports in the ordinary course of business consistent
with past practice for working capital purposes;
(xi) accelerate the payment, right to payment or vesting of any
bonus, severance, profit sharing, retirement, deferred compensation,
stock option, insurance or other compensation or benefits;
(xii) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) over $15 million, individually or in the aggregate, other
than the payment, discharge or satisfaction (A) of any such claims,
liabilities or obligations in the ordinary course of business and
consistent with past practice or (B) of claims, liabilities or
obligations reflected or reserved against in, or contemplated by, the
consolidated financial statements (or the notes thereto) contained in
the Company SEC Reports;
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(xiii) enter into any agreement, understanding or commitment that
materially restrains, limits or impedes the Company's or any of its
Subsidiaries' ability to compete with or conduct any business or line of
business, including, but not limited to, geographic limitations on the
Company's or any of its Subsidiaries' activities;
(xiv) plan, announce, implement or effect any material reduction in
labor force, lay-off, early retirement program, severance program or
other program or effort concerning the termination of employment of
employees of the Company or its Subsidiaries; provided, however, that
routine employee terminations for cause shall not be considered subject
to this clause (xiv);
(xv) take any action including, without limitation, the adoption of
any shareholder rights plan or amendments to its Certificate of
Incorporation or By-Laws (or comparable governing documents), which
would, directly or indirectly, restrict or impair the ability of Parent
to vote, or otherwise to exercise the rights and receive the benefits of
a shareholder with respect to, securities of the Company acquired or
controlled by Parent or Merger Sub or permit any shareholder to acquire
securities of the Company on a basis not available to Parent or Merger
Sub in the event that Parent or Merger Sub were to acquire any
additional shares of the Company Common Stock;
(xvi) materially modify, amend or terminate any material contract
to which it is a party or waive any of its material rights or claims
except in the ordinary course of business consistent with past practice;
(xvii) other than in the ordinary course of business consistent
with past practice, make any tax election or enter into any settlement
or compromise of any tax liability that in either case is material to
the business of the Company and its Subsidiaries as a whole; or
(xviii) agree, in writing or otherwise, to take any of the
foregoing actions.
Section 7.04. Conduct of the Business of Parent Pending the Closing
Date. Parent agrees that, except as permitted, required or specifically
contemplated by, or otherwise described in, this Agreement or otherwise
consented to or approved in writing by the Company (which consent or approval
shall not be unreasonably withheld or delayed), during the period commencing on
the date hereof until the Effective Time:
(a) Parent and each of its Subsidiaries shall conduct their respective
operations in all material respects only according to their ordinary and
usual course of business consistent with past practice and shall use their
reasonable best efforts to preserve intact their respective business
organization, keep available the services of their officers and employees
and maintain satisfactory relationships with licensors, suppliers,
distributors, clients, joint venture partners and others having significant
business relationships with them; and
(b) Except as set forth in Section 7.04(b) of the Parent Disclosure
Letter or as expressly contemplated by this Agreement, neither Parent nor
any of its Subsidiaries shall:
(i) make any change in or amendment to Parent's Certificate of
Incorporation that changes any material term or provision of the Parent
Common Stock;
(ii) make any material change in or amendment to Merger Sub's
Certificate of Incorporation;
(iii) engage in any material repurchase at a premium,
recapitalization, restructuring or reorganization with respect to
Parent's capital stock, including, without limitation, by way of any
extraordinary dividend on, or other extraordinary distributions with
respect to, Parent's capital stock;
(iv) acquire by merging or consolidating with, or by purchasing a
substantial portion of the assets of or equity in, or by any other
manner, any Person or any business or division thereof, or otherwise
acquire any assets, unless such acquisition or the entering into of a
definitive agreement relating to or the consummation of such transaction
would not (i) impose any delay in the obtaining of, or increase the risk
of not obtaining, any authorizations, consents, orders, declarations or
approvals of any Governmental Authority necessary to consummate the
Merger or the expiration or termination of any applicable waiting
period, (ii) increase the risk of any Governmental Authority
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entering an order prohibiting the consummation of the Merger or (iii)
increase the risk of not being able to remove any such order on appeal
or otherwise; or
(v) agree, resolve or otherwise commit to do any of the foregoing.
Section 7.05. Company Shareholder Meeting; Preparation of Proxy
Statement/Prospectus.
(a) Company Shareholder Meeting. If required by applicable law, the
Company, acting through its Board of Directors, shall, in accordance with
applicable law, duly call, convene and hold a meeting of the holders of the
Company Common Stock (the "COMPANY SHAREHOLDER MEETING") as soon as reasonably
practicable after the acceptance for payment of shares of Company Common Stock
pursuant to the Offer for the purpose of voting upon this Agreement and the
Merger and the Company agrees that this Agreement and the Merger shall be
submitted at such meeting. The Company shall take all action necessary to
solicit from its shareholders proxies, and shall take all other action necessary
and advisable, to secure the vote of shareholders required by applicable law and
the Company's Certificate of Incorporation or By-Laws to obtain the approval for
this Agreement and the Merger. Unless the Board of Directors of the Company
otherwise determines (based on a majority vote of the Board of Directors in its
good faith judgment that such other action is necessary to comply with its
fiduciary duty to shareholders under applicable law after receiving the advice
of outside legal counsel) prior to the Company Shareholder Approval, (i) the
Company's Board of Directors shall recommend approval and adoption by its
shareholders of this Agreement (the "COMPANY RECOMMENDATION"), (ii) neither the
Company's Board of Directors nor any committee thereof shall amend, modify,
withdraw, condition or qualify the Company Recommendation in a manner adverse to
Parent or take any action or make any statement inconsistent with the Company
Recommendation and (iii) the Company shall take all lawful action to solicit the
Company Shareholder Approval.
(b) Preparation of Merger Registration Statement and Proxy
Statement/Prospectus. If required by applicable law, promptly after the
acceptance for payment of shares of Company Common Stock pursuant to the Offer,
Parent and the Company shall prepare, and Parent shall file with the SEC, the
Merger Registration Statement, in which the Proxy Statement/Prospectus will be
included as Parent's prospectus. Each of the Company and Parent shall use all
reasonable efforts to have the Merger Registration Statement declared effective
under the Securities Act as promptly as practicable after the acceptance for
payment of shares of Company Common Stock pursuant to the Offer and to keep the
Merger Registration Statement effective as long as is necessary to consummate
the Merger. The Company shall mail the Proxy Statement/Prospectus to its
shareholders as promptly as practicable after the Merger Registration Statement
is declared effective under the Securities Act and, if necessary, after the
Proxy Statement/Prospectus shall have been so mailed, promptly circulate
amended, supplemental or supplemented proxy material, and, if required in
connection therewith, resolicit proxies. Parent shall take any action required
to be taken under any applicable state securities or blue sky laws in connection
with the issuance of Parent Common Stock in the Merger. No amendment or
supplement to the Proxy Statement/Prospectus will be made by the Company or
Parent without the approval of the other party, which will not be unreasonably
withheld or delayed. Each party will advise the other party, promptly after it
receives notice thereof, of the time when the Merger Registration Statement has
become effective or any supplement or amendment has been filed, the issuance of
any stop order, the suspension of the qualification of Parent Common Stock
issuable in connection with the Merger for offering or sale in any jurisdiction,
or any request by the SEC for amendment of the Proxy Statement/ Prospectus or
comments thereon and responses thereto or requests by the SEC for additional
information. If at any time prior to the Effective Time, the Company or Parent
discovers any information relating to either party, or any of their respective
Affiliates, officers or directors, that should be set forth in an amendment or
supplement to the Proxy Statement/Prospectus, so that such document would not
include any misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, the party that discovers such information
shall promptly notify the other party and an appropriate amendment or supplement
describing such information shall be promptly filed with the SEC and, to the
extent required by law or regulation, disseminated to the shareholders of the
Company.
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(c) Short-Form Merger. Notwithstanding the foregoing, if Parent or Merger
Sub shall acquire at least 90% of the outstanding shares of Company Common Stock
pursuant to the Offer or otherwise, the parties hereto agree, subject to the
satisfaction or (to the extent permitted hereunder) waiver of all conditions to
the Merger, to take all necessary and appropriate action to cause the Merger to
be effective as soon as practicable after the acceptance for payment and
purchase of shares of Company Common Stock pursuant to the Offer without the
Company Shareholder Meeting.
Section 7.06. Reasonable Best Efforts. Subject to the terms and
conditions provided herein and in Section 7.09, each of the Company and Parent
shall, and shall cause each of its Subsidiaries to, cooperate and use their
reasonable best efforts to take, or cause to be taken, all appropriate action,
and to make, or cause to be made, all filings necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement including, without limitation, the
Company's and Parent's reasonable best efforts to obtain, prior to the Closing
Date, all licenses, permits, consents, approvals, authorizations, qualifications
and orders of Governmental Authorities and parties to contracts with the Company
or Parent, as the case may be, and their respective Subsidiaries as are
necessary for consummation of the transactions contemplated by this Agreement
and in order to comply with applicable Laws, including Laws restricting the
foreign ownership of assets; provided, however, that no loan agreement or
contract for borrowed money shall be repaid except as currently required by its
terms, in whole or in part, and no contract shall be amended to increase the
amount payable thereunder or otherwise to be more burdensome to the Company or
any of its Subsidiaries or Parent or any of its Subsidiaries in order to obtain
any such consent, approval or authorization without first obtaining the written
approval of Parent or the Company, respectively.
Section 7.07. No Solicitation. (a) The Company shall, and shall use its
reasonable best efforts to cause its Affiliates, officers, directors, employees,
financial advisors, attorneys and other advisors, representatives and agents to,
immediately cease any discussions or negotiations with third parties with
respect to any Takeover Proposal (as defined below). The Company shall not, nor
shall it authorize or permit any of its Affiliates to, nor shall it authorize or
permit any officer, director or employee of or any financial advisor, attorney
or other advisor, representative or agent of it or any of its Affiliates, to (i)
directly or indirectly solicit, facilitate, initiate or encourage the making or
submission of, any Takeover Proposal (including, without limitation, the taking
of any action which would make Section 912 of the BCL inapplicable to a Takeover
Proposal), (ii) enter into any agreement, arrangement or understanding with
respect to any Takeover Proposal or enter into any agreement, arrangement or
understanding requiring it to abandon, terminate or fail to consummate the
Merger or any other transaction contemplated by this Agreement, (iii) initiate
or participate in any way in any discussions or negotiations regarding, or
furnish or disclose to any Person (other than a party to this Agreement) any
information with respect to, or take any other action to facilitate or in
furtherance of any inquiries or the making of any proposal that constitutes, or
could reasonably be expected to lead to, any Takeover Proposal or (iv) grant any
waiver or release under any standstill or similar agreement with respect to any
class of the Company's equity securities; provided that prior to the acceptance
for payment of shares of Company Common Stock pursuant to the Offer, in response
to an unsolicited Takeover Proposal that did not result from the breach of this
Section 7.07 and following delivery to Parent of notice of the Takeover Proposal
in compliance with its obligations under Section 7.07(d) hereof, the Company may
participate in discussions or negotiations with or furnish information (pursuant
to a confidentiality agreement with customary terms) to any third party which
makes a bona fide written Takeover Proposal if (A) a majority of the Company's
Board of Directors reasonably determines in good faith (after consultation with
an independent, nationally recognized investment bank) that taking such action
would be reasonably likely to lead to the delivery to the Company of a Superior
Proposal and (B) a majority of the Company's Board of Directors determines in
good faith (after receiving the advice of outside legal counsel) that it is
necessary to take such actions(s) in order to comply with its fiduciary duties
under applicable law. Without limiting the foregoing, the Company agrees that
any violation of the restrictions set forth in this Section 7.07(a) by any of
its, or any of its Subsidiaries', officers, employees, Affiliates or directors
or any advisor, representative, consultant or agent retained by the Company or
any of its Subsidiaries or Affiliates in connection with the transactions
contemplated hereby, whether or not such Person is purporting to act on behalf
of the Company or any of its Subsidiaries, shall constitute a breach of this
Section 7.07(a) by the Company.
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For purposes of this Agreement, "TAKEOVER PROPOSAL" means any inquiry,
proposal or offer from any Person or group relating to (i) any direct or
indirect acquisition or purchase of 15% or more of the assets of the Company or
any of its Significant Subsidiaries or 15% or more of any class of equity
securities of the Company or any of its Significant Subsidiaries, (ii) any
tender offer or exchange offer that, if consummated, would result in any Person
beneficially owning all or any portion of any class of equity securities of the
Company or any of its Significant Subsidiaries or (iii) any merger,
consolidation, business combination, sale of all or any substantial portion of
the assets, recapitalization, liquidation or a dissolution of, or similar
transaction of the Company or any of its Significant Subsidiaries other than the
Offer or the Merger; and "SUPERIOR PROPOSAL" means a bona fide written Takeover
Proposal made by a third party to purchase at least two-thirds of the
outstanding equity securities of the Company pursuant to a tender offer,
exchange offer, merger or other business combination (x) on terms which a
majority of the Company's Board of Directors determines in good faith (after
consultation with an independent, nationally recognized investment bank) to be
superior to the Company and its shareholders (in their capacity as shareholders)
from a financial point of view (taking into account, among other things, all
legal, financial, regulatory and other aspects of the proposal and identity of
the offeror) as compared to the transactions contemplated hereby and any
alternative proposed by Parent or Merger Sub in accordance with Section 9.01(c)
and (y) which is reasonably capable of being consummated.
(b) The Company agrees that, except as set forth in Section 7.07(c),
neither its Board of Directors nor any committee thereof shall (i) approve or
recommend, or propose to approve or recommend, any Takeover Proposal or (ii)
approve, recommend or cause it to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement (each, an
"ACQUISITION AGREEMENT") related to any Takeover Proposal.
(c) The Company agrees that, notwithstanding anything to the contrary
herein, prior to the acceptance for payment of shares of Company Common Stock
pursuant to the Offer, the Company and/or its Board of Directors may take the
actions otherwise prohibited by Section 7.07(b) if (i) a third party makes a
Superior Proposal, (ii) the Company complies with its obligations under Section
7.07(d), (iii) all of the conditions to the Company's right to terminate this
Agreement in accordance with Section 9.01(c) hereof have been satisfied
(including the expiration of the three (3) Business Day period described therein
and the payment of all amounts required pursuant to Section 9.03 hereof) and
(iv) simultaneously therewith, this Agreement is terminated in accordance with
Section 9.01(c) hereof.
(d) The Company agrees that in addition to the obligations of the Company
set forth in paragraphs (a), (b) and (c) of this Section 7.07, promptly on the
date of receipt thereof, the Company shall advise Parent in writing of any
request for information or any Takeover Proposal, or any inquiry, discussions or
negotiations with respect to any Takeover Proposal, the terms and conditions of
such request, Takeover Proposal, inquiry, discussions or negotiations and the
Company shall promptly provide to Parent copies of any written materials
received by the Company in connection with any of the foregoing, and the
identity of the Person or group making any such request, Takeover Proposal or
inquiry or with whom any discussions or negotiations are taking place. The
Company agrees that it shall keep Parent fully informed of the status and
details (including amendments or proposed amendments) of any such request,
Takeover Proposal or inquiry and keep Parent fully informed as to the material
details of any information requested of or provided by the Company and as to the
details of all discussions or negotiations with respect to any such request,
Takeover Proposal or inquiry. The Company agrees that it shall simultaneously
provide to Parent any non-public information concerning the Company provided to
any other Person or group in connection with any Takeover Proposal which was not
previously provided to Parent.
(e) Parent agrees that nothing contained in this Section 7.07 shall
prohibit the Company from taking and disclosing to its shareholders a position
contemplated by Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act
with respect to any tender offer.
(f) The Company agrees that immediately following the execution of this
Agreement, (i) it shall request each Person which has heretofore executed a
confidentiality agreement in connection with such Person's consideration of
acquiring the Company or any portion thereof to return or destroy (which
destruction shall be certified in writing by an executive officer of the
Company) all confidential information heretofore furnished to
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such Person by or on its behalf and (ii) the Company shall cease and cause to be
terminated immediately all existing discussions or negotiations with any Person
conducted heretofore with respect to, or that could reasonably be expected to
lead to, any Takeover Proposal.
Section 7.08. Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent and Merger Sub shall give prompt notice to
the Company, of the occurrence, or failure to occur, of any event, which
occurrence or failure to occur would be likely to cause any representation or
warranty contained in this Agreement to be untrue in any material respect at any
time from the date of this Agreement to the Effective Time. Each of the Company
and Parent shall give prompt notice to the other party of any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement.
Section 7.09. Antitrust Laws. (a) Each party hereto shall (i) take
promptly all actions necessary to make the filings required of it or any of its
Affiliates under any applicable Antitrust Laws in connection with this Agreement
and the transactions contemplated hereby, (ii) comply at the earliest
practicable date with any formal or informal request for additional information
or documentary material received by it or any of its Affiliates from any
Antitrust Authority and (iii) cooperate with one another in connection with any
filing under applicable Antitrust Laws and in connection with resolving any
investigation or other inquiry concerning the transactions contemplated by this
Agreement initiated by any Antitrust Authority.
(b) Each party hereto shall use its reasonable best efforts to resolve such
objections, if any, as may be asserted with respect to the transactions
contemplated by this Agreement under any Antitrust Law. Without limiting the
generality of the foregoing, "reasonable best efforts" shall include, without
limitation:
(i) in the case of each of Parent and the Company:
(A) filing with the appropriate Antitrust Authorities at the
earliest practicable date a Notification and Report Form or other
applicable notification with respect to the transactions contemplated by
this Agreement;
(B) if Parent or the Company receives a formal request for
information and documents from an Antitrust Authority, substantially
complying with such formal request at the earliest practicable date
following the date of its receipt thereof; and
(C) opposing vigorously any litigation relating to the Offer, the
Merger or the other transactions contemplated hereby, including, without
limitation, promptly appealing any adverse court order; provided,
however, that if any order, injunction or decree prohibiting the Offer,
the Merger or the other transactions contemplated hereby remains in
effect on September 30, 2000, Parent may terminate this Agreement
provided it is then entitled to terminate this Agreement pursuant to
Section 9.01(d).
(ii) in the case of the Company only, subject to Parent's compliance
with clause (i) above, not frustrating or impeding Parent's strategy or
negotiating positions with any Antitrust Authority; and
(iii) in the case of Parent and Merger Sub only, subject to the
Company's compliance with clause (i) above, to accept an order requiring
Parent, Merger Sub or the Company to agree or commit to divest, hold
separate, offer for sale, abandon, limit its operations of or take similar
action with respect to any assets (tangible or intangible) or any business
interest of it or any of their Subsidiaries (including, without limitation,
the Surviving Corporation after consummation of the Merger) as are
necessary to permit Parent and Merger Sub to otherwise fully consummate the
Offer and the Merger (an "ORDER OF DISPOSITION"); provided, however, that
nothing in this Agreement shall require Parent or any of its Subsidiaries
to comply with or accept Orders of Disposition which, if complied with,
could reasonably be expected to, individually or in the aggregate, have a
Parent Material Adverse Effect.
(c) Each party hereto shall promptly inform the other parties of any
material communication made to, or received by such party from, any Antitrust
Authority or any other Governmental Authority regarding any of the transactions
contemplated hereby.
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(d) For purposes of this Agreement, (i) "ANTITRUST AUTHORITIES" means the
Federal Trade Commission, the Antitrust Division, the attorneys general of the
several states of the United States, the antitrust authorities of Brazil,
Canada, Germany and any other Governmental Authority having jurisdiction with
respect to the transactions contemplated hereby pursuant to applicable Antitrust
Laws and (ii) "ANTITRUST LAW" means the Sherman Act, as amended, the Clayton
Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, the
Competition Act, European Antitrust Laws and all other federal, state and
foreign statutes, rules, regulations, orders, decrees, administrative and
judicial doctrines, and other laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization or
restraint of trade.
Section 7.10. Directors' and Officers' Insurance. (a) The Certificate of
Incorporation and the By-Laws of the Surviving Corporation shall contain the
provisions with respect to indemnification and exculpation from liability set
forth in the Company's Certificate of Incorporation and By-Laws on the date of
this Agreement, which provisions shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who on or prior to
the Effective Time were directors, officers, employees or agents of the Company,
unless such modification is required by law.
(b) For a period of six years from the Effective Time, the Surviving
Corporation shall either (x) maintain in effect the Company's current directors'
and officers' liability insurance covering those Persons who are currently
covered on the date of this Agreement by the Company's directors' and officers'
liability insurance policy (a copy of which has been heretofore delivered to
Parent) (the "INDEMNIFIED PARTIES"); provided, however, that in no event shall
Parent be required to expend in any one year an amount in excess of 225% of the
annual premiums currently paid by the Company for such insurance; provided
further that if the annual premiums of such insurance coverage exceed such
amount, the Surviving Corporation shall be obligated to obtain a policy with the
greatest coverage available for a cost not exceeding such amount; provided
further that the Surviving Corporation may substitute for the Company policy
policies with at least the same coverage containing terms and conditions which
are no less advantageous and provided that said substitution does not result in
any gaps or lapses in coverage with respect to matters occurring prior to the
Effective Time or (y) if such insurance coverage is not otherwise available,
cause Parent's directors' and officers' liability insurance then in effect to
cover those Persons who are covered on the date of this Agreement by the
Company's directors' and officers' liability insurance policy with respect to
those matters covered by the Company's directors' and officers' liability
policy.
(c) The Surviving Corporation shall indemnify all Indemnified Parties to
the fullest extent permitted by applicable law with respect to all acts and
omissions arising out of such individuals' services as officers, directors,
employees or agents of the Company or any of its Subsidiaries or as trustees or
fiduciaries of any plan for the benefit of employees of the Company or any of
its Subsidiaries occurring prior to the Effective Time, including, without
limitation, the transactions contemplated by this Agreement. Without limitation
of the foregoing, in the event any such Indemnified Party is or becomes involved
in any capacity in any action, proceeding or investigation in connection with
any matter, including, without limitation, the transactions contemplated by this
Agreement, occurring prior to, and including, the Effective Time, the Surviving
Corporation, from and after the Effective Time, shall pay, as incurred, such
Indemnified Party's reasonable legal and other expenses (including the cost of
any investigation and preparation) incurred in connection therewith. Subject to
Section 7.10(d) below, the Surviving Corporation shall pay all reasonable
expenses, including attorneys' fees, that may be incurred by any Indemnified
Party in enforcing this Section 7.10 or any action involving an Indemnified
Party resulting from the transactions contemplated by this Agreement.
(d) Any Indemnified Party wishing to claim indemnification under paragraph
(a) or (c) of this Section 7.10, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify the Surviving Corporation
thereof. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) the
Surviving Corporation shall have the right, from and after the Effective Time,
to assume the defense thereof (with counsel engaged by the Surviving Corporation
to be reasonably acceptable to the relevant Indemnified Party) and the Surviving
Corporation shall not be liable to such Indemnified Party for any legal expenses
of other counsel or any other expenses
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subsequently incurred by such Indemnified Party in connection with the defense
thereof, (ii) such Indemnified Party will cooperate in the defense of any such
matter and (iii) the Surviving Corporation shall not be liable for any
settlement effected without its prior written consent; provided that the
Surviving Corporation shall not have any obligation hereunder to any Indemnified
Party when and if a court of competent jurisdiction shall ultimately determine,
and such determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
law.
Section 7.11. Public Announcements. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement and
shall not issue any such press release or make any such public statement prior
to such consultation and review by the other party of such release or statement,
except as may be required by law, court process or by obligations pursuant to
any listing agreement with a national securities exchange.
Section 7.12. Transfer Tax. The Company and Parent shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees and any similar taxes which become payable in
connection with the transactions contemplated by this Agreement (together with
any related interest, penalties or additions to tax, "TRANSFER TAXES"). All
Transfer Taxes shall be paid by the Company and expressly shall not be a
liability of any holder of the Company Common Stock.
Section 7.13. NYSE Listing. Parent shall use its reasonable best efforts
to cause the Parent Common Stock to be issued in connection with the Offer and
the Merger to be listed on the NYSE, subject to official notice of issuance.
Section 7.14. Affiliates of the Company. Not less than 15 days prior to
the Effective Time, the Company shall deliver to Parent a letter identifying all
Persons who, to the Company's knowledge, at the Effective Time, may be deemed to
be "affiliates" of the Company for purposes of Rule 145 under the Securities Act
or who may otherwise be deemed to be Affiliates of the Company (the "RULE 145
AFFILIATES"). The Company shall use its reasonable best efforts to cause each
Person who is identified as a Rule 145 Affiliate in such list to deliver to
Parent prior to the Effective Time, a written agreement, in the form attached
hereto as Exhibit A (a "RULE 145 AFFILIATE AGREEMENT").
Section 7.15. Employee Benefits. (a) Parent covenants and agrees that,
during the period commencing at the Effective Time through at least December 31,
2001, it will provide (or shall cause the Surviving Corporation to provide)
nonrepresented current and former employees of the Company and its Subsidiaries
with salary and benefits under employee benefit plans that are no less
favorable, in the aggregate, than those currently provided by the Company and
its Subsidiaries to such employees (including, without limitation, benefits
pursuant to qualified and nonqualified retirement plans, savings plans, medical,
dental, disability and life insurance plans and programs, deferred compensation
arrangements, bonus and incentive compensation plans, and retiree benefit plans,
policies and arrangements). Parent shall cause the Surviving Corporation to
recognize service with the Company and its Subsidiaries and any predecessor
entities (and any other service credited by the Company under similar benefit
plans) for all purposes (including for vesting, eligibility to participate,
severance, and benefit accrual); and Parent and the Surviving Corporation shall
recognize (or cause to be recognized) service with the Company and its
Subsidiaries and any predecessor entities (and any service credited by the
Company under similar benefit plans) for purposes of vesting, eligibility to
participate and severance under any employee benefit plan or arrangement
maintained by Parent, the Surviving Corporation or any Subsidiary or Affiliate
of Parent and for purposes of benefit accrual under any employee welfare benefit
plan or arrangement maintained by Parent, the Surviving Corporation or any
Subsidiary or Affiliate of Parent; provided, however, that solely to the extent
necessary to avoid duplication of benefits, amounts payable under employee
benefit plans provided by Parent, the Surviving Corporation or a Parent
Subsidiary may be reduced by amounts payable under similar Company Employee
Benefit Plans with respect to the same periods of service. Any benefits accrued
by employees of the Company or any Subsidiary of the Company prior to the
Effective Time under any defined benefit pension plan currently maintained by
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the Company or any Subsidiary of the Company that employs a final average pay
formula shall be calculated based on the employees' final average pay with
Parent, the Surviving Corporation or any Parent Subsidiary or other Affiliate
employing the employees for as long as the current final average pay benefit
formula under such plan is in effect. From and after the Effective Time, Parent
and the Surviving Corporation shall, and Parent shall cause the Subsidiaries and
Affiliates of Parent to, (i) waive any pre-existing condition limitations to the
extent that the employees or their beneficiaries are not subject to such
pre-existing condition limitations under the comparable Company Employee Benefit
Plans prior to the Effective Time, and (ii) credit any deductibles and
out-of-pocket expenses that are applicable and/or covered under the Company
Employee Benefit Plans, and are incurred by the employees and their
beneficiaries during the portion of the calendar year prior to participation in
the benefit plans provided by Parent, the Surviving Corporation and any
Subsidiary or Affiliate of Parent. The provisions of this Section 7.15 shall not
create in any employee or former employee of the Company or any Subsidiary of
the Company any rights to employment or continued employment with Parent, the
Surviving Corporation or the Company or any of their respective Subsidiaries or
Affiliates or any right to specific terms or conditions of employment.
(b) During the period commencing at the Effective Time and through at least
December 31, 2001, Parent and the Surviving Corporation shall honor, and Parent
shall cause its Subsidiaries and Affiliates to honor, in accordance with its
terms, the Company's severance policy in effect as of the Closing Date as set
forth in Section 7.15 of the Company Disclosure Letter. During the period
commencing at the Effective Time and through at least the second anniversary of
the Closing Date, Parent and the Surviving Corporation shall honor, and Parent
shall cause its Subsidiaries and Affiliates to honor, in accordance with its
terms, the Company's Severance Plan for Key Employees. Parent agrees that up to
27 employees listed on Section 7.15 of the Company Disclosure Schedule may be
added as participants in the Company's Severance Plan for Key Employees. During
the period commencing at the Effective Time and through at least the first
anniversary of the Closing Date, Parent and the Surviving Corporation shall
honor, and Parent shall cause its Subsidiaries and Affiliates to honor, in
accordance with its terms, the Reorganization Severance Plan which the Company
will establish prior to the Effective Time in accordance with the term sheet
attached to Section 7.15 of the Company Disclosure Letter. Parent shall cause
the Surviving Corporation to honor all accrued obligations under its deferred
compensation and supplemental retirement plans (including, without limitation,
such plans set forth in Section 7.15 of the Company Disclosure Letter). For
purposes of this Section 7.15(b), "PHANTOM SHARE" shall mean each unit of
deferred compensation or supplemental savings which pursuant to the governing
plan and/or arrangement (of, or with, the Company or a Company Subsidiary) is
measured by, or deemed invested in, a share of the Company Common Stock,
including, without limitation, a contingently credited share and a vested
deferred restricted stock unit. Parent and the Company agree to the following:
(i) as of the Effective Time, each Phantom Share under a plan or
arrangement which gives the participants no investment alternatives shall
be automatically converted into the number of phantom shares of Parent
Common Stock equal to the sum of (A) $50 divided by the Average Price and
(B) the Exchange Ratio; and
(ii) (A) one-third of each Phantom Share under a plan or arrangement
which gives the participants investment alternatives shall be automatically
converted into the number of phantom shares of Parent Common Stock equal to
the Exchange Ratio; and (B) two-thirds of each Phantom Share shall
automatically be deemed converted into $50 in cash which shall be deemed
invested in the most conservative deemed investment alternative under the
applicable plan or arrangement until new instructions as to deemed
investments are received from the participant.
The terms and conditions applicable to each Phantom Share under the
Company's existing plans and arrangements shall continue to apply to the related
converted Phantom Share.
(c) In addition, Parent shall cause the Surviving Corporation to honor, in
accordance with their terms, any individual employment, change of control,
severance, retirement or termination agreement between the Company or any
Subsidiary of the Company, and any current or former officer, director or
employee of the Company or any Subsidiary of the Company, including the
Company's incentive programs and change in control agreements between the
Company and certain of its officers, in each case as set forth in Section 7.15
of
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the Company Disclosure Letter (including the Trust Agreement), except as
otherwise agreed to by any such officer, director or employee. Parent shall also
cause the Surviving Corporation to honor the Executive Life Insurance Plan, in
accordance with its terms existing immediately prior to the execution of this
Agreement, and the related Split Dollar Life Insurance Agreements.
(d) The provisions of this Section 7.15 shall apply to employees of the
Company and its Subsidiaries whose terms and conditions of employment are not
subject to a collective bargaining agreement and, to the extent required by a
collective bargaining agreement, to employees of the Company and its
Subsidiaries whose terms and conditions of employment are subject to a
collective bargaining agreement.
(e) Parent acknowledges that a "POTENTIAL CHANGE IN CONTROL" has occurred
as defined in the Trust Agreement and that the Company shall deliver the Funding
Amount to the trustee under the Trust Agreement.
(f) Parent agrees that the consummation of the Merger shall constitute a
"CHANGE IN CONTROL" of the Company for all purposes within the meaning of all
applicable compensation or benefit plans or agreements of the Company and its
subsidiaries, including, without limitation, the Company Stock Plans and the
employment agreements set forth on the Company Disclosure Letter.
(g) The Company shall deliver to Parent copies of all notices, schedules
and other documents it proposes to deliver to, or receives from, the trustee
under the Trust Agreement after the date hereof, or in connection with the
transactions contemplated hereby, including, without limitation, the Payment
Schedule, as defined in the Trust Agreement. Parent shall have a reasonable
opportunity to review such notices, schedules and other documents proposed to be
delivered to such trustee prior to such delivery thereof.
(h) Parent agrees that the Company shall pay a pro rata bonus to each of
the approximately 650 participants in its annual bonus plan in respect of such
participant's employment with the Company in 2000 through the Closing Date. The
amount of such participant's bonus shall be determined as follows: (i) if such
participant is not terminated by the Company, the Surviving Corporation or
Parent (as the case may be) on or prior to December 31, 2000, such participant
shall receive a pro rata bonus equal to the amount of such participant's "actual
bonus" for 2000 through the Closing Date, which amount shall be paid on or prior
to February 28, 2001 in accordance with Parent's standard policies in effect for
bonus payments in respect of 2000; provided, however, that such participant
shall not have voluntarily terminated his or her employment on or prior to the
bonus payment date; and (ii) if such participant is terminated without "cause"
by the Company, the Surviving Corporation or Parent (as the case may be) on or
prior to December 31, 2000, such participant shall receive a pro rata bonus
equal to the amount of such participant's "actual bonus" for 2000 through the
Closing Date, which amount shall be paid within five days of such participant's
termination. For purposes of this Section 7.15(h), "actual bonus" shall be
determined by the Company in a manner consistent with past practice (except that
it shall be determined as of the Closing Date) and shall be reviewed with and
reasonably acceptable to Parent, and "cause" shall have the definition of such
term in the Severance Plan for Key Employees. For the avoidance of doubt, any
participant who is terminated with "cause" or who voluntarily terminates his or
her employment on or prior to the bonus payment date shall not receive any
bonus. Notwithstanding the foregoing provisions of this Section 7.15(h), a Named
Executive entitled to a payment at the time of his termination pursuant to
Section 7.15(j) shall also be entitled to be paid his pro rata bonus pursuant to
this Section 7.15(h).
(i) Parent agrees that it shall pay (or cause to be paid) a pro rata bonus
to each of the approximately 650 participants in the Company's annual bonus plan
in respect of such participant's employment with the Surviving Corporation or
Parent for the period commencing on the day following the Closing Date and
ending on December 31, 2000 (the "POST-CLOSING PERIOD"); provided that a
similarly situated employee of Parent participates in Parent's bonus plans. The
amount of such participant's bonus shall be determined as follows: (i) if a
participant is not terminated by the Surviving Corporation or Parent (as the
case may be) on or prior to December 31, 2000, such participant shall receive a
pro rata bonus equal to the amount of such participant's "Company target bonus"
for the Post-Closing Period; provided, however, that such participant shall not
have voluntarily terminated his or her employment on or prior to the bonus
payment date; and (ii) if a participant is terminated without "cause" by the
Surviving Corporation or Parent (as the case may be) on or prior to
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December 31, 2000, such participant shall receive a pro rata bonus equal to the
amount of such participant's "Company target bonus" for the period commencing on
the day following the Closing Date and ending on such termination date, in each
case, which amount shall be paid on or prior to February 28, 2001 in accordance
with Parent's standard policies in effect for bonus payments in respect of 2000.
For purposes of this Section 7.15(i), "Company target bonus" shall be reasonably
determined by Parent by application of the Company's targets (as in effect on
the date hereof) and Parent's performance measures (as in effect on the date
hereof), and "cause" shall have the definition of such term in the Severance
Plan for Key Employees. For the avoidance of doubt, any participant who is
terminated with "cause" or who voluntarily terminates his or her employment on
or prior to the bonus payment date shall not receive any bonus. Notwithstanding
the foregoing provisions of this Section 7.15(i), a Named Executive entitled to
a payment at the time of his termination pursuant to Section 7.15(j) shall also
be entitled to be paid his pro rata bonus pursuant to this Section 7.15(i).
(j) With respect to Messrs. Olson, Nichols, Brown, Fox, Corey, Diforio,
Hart, McWilliams and Nimons (each, a "NAMED EXECUTIVE"), unless otherwise agreed
in writing by such Named Executive and Parent after the execution of this
Agreement and prior to any termination of employment, he shall receive, at the
time of his termination of employment by wire transfer to an account designated
by him, the respective aggregate payment on account of the lump sum amounts
(including, without limitation, the Gross-Up Payment) to which he will become
entitled upon such termination under his employment or severance agreement and
this Section 7.15(j) plus the pro rata bonus to which he is entitled pursuant to
Sections 7.15(h) and 7.15(i); provided that (i) such Named Executive continues
to be employed by the Company after the Closing Date (being paid his salary in
effect immediately prior to the Closing) and does not terminate his employment
prior to December 31, 2000, (ii) the date of termination of such Named Executive
shall be at the election of Parent (if such termination occurs before December
31, 2000), (iii) such Named Executive agrees that he will not in any way
knowingly make any statement, written or oral, or take any other action relating
to Parent, the Company, the Surviving Corporation or their respective officers,
directors or shareholders that would disparage or otherwise harm Parent, the
Company, the Surviving Corporation or their respective business or reputation or
those of any of its officers, directors or shareholders (except as required in
connection with any governmental, judicial or regulatory agency proceeding) and
(iv) such Named Executive agrees that, at least until the earlier of December
31, 2000 or the termination of his employment at the election of Parent, he will
fully cooperate with Parent by providing Parent with such information about the
Company (and information about such other companies which is not covered by
confidentiality agreements with those companies) as it may reasonably request
and he will use his reasonably best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary or desirable in
order to effect an orderly and expeditious integration of the Company and Parent
after the Closing. Such termination shall be deemed a termination without Cause
for all purposes of such severance or employment agreement and all agreements
and plans applicable to such individual.
(k) Prior to the Effective Time, the Company shall establish a retention
plan for certain of the Company's employees. Such retention plan shall have an
aggregate cost of up to $11,500,000 and shall contain participants who are
determined as reasonably and mutually acceptable to Parent and the Company.
Payment under such retention plan shall be made to the Company's employees who
are employed by the Company at the first anniversary of the Closing Date (or who
have previously been terminated without cause, terminated as a result of death
or disability or terminated by the participant as a result of such participant's
reduction in salary or relocation, unless such relocation is to the Borough of
Manhattan in New York, New York, if the participant is located in Stamford,
Connecticut prior to the Effective Time, or to a location not more than 35 miles
away from such participant's principal place of employment prior to the
Effective Time) within five days of such anniversary date (or within five days
of such date of termination, if applicable). Such payment made to any
participant shall equal 50% of such participant's salary as in effect
immediately prior to the Closing.
Section 7.16. Section 16 Matters. Prior to the Effective Time, Parent and
the Company shall take all such steps as may be required to cause any
dispositions of Company Common Stock (including derivative securities with
respect to the Company Common Stock) and acquisitions of Parent Common Stock
(including derivative securities with respect to Parent Common Stock) resulting
from the transactions contemplated by
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this Agreement by each individual who is subject to the reporting requirements
of Section 16(a) of the Exchange Act with respect to the Company to be exempt
under Rule 16b-3 promulgated under the Exchange Act, such steps to be taken in
accordance with the No-Action Letter, dated January 12, 1999, issued by the SEC
to Skadden, Arps, Slate, Meagher & Flom LLP.
Section 7.17. Voting of Shares. Parent agrees to vote all shares of
Company Common Stock beneficially owned by it or any of its Subsidiaries in
favor of adoption of this Agreement at the Company Shareholder Meeting.
ARTICLE 8
CONDITIONS TO THE MERGER
Section 8.01. Conditions to Obligations of Each Party. The obligations of
the Company, Parent and Merger Sub to consummate the Merger are subject to the
satisfaction of the following conditions:
(a) to the extent required by applicable law this Agreement shall have
been approved and adopted by the shareholders of the Company in accordance
with the BCL;
(b) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger;
(c) Parent Common Stock to be issued in the Merger shall have been
authorized for listing on the NYSE, subject to official notice of issuance;
(d) the Merger Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, no stop order
suspending the effectiveness of the Merger Registration Statement shall
have been issued by the SEC and no proceedings for that purpose shall have
been initiated by the SEC and not concluded or withdrawn and all state
securities or blue sky authorizations necessary to carry out the
transactions contemplated hereby shall have been obtained and be in effect;
and
(e) Merger Sub shall have purchased shares of Company Common Stock
pursuant to the Offer.
Section 8.02. Conditions To the Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to consummate the Merger are subject to the
satisfaction of the following further condition: that the Company shall have
performed in all material respects all of its obligations hereunder required to
be performed by it at or prior to the Effective Time.
ARTICLE 9
TERMINATION AND ABANDONMENT
Section 9.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the Company Shareholder
Approval:
(a) by mutual written consent of Parent and the Company; or
(b) by Parent:
(i) if at any time prior to the acceptance for payment of shares of
Company Common Stock pursuant to the Offer, the Company has breached in
any material respect any representation, warranty, covenant or other
agreement contained in this Agreement, which (i) would give rise to the
failure of a condition set forth in clause (f) of Annex I, (ii) cannot
be or has not been cured prior to the Termination Date and (iii) has not
been waived by Parent pursuant to the provisions hereof;
(ii) if at any time after the date hereof and prior to the
acceptance for payment of shares of Company Common Stock pursuant to the
Offer, (A) the Company, or its Board of Directors, as the case may be,
shall have (w) entered into any agreement with respect to any Takeover
Proposal other
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than the Offer or the Merger and other than a confidentiality agreement
permitted under Section 7.07, (x) amended, conditioned, qualified,
withdrawn or modified, or proposed or resolved to do so, in a manner
adverse to Parent or Merger Sub, its approval and recommendation of the
Offer, the Merger and this Agreement, or (y) approved or recommended, or
proposed to approve or recommend, any Takeover Proposal other than the
Offer or the Merger, or (B) the Company or the Company's Board of
Directors or any committee thereof shall have resolved to do any of the
foregoing; or
(iii) if the Company breaches any of its obligations under Section
7.07 or Section 9.01(c) hereof;
(c) by the Company if at any time prior to the acceptance for payment
of shares of Company Common Stock pursuant to the Offer a Superior Proposal
is received by the Company and the Board of Directors of the Company
reasonably determines in good faith (after receiving the advice of outside
legal counsel) that it is necessary to terminate this Agreement and enter
into an agreement to effect the Superior Proposal to comply with its
fiduciary duties under applicable law; provided that the Company may not
terminate this Agreement pursuant to this Section 9.01(c) unless and until
(i) three (3) Business Days have elapsed following delivery to Parent of a
written notice of such determination by the Board of Directors of the
Company and during such three (3) Business Day period the Company has fully
cooperated with Parent, including, without limitation, informing Parent of
the terms and conditions of such Superior Proposal, and the identity of the
Person making such Superior Proposal, with the intent of enabling both
parties to agree to a modification of the terms and conditions of this
Agreement so that the transactions contemplated hereby may be effected;
(ii) at the end of such three (3) Business Day period the Takeover Proposal
continues to constitute a Superior Proposal and the Board of Directors of
the Company confirms its determination (after receiving the advice of
outside legal counsel) that it is necessary to terminate this Agreement and
enter into an agreement to effect the Superior Proposal to comply with its
fiduciary duties under applicable law; and (iii)(x) at or prior to such
termination, Parent has received all fees and Expenses set forth in Section
9.03 hereof by wire transfer in same day funds and (y) immediately
following such termination the Company enters into a definitive
acquisition, merger or similar agreement to effect the Superior Proposal;
(d) by either Parent or the Company:
(i) if the Offer has not been consummated on or before September
30, 2000 (the "TERMINATION DATE"); provided that the right to terminate
this Agreement pursuant to this clause shall not be available to any
party whose failure to fulfill any material obligation of this Agreement
or other material breach of this Agreement has been the cause of, or
resulted in, the failure of the Offer to have been consummated on or
prior to the aforesaid date; or
(ii) if any court of competent jurisdiction or any Governmental
Authority shall have issued an order, decree or ruling or taken any
other action permanently restricting, enjoining, restraining or
otherwise prohibiting acceptance for payment of, and payment for, shares
of Company Common Stock pursuant to the Offer or consummation of the
Merger and such order, decree, ruling or other action shall have become
final and nonappealable.
Section 9.02. Effect of Termination. In the event of termination of this
Agreement by Parent or the Company, as provided in Section 9.01, this Agreement
shall forthwith become void and there shall be no liability hereunder on the
part of the Company, Parent or Merger Sub or their respective officers or
directors (except as set forth in Section 7.02, this Section 9.02 and Sections
9.03, 10.03, 10.04, 10.05, 10.11 and 10.13, which shall survive the
termination); provided, however, that nothing contained in this Section 9.02 or
in Section 9.03 shall relieve any party hereto from any liability for any breach
of this Agreement.
Section 9.03. Payment of Certain Fees. (a) If this Agreement is
terminated by Parent in accordance with Section 9.01(b)(i), 9.01(b)(ii)(A)(w),
9.01(b)(ii)(A)(y), 9.01(b)(ii)(B) (unless related to a resolution to take any of
the actions set forth in Section 9.01(b)(ii)(A)(x), in which case Section
9.03(c) shall apply) or 9.01(b)(iii) hereof or by the Company pursuant to
Section 9.01(c), then the Company shall
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<PAGE> 116
(A) reimburse Parent for all of its Expenses and (B) pay to Parent in
immediately available funds a termination fee in an amount equal to $300 million
(the "TERMINATION FEE").
(b) If this Agreement is terminated by Parent or the Company pursuant to
Section 9.01(d)(i) hereof and (x) a Takeover Proposal has been made and publicly
announced or communicated to the Company's shareholders after the date of this
Agreement and prior to the Termination Date and, to the extent applicable, (y)
concurrently with or within twelve (12) months of the date of such termination a
Third Party Acquisition Event occurs, then the Company shall (i) within one
Business Day of the date of termination pursuant to Section 9.01(d)(i) (A) pay
to Parent 50% of the Termination Fee and (B) reimburse Parent for all of its
Expenses, and (ii) within one Business Day of the occurrence of such a Third
Party Acquisition Event (including any revisions or amendments thereto) pay to
Parent 50% of the Termination Fee.
"THIRD PARTY ACQUISITION EVENT" shall mean (i) the consummation of a
Takeover Proposal involving the purchase of a majority of either the equity
securities of the Company or of the consolidated assets of the Company and its
Subsidiaries, taken as a whole, or any such transaction that, if it had been
proposed prior to the termination of this Agreement would have constituted a
Takeover Proposal or (ii) the entering into by the Company or any of its
Subsidiaries of a definitive agreement with respect to any such transaction.
"EXPENSES" shall mean documented and reasonable out-of-pocket fees and
expenses up to a maximum aggregate amount of $10 million incurred or paid in
connection with the Merger or the consummation of any of the transactions
contemplated by this Agreement, including, but not limited to, all filing fees,
printing fees and reasonable fees and expenses of law firms, commercial banks,
investment banking firms, accountants, experts and consultants.
(c) If this Agreement is terminated by Parent pursuant to Section
9.01(b)(ii)(A)(x), then (i) the Company shall (A) pay to Parent 50% of the
Termination Fee and (B) reimburse Parent for all of its Expenses and (ii) if
concurrently with or within 12 months after such termination a Third Party
Acquisition Event occurs, then the Company shall pay to Parent 50% of the
Termination Fee within one Business Day of the occurrence of such a Third Party
Acquisition Event (including any revisions or amendments thereto).
(d) Any payment of the Termination Fee (and reimbursement of Expenses)
pursuant to this Section 9.03 shall be made within one Business Day after
termination of this Agreement (or as otherwise expressly set forth in this
Agreement) by wire transfer of immediately available funds. If either party
fails to pay to (or reimburse) the other party any fee or expense due hereunder
(including the Termination Fee), such party shall pay the costs and expenses
(including legal fees and expenses) in connection with any action, including the
filing of any lawsuit or other legal action, taken to collect payment, together
with interest on the amount of any unpaid fee and/or expense at the publicly
announced prime rate of Citibank, N.A. from the date such fee was required to be
paid to the date it is paid.
ARTICLE 10
MISCELLANEOUS
Section 10.01. Representations and Warranties. The respective
representations and warranties of the Company, on the one hand, and Parent and
Merger Sub, on the other hand, contained herein or in any certificates or other
documents delivered prior to or at the Closing shall not be deemed waived or
otherwise affected by any investigation made by any party. Each and every such
representation and warranty shall expire with, and be terminated and
extinguished by, the Closing and thereafter none of the Company, Parent or
Merger Sub shall be under any liability whatsoever with respect to any such
representation or warranty. This Section 10.01 shall have no effect upon any
other obligation of the parties hereto, whether to be performed before or after
the Effective Time.
Section 10.02. Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken by or on behalf of the respective
Boards of Directors of the Company, Parent or Merger Sub, may (i) extend the
time for the performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein by any other applicable
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<PAGE> 117
party or in any document, certificate or writing delivered pursuant hereto by
any other applicable party or (iii) waive compliance with any of the agreements
or conditions contained herein. Any agreement on the part of any party to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
Section 10.03. Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered in person or
mailed, certified or registered mail with postage prepaid, or sent by telex,
telegram or telecopier, as follows:
(a) if to the Company, to it at:
Champion International Corporation
One Champion Plaza
Stamford, Connecticut 06921
Telecopy: 203-358-6562
Attention: General Counsel
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Telecopy: 212-735-2000
Attention: Blaine V. Fogg, Esq.
Joseph A. Coco, Esq.
(b) if to either Parent or Merger Sub, to it at:
International Paper Company
2 Manhattanville Road
Purchase, New York 10577
Telecopy: 914-397-1909
Attention: General Counsel
in each case, with a copy (which shall not constitute notice) to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telecopy: 212-450-5744
Attention: Dennis S. Hersch, Esq.
or to such other Person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the date of
delivery unless if mailed, in which case on the third Business Day after the
mailing thereof except for a notice of a change of address, which shall be
effective only upon receipt thereof.
Section 10.04. Entire Agreement. This Agreement and the schedules and
other documents referred to herein or delivered pursuant hereto, collectively
contain the entire understanding of the parties hereto with respect to the
subject matter contained herein and supersede all prior agreements and
understandings, oral and written, with respect thereto.
Section 10.05. Binding Effect; Benefit; Assignment. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and, with respect
to the provisions of Sections 7.10, 7.15(c), 7.15(j) and 7.16 hereof, shall
inure to the benefit of the Persons or entities benefitting from the provisions
thereof who are intended to be third-party beneficiaries thereof and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties,
except that Merger Sub may assign and transfer its right and obligations
hereunder to any of its Affiliates. Except as provided in the immediately
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<PAGE> 118
preceding sentence, nothing in this Agreement, expressed or implied, is intended
to confer on any Person other than the parties hereto or their respective
successors and permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
Section 10.06. Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified and supplemented in writing by the
parties hereto in any and all respects before the Effective Time
(notwithstanding the Company Shareholder Approval), by action taken by the
respective Boards of Directors of Parent, Merger Sub and the Company or by the
respective officers authorized by such Boards of Directors or otherwise, as the
case may be; provided, however, that after the Company Shareholder Approval, no
amendment shall be made which by law requires further approval by the
shareholders of the Company without such further approval.
Section 10.07. Further Actions. Each of the parties hereto agrees that,
except as otherwise provided in this Agreement and subject to its legal
obligations, it will use its reasonable best efforts to fulfill all conditions
precedent specified herein, to the extent that such conditions are within its
control, and to do all things reasonably necessary to consummate the
transactions contemplated hereby.
Section 10.08. Headings. The descriptive headings of the several Articles
and Sections of this Agreement are inserted for convenience only, do not
constitute a part of this Agreement and shall not affect in any way the meaning
or interpretation of this Agreement.
Section 10.09. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
Section 10.10. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
Section 10.11. Applicable Law. This Agreement and the legal relations
between the parties hereto shall be governed by and construed in accordance with
the laws of the State of New York, without regard to the conflict of laws rules
thereof.
Section 10.12. Severability. If any term, provision, covenant or
restriction contained in this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void, unenforceable or against
its regulatory policy, the remainder of the terms, provisions, covenants and
restrictions contained in this Agreement shall remain in full force and effect
and shall in no way be affected, impaired or invalidated.
Section 10.13. Waiver of Jury Trial. Each of the parties to this
Agreement hereby irrevocably waives all right to a trial by jury in any action,
proceeding or counterclaim arising out of or relating to this Agreement or the
transactions contemplated hereby.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 119
IN WITNESS WHEREOF, each of Parent, Merger Sub and the Company has caused
this Agreement to be executed by its officers thereunto duly authorized, all as
of the date first above written.
INTERNATIONAL PAPER COMPANY
By: /s/ WILLIAM B. LYTTON
--------------------------------------
William B. Lytton
Senior Vice President and
General Counsel
CONDOR ACQUISITION
CORPORATION
By: /s/ C. CATO EALY
--------------------------------------
C. Cato Ealy
Vice President
CHAMPION INTERNATIONAL
CORPORATION
By: /s/ STEPHEN B. BROWN
--------------------------------------
Stephen B. Brown
Senior Vice President and
General Counsel
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<PAGE> 120
ANNEX I
Notwithstanding any other provision of the Offer, but subject to compliance
with Section 2.01(a) of the Agreement and Plan of Merger dated as of May 12,
2000 among Parent, Merger Sub and the Company (the "MERGER AGREEMENT") (each
defined term used herein shall have the meaning assigned to such term in the
Merger Agreement), Merger Sub shall not be required to accept for payment or pay
for any shares of Company Common Stock tendered pursuant to the Offer, and may
terminate or amend the Offer in accordance with the Merger Agreement, if (i)
prior to the expiration date of the Offer, (A) the Minimum Condition shall not
have been satisfied, or (B) the applicable waiting period under the HSR Act, any
of the European Antitrust Laws or the Competition Act shall not have expired or
been terminated; or (ii) on or after the date of the Merger Agreement and at or
prior to the expiration date of the Offer, any of the other conditions to the
Offer are not satisfied. The other conditions are as follows:
(a) Parent Common Stock to be issued in the Offer shall have been
authorized for listing on the NYSE, subject to official notice of issuance;
(b) The Offer Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, no stop order
suspending the effectiveness of the Offer Registration Statement shall have
been issued by the SEC and no proceedings for that purpose shall have been
initiated by the SEC and not concluded or withdrawn and all state
securities or blue sky authorizations necessary to consummate the Offer
shall have been obtained and be in effect;
(c) There shall not have been issued by any federal, state or foreign
court or by any federal, state or foreign governmental or regulatory
agency, body or authority and be in effect a preliminary or permanent
injunction or other order which prohibits, restrains, restricts or enjoins
the consummation of the Offer;
(d) There shall not have been enacted, entered, promulgated or
enforced by any court or governmental authority any federal, state or
foreign statute, rule, regulation, executive order, decree or order of any
kind which prohibits, restrains, restricts or enjoins the consummation of
the Offer or has the effect of making the Offer illegal;
(e) There shall not have occurred any event that has had or could
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect;
(f) (i) The Company shall not have breached or failed to perform in
all material respects any of its obligations under the Merger Agreement,
(ii) the representations and warranties of the Company contained in the
Merger Agreement that are qualified by reference to a Company Material
Adverse Effect shall be true when made or at any time prior to the
consummation of the Offer as if made at and as of such time (other than
representations and warranties which by their terms address matters only as
of another specified date, which shall be true and correct only as of such
date), or (iii) the representations and warranties of the Company contained
in the Merger Agreement that are not so qualified shall be true when made
or at any time prior to the consummation of the Offer as if made at and as
of such time (other than representations and warranties which by their
terms address matters only as of another specified date, which shall be
true and correct only as of such date), except, in the case of clause (iii)
only, for such inaccuracies as are not reasonably likely to, individually
or in the aggregate, result in a Company Material Adverse Effect; and
(g) The Merger Agreement shall not have been terminated in accordance
with its terms;
which, in the sole judgment of Parent in any such case, and regardless of the
circumstances (including any action or omission by Parent) giving rise to any
such condition, makes it inadvisable to proceed with such acceptance for payment
or payment.
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<PAGE> 121
Facsimile copies of letters of transmittal, properly completed and duly
executed, will be accepted. The appropriate letter of transmittal, certificates
for Champion shares and any other required documents should be sent or delivered
by each Champion stockholder or his broker, dealer, commercial bank, trust
company or other nominee to the exchange agent at one of its addresses set forth
below.
The Exchange Agent for the offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand:
ChaseMellon Shareholder (For eligible institutions only) ChaseMellon Shareholder
Services, L.L.C. (201) 296-4293 Services, L.L.C.
P.O. Box 3301 120 Broadway, 13th Floor
South Hackensack, NJ 07606 New York, NY 10271
</TABLE>
Confirm Facsimile by Telephone:
(201) 296-4860
(For Confirmation Only)
By Overnight Courier:
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Ridgefield Park, NJ 07660
------------------------
Any questions or requests for assistance or additional copies of the
prospectus, the letter of transmittal and the notice of guaranteed delivery and
related exchange offer materials may be directed to the information agent or the
dealer manager at their respective telephone numbers and locations listed below.
You may also contact your local broker, commercial bank, trust company or
nominee for assistance concerning the offer.
The Information Agent for the offer and the merger is:
INSFREE LOGO
501 Madison Avenue
20th Floor
New York, New York 10022
(212) 750-5833 (Call Collect)
or
Call Toll-Free (877) 750-5837
The Dealer Manager for the offer is:
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free: (800) 881-8320
<PAGE> 122
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Indemnification. Section 721 of the New York Business Corporation Law
("NYBCL") provides that, in addition to indemnification provided in Article 7 of
the NYBCL, a corporation may indemnify a director or officer by a provision
contained in the certificate of incorporation or by-laws or by a duly authorized
resolution of its shareholders or directors or by agreement, provided that no
indemnification may be made to or on behalf of any director or officer if a
judgment or other final adjudication adverse to the director or officer
establishes that his acts were committed in bad faith or were the result of
active and deliberate dishonesty and material to the cause of action, or that
such director or officer personally gained in fact a financial profit or other
advantage to which he was not legally entitled.
Section 722(a) of the NYBCL provides that a corporation may indemnify a
director or officer made, or threatened to be made, a party to any action other
than a derivative action, whether civil or criminal, against judgments, fines,
amounts paid in settlement and reasonable expenses actually and necessarily
incurred as a result of such action, if such director or officer acted, in good
faith, for a purpose which he reasonably believed to be in, or not opposed to,
the best interests of the corporation and, in criminal actions or proceedings,
in addition, has no reasonable cause to believe that his conduct was unlawful.
Section 722(c) of the NYBCL provides that a corporation may indemnify a
director or officer, made or threatened to be made a party in a derivative
action, against amounts paid in settlement and reasonable expenses actually and
necessarily incurred by him in connection with the defense or settlement of such
action or in connection with an appeal therein if such director or officer
acted, in good faith, for a purpose which he reasonably believed to be in, or
not opposed to, the best interests of the corporation, except that no
indemnification will be available under Section 722(c) of the NYBCL in respect
of a threatened or pending action which is settled or otherwise disposed of or
any claim as to which such director or officer shall have been adjudged liable
to the corporation, unless and only to the extent that the court in which the
action was brought, or, if no action was brought, any court of competent
jurisdiction, determines, upon application, that, in view of all the
circumstances of the case, the director or officer is fairly and reasonably
entitled to indemnity for such portion of the settlement amount and expenses as
the court deems proper.
Section 723 of the NYBCL specifies the manner in which payment of
indemnification under Section 722 of the NYBCL or indemnification permitted
under Section 721 of the NYBCL may be authorized by the corporation. It provides
that indemnification may be authorized by the corporation. It provides that
indemnification by a corporation is mandatory in any case in which the director
or officer has been successful, whether on the merits or otherwise, in defending
an action. In the event that the director or officer has not been successful or
the action is settled, indemnification must be authorized by the appropriate
corporate action as set forth in Section 723.
Section 724 of the NYBCL provides, that, upon application by a director or
officer, indemnification may be awarded by a court to the extent authorized
under Section 722 and Section 723 of the NYBCL contains certain other
miscellaneous provisions affecting the indemnification of directors and
officers.
Section 726 of the NYBCL authorizes the purchase and maintenance of
insurance to indemnify (1) a corporation for any obligation which it incurs as a
result of the indemnification of directors and officers under the above section,
(2) directors and officers in instances in which they may be indemnified by a
corporation under such section, and (3) directors and officers in instances in
which they may not otherwise be indemnified by a corporation under such section,
provided the contract of insurance covering such directors and officers
provides, in a manner acceptable to the New York State Superintendent of
Insurance, for a retention amount and for co-insurance.
Article VII of the Restated Certificate of Incorporation of International
Paper Company ("IP") provides in part as follows:
"Each Director of the Corporation shall be indemnified by the
Corporation against expenses actually and necessarily incurred by him in
connection with the defense of any action, suit or proceeding in which
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<PAGE> 123
he is made a party by reason of his being or having been a Director of the
Corporation, except in relation to matters as to which he shall be adjudged
in such action, suit or proceeding to be liable for negligence or
misconduct in the performance of his duties as such Director, provided that
such right of indemnification shall not be deemed exclusive of any other
rights to which a Director of the Corporation may be entitled, under any
by-law, agreement, vote of stockholders or otherwise."
Article IX of the By-laws, as amended, of IP provides as follows:
"The Corporation shall indemnify each Officer or Director who is made,
or threatened to be made, a party to any action by reason of the fact that
he or she is or was an Officer or Director of the Corporation, or is or was
serving at the request of the Corporation in any capacity for the
Corporation or any other enterprise, to the fullest extent permitted by
applicable law. The Corporation may, so far as permitted by law, enter into
an agreement to indemnify and advance expenses to any Officer or Director
who is made, or threatened to be made, a party to any such action."
Insurance. IP has purchased certain liability insurance for its officers
and directors as permitted by Section 727 of the NYBCL and has entered into
indemnity agreements with its directors and certain officers providing
indemnification in addition to that provided under the NYBCL as permitted by
Section 721 of the NYBCL.
Champion International Directors and Officers. The merger agreement
provides that the indemnification provisions of Champion International
Corporation ("Champion") shall survive the merger and shall not be modified for
at least six years after the effective time of the merger in any manner that
would adversely affect the rights of persons indemnified thereunder.
As described more fully above, Sections 721-727 of the NYBCL contain
detailed provisions regarding indemnification of and liability insurance for,
directors and officers of New York corporations against expenses, judgments,
fines and amounts paid in settlement in connection with litigation. Article F of
the Champion's Restated Certificate of Incorporation, as amended, requires
Champion to indemnify its directors and officers to the fullest extent permitted
by New York law, as such law may be amended from time to time. Article F also
allows Champion, if and when deemed appropriate, to provide indemnification or
reimbursement or advancement of expenses beyond the indemnification specifically
allowed by the NYBCL to the extent permitted by law. In addition, Champion has
purchased insurance policies that provide coverage for its directors and
officers in certain situations.
The merger agreement also provides that after the effective time of the
merger, the surviving corporation shall indemnify and hold harmless, to the
fullest extent permitted under applicable law, each present and former director
or officer of Champion and each Champion subsidiary against all liabilities and
expenses, including reasonable attorneys' fees, arising out of or pertaining to
any action or omission in their capacity as an officer or director, in each case
occurring before the effective time of the merger (including the transactions
contemplated by the merger agreement).
For six years from the effective time of the merger, the surviving
corporation shall provide to Champion's current directors and officers liability
insurance protection of the same kind and scope as that provided by Champion's
directors' and officers' liability insurance policies as of the date hereof;
provided, however, that in no event shall IP be required to expend in any one
year an amount in excess of 225% of the annual premiums currently paid by
Champion for such insurance; and, provided, further, that if the annual premiums
of such insurance coverage exceed such amount, the surviving corporation shall
be obligated to obtain a policy with the greatest coverage available for a cost
not exceeding such amount.
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<PAGE> 124
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) List of Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------- ----------- ----
<C> <S> <C>
2 Agreement and Plan of Merger dated as of May 12, 2000 among
IP, Champion and Condor Acquisition Corporation (included as
Annex A to the Prospectus).
3.1 Form of Restated Certificate of Incorporation of IP
(incorporated by reference to IP's registration statement on
Form 10-Q dated August 16, 1999).
3.2 Form of Restated Bylaws of IP (incorporated by reference to
IP's registration statement on Form 8-K dated March 10,
1999).
4 Specimen Common Stock Certificate (incorporated by reference
to Exhibit 2-A to IP's registration statement on Form S-7,
no.2-56588, dated June 10, 1976).
5 Opinion of Davis Polk & Wardwell regarding the validity of
the securities being registered.
23.1 Consent of Arthur Andersen LLP (for IP).
23.2 Consent of PricewaterhouseCoopers LLP (for IP).
23.3 Consent of Arthur Andersen LLP (for Champion).
23.4 Consent of Davis Polk & Wardwell (included in the opinion
filed as Exhibit 5 to this Registration Statement).
24 Power of Attorney (included on the signature page of this
Registration Statement).
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Brokers, Dealers, etc.
99.4 Form of Letter to Clients.
99.5 Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
99.6 Consent of Goldman, Sachs & Co.
99.7 Commitment Letter from Credit Suisse First Boston, New York
branch.
</TABLE>
(b) Not applicable.
(c) Not applicable.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
make, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
II-3
<PAGE> 125
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering; and
(4) If the registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include any
financial statements required by Rule 3-19 of this chapter at the start of
any delayed offering or throughout a continuous offering. Financial
statements and information otherwise required by Section 10(a)(3) of the
Act need not be furnished, PROVIDED, that the registrant includes in the
prospectus, by means of a post-effective amendment, financial statements
required pursuant to this paragraph (a)(4) and other information necessary
to ensure that all other information in the prospectus is at least as
current as the date of those financial statements. Notwithstanding the
foregoing, with respect to registration statements on Form F-3, a
post-effective amendment need not be filed to include financial statements
and information required by Section 10(a)(3) of the Act or Rule 3-19 of
this chapter if such financial statements and information are contained in
periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the Form F-3.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time be deemed to be the
initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by a person or party
who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the information called
for by the applicable registration form with respect to reofferings by persons
who may be deemed underwriters, in addition to the information called for by the
other items of the applicable form.
(d) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (a) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a) (3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(e) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(f) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one
II-4
<PAGE> 126
business day of receipt of such request, and to send the incorporated documents
by first class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
(g) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not subject of and included in
the registration statement when it became effective.
II-5
<PAGE> 127
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the County of Westchester, State of
New York, on May 19, 2000.
Date: May 19, 2000 INTERNATIONAL PAPER COMPANY
(Registrant)
By: /s/ JAMES W. GUEDRY
------------------------------------
James W. Guedry, Vice President
and Secretary
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
James W. Guedry and Barbara Smithers, and each of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
and supplements to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and hereby grants to such attorneys-in-fact
and agents, full power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ JOHN T. DILLON Chairman, Chief Executive Officer and May 19, 2000
- -------------------------------------- Director (Principal Executive Officer)
(John T. Dillon)
/s/ C. WESLEY SMITH Executive Vice President and Director May 19, 2000
- --------------------------------------
(C. Wesley Smith)
/s/ JOHN V. FARACI Senior Vice President and Chief May 19, 2000
- -------------------------------------- Financial Officer (Principal Financial
(John V. Faraci) Officer)
/s/ ANDREW R. LESSIN Vice President -- Finance and Chief May 19, 2000
- -------------------------------------- Accounting Officer (Principal
(Andrew R. Lessin) Accounting Officer)
/s/ PETER I. BIJUR Director May 19, 2000
- --------------------------------------
(Peter I. Bijur)
/s/ JAMES A. HENDERSON Director May 19, 2000
- --------------------------------------
(James A. Henderson)
</TABLE>
II-6
<PAGE> 128
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ ROBERT J. EATON Director May 19, 2000
- --------------------------------------
(Robert J. Eaton)
/s/ SAMIR G. GIBARA Director May 19, 2000
- --------------------------------------
(Samir G. Gibara)
/s/ JOHN R. KENNEDY Director May 19, 2000
- --------------------------------------
(John R. Kennedy)
/s/ ROBERT D. KENNEDY Director May 19, 2000
- --------------------------------------
(Robert D. Kennedy)
/s/ W. CRAIG MCCLELLAND Director May 19, 2000
- --------------------------------------
(W. Craig McClelland)
/s/ DONALD F. MCHENRY Director May 19, 2000
- --------------------------------------
(Donald F. McHenry)
/s/ PATRICK F. NOONAN Director May 19, 2000
- --------------------------------------
(Patrick F. Noonan)
/s/ JANE C. PFEIFFER Director May 19, 2000
- --------------------------------------
(Jane C. Pfeiffer)
/s/ JEREMIAH J. SHEEHAN Director May 19, 2000
- --------------------------------------
(Jeremiah J. Sheehan)
/s/ CHARLES R. SHOEMATE Director May 19, 2000
- --------------------------------------
(Charles R. Shoemate)
</TABLE>
II-7
<PAGE> 129
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
2 Agreement and Plan of Merger dated as of May 12, 2000 among
IP, Champion and Condor Acquisition Corporation (included as
Annex A to the Prospectus).
3.1 Form of Restated Certificate of Incorporation of IP
(incorporated by reference to IP's registration statement on
Form 10-Q dated August 16, 1999).
3.2 Form of Restated Bylaws of IP (incorporated by reference to
IP's registration statement on Form 8-K dated March 10,
1999).
4 Specimen Common Stock Certificate (incorporated by reference
to Exhibit 2-A to IP's registration statement on Form S-7,
no.2-56588, dated June 10, 1976).
5 Opinion of Davis Polk & Wardwell regarding the validity of
the securities being registered.
23.1 Consent of Arthur Andersen LLP (for IP).
23.2 Consent of PricewaterhouseCoopers LLP (for IP).
23.3 Consent of Arthur Andersen LLP (for Champion).
23.4 Consent of Davis Polk & Wardwell (included in the opinion
filed as Exhibit 5 to this Registration Statement).
24 Power of Attorney (included on the signature page of this
Registration Statement).
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Brokers, Dealers, etc.
99.4 Form of Letter to Clients.
99.5 Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
99.6 Consent of Goldman, Sachs & Co.
99.7 Commitment Letter from Credit Suisse First Boston, New York
branch.
</TABLE>
II-8
<PAGE> 1
EXHIBIT 5
[LETTERHEAD OF DAVIS POLK & WARDWELL]
May 19, 2000
International Paper Company
Two Manhattanville Road
Purchase, New York 10577
Ladies and Gentlemen:
We have acted as special counsel to International Paper Company (the
"Company") in connection with the Company's registration of shares of common
stock (the "Common Shares") to be issued in exchange for Champion International
Corporation ("Champion") common stock pursuant to an agreement and plan of
merger dated as of May 12, 2000 among the Company, Champion and Condor
Acquisition Corporation.
We have examined originals or copies, certified or otherwise identified to
our satisfaction, of such documents, corporate records, certificates of public
officials and other instruments as we have deemed necessary or advisable for the
purpose of rendering this opinion.
Upon the basis of the foregoing, we are of the opinion that the Common
Shares will have been duly authorized and, upon issuance, will be validly
issued, fully paid and non-assessable.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York and the federal laws of
the United States of America.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement relating to the Common Shares. We also consent to the
reference to us under the caption "Legal Matters" in the Prospectus contained in
such Registration Statement.
This opinion is rendered to you in connection with the above matter. This
opinion may not be relied upon by you for any other purpose. ChaseMellon
Shareholder Services, L.L.C., as Exchange Agent, may rely upon this opinion as
if it were addressed directly to it.
Very truly yours,
Davis Polk & Wardwell
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated February 8, 2000
included in International Paper Company's Form 10-K for the year ended December
31, 1999 and to all references to our Firm included in this registration
statement.
Arthur Andersen LLP
New York, New York
May 18, 2000
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of International Paper Company of our report dated
February 5, 1999 relating to the financial statements and financial statement
schedule of Union Camp Corporation, which report appears in International Paper
Company's Annual Report on Form 10-K for the year end December 31, 1999. We also
consent to the reference to us under the headings "Experts" in such Registration
Statement.
PricewaterhouseCoopers LLP
New York, New York
May 18, 2000
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated January 17, 2000
included in Champion International Corporation's Form 10-K for the year ended
December 31, 1999 and to all references to our Firm included in this
registration statement. We also hereby consent to the application of that report
to the supplemental note to the financial statements included herein labeled
"Note 20 -- Subsequent Event." It should be noted that we have performed no
audit procedures subsequent to January 17, 2000, the date of our report, except
with respect to the supplemental note as to which the date is May 12, 2000.
Furthermore, we have not audited any financial statements of Champion
International Corporation as of any date or for any period subsequent to
December 31, 1999.
ARTHUR ANDERSEN LLP
Stamford, Connecticut
May 17, 2000
<PAGE> 1
LETTER OF TRANSMITTAL
TO EXCHANGE EACH OUTSTANDING SHARE OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
OF
CHAMPION INTERNATIONAL CORPORATION
FOR
SHARES OF COMMON STOCK
OF
INTERNATIONAL PAPER COMPANY
HAVING A VALUE OF $25
(SUBJECT TO THE LIMITATION DESCRIBED IN THE PROSPECTUS)
AND
$50 NET TO THE SELLER IN CASH
PURSUANT TO THE PROSPECTUS
DATED MAY 19, 2000
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JUNE 16, 2000, UNLESS THE OFFER IS EXTENDED.
THE EXCHANGE AGENT FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand:
ChaseMellon Shareholder Services, (For eligible institutions only) ChaseMellon Shareholder Services,
L.L.C. (201) 296-4293 L.L.C.
P.O. Box 3301 120 Broadway, 13th Floor
South Hackensack, NJ 07606 New York, NY 10271
</TABLE>
Confirm Facsimile by Telephone:
(201) 296-4860
(For Confirmation Only)
By Overnight Courier:
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Mail Stop -- Reorg
Ridgefield Park, NJ 07660
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE
EXCHANGE AGENT. YOU MUST SIGN THIS LETTER OF TRANSMITTAL WHERE INDICATED BELOW
AND COMPLETE THE SUBSTITUTE W-9 FORM PROVIDED BELOW.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used by stockholders of Champion
International Corporation ("Champion") if certificates for Champion Shares (as
defined below) are to be forwarded herewith or, unless an Agent's Message (as
defined in Instruction 2 below) is utilized, if delivery of Champion Shares is
to be made by book-entry transfer to an account maintained by the Exchange Agent
at The Depository Trust Company (the "Book-Entry Transfer Facility"), pursuant
to the procedures set forth under "The Offer-Procedure for Tendering" in the
Prospectus. Champion stockholders who deliver Champion Shares by book-entry
transfer are referred to herein as "Book-Entry Stockholders" and Champion
stockholders who deliver certificates for Champion Shares are referred to herein
as "Certificate Stockholders."
Stockholders whose certificates for Champion Shares are not immediately
available or who cannot deliver their certificates and all other documents
required hereby to the Exchange Agent on or prior to the expiration date (as
defined in the Prospectus, dated May 19, 2000 (the "Prospectus")), or who cannot
comply with the book-entry transfer procedures on a timely basis, may
nevertheless tender their Champion Shares according to the guaranteed delivery
procedures set forth under "The Offer-Guaranteed Delivery" in the Prospectus.
See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY
WILL NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT FOR THIS OFFER (AS DEFINED
BELOW).
<PAGE> 2
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE
ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
------------------------------------------------------------------------------
DTC Participant Number:
------------------------------------------------------------------------------
Transaction Code Number:
------------------------------------------------------------------------------
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
------------------------------------------------------------------------------
Window Ticket Number (if any) or DTC Participant Number:
---------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-------------------------------------------------------------
Name of Institution that Guaranteed Delivery:
--------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARE CERTIFICATE(S) AND
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARE(S) TENDERED
APPEAR(S) ON SHARE CERTIFICATES(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ----------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
SHARE REPRESENTED NUMBER OF
CERTIFICATE BY SHARE SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
<S> <C> <C> <C>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
TOTAL SHARES
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Champion Shares
represented by certificates delivered to the Exchange Agent are being
tendered hereby. See Instruction 4.
[ ] CHECK HERE IF CERTIFICATES HAVE BEEN LOST, DESTROYED OR STOLEN. SEE
INSTRUCTION 11.
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby delivers to Condor Acquisition Corporation
("Purchaser"), a wholly owned subsidiary of International Paper Company, a New
York corporation ("IP"), the above-described shares of common stock, par value
$0.50 per share (the "Common Stock"), and the associated rights to purchase
preferred stock (the "Rights" and together with the Common Stock, the "Champion
Shares"), of Champion International Corporation, a New York corporation
("Champion"), pursuant to Purchaser's offer to exchange shares of common stock,
par value $1.00 per share, of IP ("IP Common Shares") having a value of $25
(subject to the limitation described in the Prospectus) plus $50 net to the
seller in cash, without interest thereon, for each outstanding Champion Share,
upon the terms and subject to the conditions set forth in the Prospectus and
this Letter of Transmittal (which, together with the Prospectus and any
amendments or supplements hereto or thereto, collectively constitute the
"Offer"). Receipt of the Offer is hereby acknowledged. Purchaser reserves the
right to transfer or assign, in whole or from time to time in part, to one or
more of its affiliates or subsidiaries, the right to purchase Champion Shares
tendered pursuant to the Offer. Unless the context otherwise requires and unless
and until the Rights are redeemed, all references to the Champion Shares shall
include the associated Rights.
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), subject
to, and effective upon, acceptance of the Champion Shares tendered herewith in
accordance with the terms of the Offer, the undersigned hereby sells, assigns
and transfers to, or upon the order of, Purchaser, all right, title and interest
in and to all of the Champion Shares that are being tendered hereby (and any and
all non-cash dividends, non-cash distributions, rights, other Champion Shares or
other securities issued or issuable in respect thereof on or after June 16, 2000
(collectively, "Distributions")) and irrevocably constitutes and appoints the
Exchange Agent the true and lawful agent and attorney-in-fact of the undersigned
with respect to such Champion Shares (and all Distributions), with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to (i) deliver certificates for such Champion Shares
(and any and all Distributions), or transfer ownership of such Champion Shares
(and any and all Distributions) on the account books maintained by the
Book-Entry Transfer Facility, together, in any such case, with all accompanying
evidences of transfer and authenticity, to, or upon the order of Purchaser, (ii)
present such Champion Shares (and any and all Distributions) for transfer on the
books of Champion, and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Champion Shares (and any and all
Distributions), all in accordance with the terms of the Offer.
THE UNDERSIGNED UNDERSTANDS THAT STOCKHOLDERS WILL BE REQUIRED TO TENDER
ONE RIGHT FOR EACH SHARE TENDERED IN ORDER TO EFFECT A VALID TENDER OF CHAMPION
SHARES.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints James W. Guedry and Barbara Smithers in their respective capacities as
employees of Purchaser, and any individual who shall thereafter succeed to any
such office of Purchaser, and each of them, as the attorneys-in-fact and proxies
of the undersigned, each with full power of substitution and resubstitution, to
vote at any annual or special meeting of Champion's stockholders or any
adjournment or postponement thereof or otherwise in such manner as each such
attorney-in-fact and proxy or his substitute shall in his sole discretion deem
proper with respect to, to execute any written consent concerning any matter as
each such attorney-in-fact and proxy or his substitute shall in his sole
discretion deem proper with respect to, and to otherwise act as each such
attorney-in-fact and proxy or his substitute shall in his sole discretion deem
proper with respect to, all of the Champion Shares (and any and all
Distributions) tendered hereby and accepted for exchange by IP. This appointment
will be effective if and when, and only to the extent that, Purchaser accepts
such Champion Shares for exchange pursuant to the Offer. This power of attorney
and proxy are irrevocable and are granted in consideration of the acceptance for
exchange of such Champion Shares in accordance with the terms of the Offer. Such
acceptance for exchange shall, without further action, revoke any prior powers
of attorney and proxies granted by the undersigned at any time with respect to
such Champion Shares (and any and all Distributions), and no subsequent powers
of attorney, proxies, consents or revocations may be given by the undersigned
with respect thereto (and, if given, will not be deemed effective). Purchaser
reserves the right to require that, in order for Champion Shares (or other
Distributions) to be deemed validly tendered, immediately upon Purchaser's
acceptance for exchange of such Champion Shares, Purchaser or its designee must
be able to exercise full voting, consent and other rights with respect to such
Champion Shares (and any and all Distributions), including voting at any meeting
of Champion's stockholders.
<PAGE> 4
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Champion
Shares tendered hereby and all Distributions, that the undersigned owns the
Champion Shares tendered hereby, and that when the same are accepted for
exchange by Purchaser, Purchaser will acquire good, marketable and unencumbered
title thereto and to all Distributions, free and clear of all liens,
restrictions, charges and encumbrances and the same will not be subject to any
adverse claims. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Exchange Agent or Purchaser to be necessary
or desirable to complete the sale, assignment and transfer of the Champion
Shares tendered hereby and all Distributions. In addition, the undersigned shall
remit and transfer promptly to the Exchange Agent for the account of Purchaser
all Distributions in respect of the Champion Shares tendered hereby, accompanied
by appropriate documentation of transfer, and, pending such remittance and
transfer or appropriate assurance thereof, Purchaser shall be entitled to all
rights and privileges as owner of each such Distribution and may choose not to
exchange the Champion Shares tendered hereby or may reduce from the total
consideration due, the amount or value of such Distribution as determined by
Purchaser in its sole discretion.
The undersigned represents and warrants that the undersigned has read and
agrees to all the terms and conditions of the Offer. All authority herein
conferred or agreed to be conferred shall survive the death or incapacity of the
undersigned, and any obligation of the undersigned hereunder shall be binding
upon the heirs, executors, administrators, personal representatives, trustees in
bankruptcy, successors and assigns of the undersigned. Except as stated in the
Prospectus this tender is irrevocable.
The undersigned understands that the valid tender of Champion Shares
pursuant to any one of the procedures described in "The Offer -- Procedure for
Tendering" of the Prospectus and in the Instructions hereto will constitute a
binding agreement between the undersigned and Purchaser upon the terms and
subject to the conditions of the Offer (and if the Offer is extended or amended,
the terms or conditions of any such extension or amendment). The undersigned
recognizes that under certain circumstances set forth in the Prospectus,
Purchaser may not be required to accept for exchange any of the Champion Shares
tendered hereby.
Unless otherwise indicated under "Special Issuance Instructions," please
issue the IP Common Shares and a check for cash (including any cash in lieu of
fractional IP Common Shares and any cash interest payable pursuant to the
Offer), and return any certificates for Champion Shares not tendered or not
accepted for exchange in the name(s) of the registered holder(s) appearing above
under "Description of Shares Tendered." Similarly, unless otherwise indicated
under "Special Delivery Instructions," please mail the IP Common Shares and a
check for cash (including any cash in lieu of fractional IP Common Shares) and
return any certificates for Champion Shares not tendered or not accepted for
exchange (and any accompanying documents, as appropriate) to the address(es) of
the registered holder(s) appearing above under "Description of Shares Tendered."
In the event that the boxes entitled "Special Issuance Instructions" and
"Special Delivery Instructions" are both completed, please issue the IP Common
Shares and a check for cash (including any cash in lieu of fractional IP Common
Shares), and issue certificates for Champion Shares not so tendered or accepted,
in the name of, and deliver said certificates and return such certificates to,
the person or persons so indicated. Unless otherwise indicated herein in the box
entitled "Special Issuance Instructions," please credit any Champion Shares
tendered herewith by book-entry transfer that are not accepted for exchange by
crediting the account at the Book-Entry Transfer Facility designated above. The
undersigned recognizes that Purchaser has no obligation, pursuant to the
"Special Issuance Instructions," to transfer any Champion Shares from the name
of the registered holder thereof if Purchaser does not accept for exchange any
or all of the Champion Shares so tendered.
<PAGE> 5
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the IP Common Shares and the check for cash payable
in the Offer is to be issued in the name of someone other than the undersigned,
if certificates for the Champion Shares not tendered or not accepted for
exchange are to be issued in the name of someone other than the undersigned or
if Champion Shares tendered hereby and delivered by book-entry transfer that are
not accepted for exchange are to be returned by credit to an account maintained
at a Book-Entry Transfer Facility other than the account indicated above.
Issue [ ] check
[ ] certificate(s) to:
Name
- ----------------------------------------------
(PLEASE PRINT)
Address
- --------------------------------------------
-----------------------------------------------------
(ZIP CODE)
- ------------------------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER
(SEE SUBSTITUTE FORM W-9)
Credit the Shares tendered by book-entry transfer that are not accepted for
exchange to DTC to the account set forth below:
- ------------------------------------------------------
(Account Number)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for the Champion Shares not tendered
or not accepted for exchange and the IP Common Shares and the check for cash
payable in the Offer is to be sent to someone other than the undersigned or to
the undersigned at an address other than that shown under "Description of Shares
Tendered."
Mail [ ] check
[ ] certificate(s) to:
Name
- ----------------------------------------------
(PLEASE PRINT)
Address
- --------------------------------------------
-----------------------------------------------------
(ZIP CODE)
- ------------------------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER
(SEE SUBSTITUTE FORM W-9)
<PAGE> 6
IMPORTANT
STOCKHOLDERS SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW)
>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) OF STOCKHOLDERS
Dated
- --------------------------- , 2000
Name(s)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title)
- --------------------------------------------------------------------------------
(SEE INSTRUCTION 5)
Address
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
- ---------------------------------------------------------------------
Taxpayer Identification or
Social Security Number
- --------------------------------------------------------------------------------
(SEE SUBSTITUTE FORM W-9)
(Must be signed by registered holder(s) exactly as name(s) appear(s) on Champion
Share certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, please set forth full title and see
Instruction 5.)
GUARANTEE OF SIGNATURES(S)
(IF REQUIRED; SEE INSTRUCTIONS 1 AND 5)
FOR USE BY ELIGIBLE INSTITUTIONS ONLY,
PLACE MEDALLION GUARANTEE IN SPACE BELOW
Name of Firm
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Authorized Signature
- --------------------------------------------------------------------------------
Name(s)
- --------------------------------------------------------------------------------
Area Code and Telephone Number
- ---------------------------------------------------------------------
Dated
- --------------------------- , 2000
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) of Champion Shares (which term, for purposes of this
document, shall include any participant in the Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Champion
Shares) tendered herewith, unless such holder(s) has completed either the box
entitled "Special Issuance Instructions" or the box entitled "Special Delivery
Instructions," or (b) if such Champion Shares are tendered for the account of a
firm which is a bank, broker, dealer, credit union, savings association or other
entity which is a member in good standing of a recognized Medallion Program
approved by the Securities Transfer Association Inc., including the Securities
Transfer Agent's Medallion Program (STAMP), the Stock Exchange Medallion Program
(SEMP) and the New York Stock Exchange Medallion Signature Program (MSP) or any
other "eligible guarantor institution" (as defined in Rule 17Ad-15 under the
Securities Exchange Act 1934, as amended)(each of the foregoing, an "Eligible
Institution"). In all other cases, all signatures on this Letter of Transmittal
must be guaranteed by an Eligible Institution. See Instruction 5 of this Letter
of Transmittal.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed by stockholders of
Champion either if Champion Share certificates are to be forwarded to the
Exchange Agent or, unless an Agent's Message is utilized, if delivery of
Champion Shares is to be made by book-entry transfer pursuant to the procedures
set forth herein and in "The Offer -- Procedure for Tendering" of the
Prospectus. For a stockholder to validly tender Champion Shares pursuant to the
Offer, either (a) a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof), together with any required signature
guarantees or an Agent's Message (in connection with book-entry transfer) and
any other required documents, must be received by the Exchange Agent at one of
its addresses set forth herein prior to the expiration date and either (i)
certificates for tendered Champion Shares must be received by the Exchange Agent
at one of such addresses prior to the expiration date or (ii) Champion Shares
must be delivered pursuant to the procedures for book-entry transfer set forth
herein and in "The Offer -- Procedure for Tendering" of the Prospectus and a
Book-Entry Confirmation must be received by the Exchange Agent prior to the
expiration date or (b) the tendering stockholder must comply with the guaranteed
delivery procedures set forth herein and in "The Offer -- Guaranteed Delivery"
of the Prospectus.
Stockholders whose certificates for Champion Shares are not immediately
available or who cannot deliver their certificates and all other required
documents to the Exchange Agent prior to the expiration date or who cannot
comply with the book-entry transfer procedures on a timely basis may tender
their Champion Shares by properly completing and duly executing the Notice of
Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth
herein and in "The Offer -- Guaranteed Delivery" of the Prospectus.
Pursuant to such guaranteed delivery procedures, (i) such tender must be
made by or through an Eligible Institution, (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
Purchaser, must be received by the Exchange Agent prior to the expiration date
and (iii) the certificates for all tendered Champion Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to all tendered Champion
Shares), together with a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof), with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and any other required documents must be received by the Exchange Agent
within three (3) New York Stock Exchange, Inc. trading days after the date of
execution of such Notice of Guaranteed Delivery.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Exchange Agent and forming a part of
a Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Champion Shares, that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that Purchaser may enforce such agreement against the participant.
The signatures on this Letter of Transmittal cover the Champion Shares
tendered hereby.
THE METHOD OF DELIVERY OF THE CHAMPION SHARES, THIS LETTER OF TRANSMITTAL,
THE CERTIFICATE(S) REPRESENTING CHAMPION SHARES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER. THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT (INCLUDING, IN THE
CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
<PAGE> 8
No alternative, conditional or contingent tenders will be accepted, and no
fractional Champion Shares will be purchased. All tendering stockholders, by
executing this Letter of Transmittal (or a manually signed facsimile thereof),
waive any right to receive any notice of acceptance of their Champion Shares for
exchange.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the number of Champion Shares tendered and the
Share certificate numbers with respect to such Champion Shares should be listed
on a separate signed schedule attached hereto.
4. PARTIAL TENDERS. (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY
BOOK-ENTRY TRANSFER). If fewer than all the Champion Shares evidenced by any
Share certificate delivered to the Exchange Agent herewith are to be tendered
hereby, fill in the number of Champion Shares that are to be tendered in the box
entitled "Number of Shares Tendered." In any such case, new certificate(s) for
the remainder of the Champion Shares that were evidenced by the old certificates
will be sent to the registered holder, unless otherwise provided in the
appropriate box on this Letter of Transmittal, as soon as practicable after the
expiration date or the termination of the Offer. All Champion Shares represented
by certificates delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Champion
Shares tendered hereby, the signature(s) must correspond with the name(s) as
written on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Champion Shares tendered hereby are held of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Champion Shares are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any Share certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of the authority of such person so to act must be
submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Champion Shares listed and transmitted hereby, no endorsements of Share
certificates or separate stock powers are required unless payment or
certificates for Champion Shares not tendered or not accepted for exchange are
to be issued in the name of a person other than the registered holder(s).
Signatures on any such Share certificates or stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Champion Shares evidenced by certificates listed and
transmitted hereby, the Share certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on the Share certificates. Signature(s) on any
such Share certificates or stock powers must be guaranteed by an Eligible
Institution.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, Purchaser will pay or cause to be paid all stock transfer taxes with respect
to the transfer and sale of any Champion Shares to it or its order pursuant to
the Offer. If, however, delivery of the consideration in respect of the Offer is
to be made, or (in the circumstances where permitted hereby) if certificates for
Champion Shares not tendered or not accepted for exchange are to be registered
in the name of, any person other than the registered holder(s), or if tendered
certificates are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any stock transfer taxes
(whether imposed on the registered holder(s) or such other person) payable on
account of the transfer to such other person will be deducted from the overall
consideration paid unless evidence satisfactory to Purchaser of the payment of
such taxes, or exemption therefrom, is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Share certificates evidencing the
Champion Shares tendered hereby.
7. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If certificates for IP
Common Shares and a check for cash (including any cash in lieu of fractional IP
Common Shares), and certificates for Champion Shares not accepted for exchange
or not tendered are to be issued in the name of and/or returned to, a person
other than the signer of this Letter of Transmittal or if a check is to be sent,
and/or such certificates are to be returned, to a person other than the signer
of this Letter of Transmittal, or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed. Any
stockholder(s) delivering Champion Shares by book-entry transfer may request
that Champion Shares not purchased be credited to such account maintained at the
Book-Entry Transfer Facility as such stockholder(s) may designate in the box
entitled "Special Issuance Instructions." If no such instructions are given, any
such Champion Shares not purchased will be returned by crediting the account at
the Book-Entry Transfer Facility designated above as the account from which such
Champion Shares were delivered.
<PAGE> 9
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance or additional copies of the Prospectus, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent or Dealer Manager at their respective address
and phone numbers set forth below, or from your broker, dealer, commercial bank,
trust company or other nominee.
9. WAIVER OF CONDITIONS. Purchaser reserves the absolute right in its sole
discretion (subject to the merger agreement) to waive, at any time or from time
to time, any of the specified conditions of the Offer (other than the minimum
tender condition, the regulatory approvals condition and the conditions relating
to the absence of an injunction and the effectiveness of the registration
statement for the IP Common Shares to be issued in the Offer), in whole or in
part, in the case of any Champion Shares tendered.
10. SUBSTITUTE FORM W-9. The tendering stockholder is required to provide
the Exchange Agent with a correct Taxpayer Identification Number ("TIN"),
generally the stockholder's social security or federal employer identification
number, on the Substitute Form W-9 which is provided below, and to certify
whether the stockholder is subject to backup withholding of United States
federal income tax. If a tendering stockholder is subject to federal backup
withholding, the stockholder must cross out item (2) of the "Certification" box
of the Substitute Form W-9. Failure to provide the information on the Substitute
Form W-9 may subject the tendering stockholder to a $50 penalty imposed by the
Internal Revenue Service ("IRS") and a 31% federal backup withholding tax on the
payment of the purchase price. If the tendering stockholder has not been issued
a TIN and has applied for a number or intends to apply for a number in the near
future, the stockholder should write "Applied For" in the space provided for the
TIN in Part I, check the box in Part III, and sign and date the Substitute Form
W-9. If "Applied For" is written in Part I and the Exchange Agent is not
provided with a TIN within 60 days of its receipt of the Substitute Form W-9,
the Exchange Agent will withhold 31% on all payment of the purchase price until
a TIN is provided to the Exchange Agent.
11. LOST, DESTROYED OR STOLEN SHARE CERTIFICATES. If any certificate(s)
representing Champion Shares has been lost, destroyed or stolen, the stockholder
should promptly notify ChaseMellon Shareholder Services, L.L.C., Champion's
Transfer Agent, by checking the box under "Description of Shares Tendered". The
stockholder will then be instructed as to the steps that must be taken in order
to replace the Share certificate(s). This Letter of Transmittal and related
documents cannot be processed until the procedures for replacing lost, destroyed
or stolen Share certificates have been followed.
IMPORTANT:
THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE HEREOF) TOGETHER
WITH ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY
TRANSFER, AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED
BY THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR
TENDERED CHAMPION SHARES MUST BE RECEIVED BY THE EXCHANGE AGENT OR CHAMPION
SHARES MUST BE DELIVERED PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN
EACH CASE PRIOR TO THE EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY
WITH THE PROCEDURES FOR GUARANTEED DELIVERY.
IMPORTANT TAX INFORMATION
Under United States federal income tax law, a stockholder whose tendered
Champion Shares are accepted for payment is required to provide the Exchange
Agent (as payer) with such stockholder's correct social security number,
individual taxpayer identification number, or employer identification number
(each a Taxpayer Identification Number or a "TIN") on Substitute Form W-9
provided below. If such stockholder is an individual, the TIN is such person's
social security number. The TIN of a resident alien who does not have and is not
eligible to obtain a social security number is such person's IRS individual
taxpayer identification number. If a tendering stockholder is subject to federal
backup withholding, the stockholder must cross out item (2) of the Certification
box on the Substitute Form W-9. If the Exchange Agent is not provided with the
correct TIN, the stockholder may be subject to a $50 penalty imposed by the IRS.
In addition, payments that are made to such stockholder with respect to Champion
Shares purchased pursuant to the Offer may be subject to federal backup
withholding.
<PAGE> 10
Certain stockholders (including, among others, all corporations and certain
non-United States individuals) are not subject to federal backup withholding. In
order for a non-United States individual to qualify as an exempt recipient, that
stockholder must submit to the Exchange Agent a properly completed IRS Form W-8
or Form W-8BEN, signed under penalties of perjury, attesting to that
individual's exempt status. Such forms may be obtained from the Exchange Agent.
Exempt stockholders, other than non-United States individuals, should furnish
their TIN, write "EXEMPT" on the face of the Substitute Form W-9 below, and
sign, date and return the Substitute Form W-9 to the Exchange Agent. See the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional instructions.
If federal backup withholding applies, the Exchange Agent is required to
withhold 31% of any payments made to the stockholder. Federal backup withholding
is not an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the IRS.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent federal backup withholding on payments that are made to a
stockholder with respect to Champion Shares purchased pursuant to the Offer, the
stockholder is required to notify the Exchange Agent of such stockholder's
correct TIN by completing the Substitute Form W-9 below certifying that the TIN
provided on such form is correct (or that such stockholder is awaiting a TIN)
and that (i) such holder is exempt from federal backup withholding, (ii) such
holder has not been notified by the IRS that such holder is subject to federal
backup withholding as a result of a failure to report all interest or dividends,
or (iii) the IRS has notified such holder that such holder is no longer subject
to federal backup withholding (see Part 2 of Substitute Form W-9).
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The stockholder is required to give the Exchange Agent the TIN of the
record owner of the Champion Shares. If the Champion Shares are in more than one
name or are not in the name of the actual owner, consult the enclosed Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidelines on which number to report. If the tendering stockholder
has not been issued a TIN and has applied for a number or intends to apply for a
number in the near future, such stockholder should write "Applied For" in the
space provided for in the TIN in Part 1, check the box in Part 3, and sign and
date the Substitute Form W-9. If "Applied For" is written in Part 1 and the
Exchange Agent is not provided with a TIN within 60 days, the Exchange Agent may
withhold 31% on all payments of the purchase price until a TIN is provided to
the Exchange Agent.
<PAGE> 11
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- TAXPAYER IDENTIFICATION NO. -- FOR ALL ACCOUNTS PART 2 -- FOR PAYEES EXEMPT
FORM W-9 FROM BACKUP WITHHOLDING (SEE
ENCLOSED GUIDELINES)
---------------------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY ENTER YOUR TAXPAYER IDENTIFICATION NUMBER IN THE
INTERNAL REVENUE SERVICE APPROPRIATE BOX. FOR MOST INDIVIDUALS AND SOLE
PROPRIETORS, THIS IS YOUR SOCIAL SECURITY NUMBER. FOR
PAYER'S REQUEST FOR OTHER ENTITIES, IT IS YOUR EMPLOYER IDENTIFICATION NUMBER. Social Security Number
TAXPAYER IDENTIFICATION NO. IF YOU DO NOT HAVE A NUMBER, SEE "HOW TO OBTAIN A TIN" IN
THE ENCLOSED GUIDELINES. OR
NOTE: IF THE ACCOUNT IS IN MORE THAN ONE NAME, SEE THE
CHART ON PAGE 2 OF THE ENCLOSED GUIDELINES TO DETERMINE
WHAT NUMBER TO ENTER. Employee Identification Number
---------------------------------------------------------------------------------------------
PART 2 -- CERTIFICATION -- UNDER PENALTIES OF PERJURY, I
CERTIFY THAT: PART 3
(1) THE NUMBER SHOWN ON THIS FORM IS MY CORRECT TAXPAYER AWAITING TIN [ ]
IDENTIFICATION NUMBER (OR I AM WAITING FOR A NUMBER TO ------------------------------
BE ISSUED TO ME);
PART 4
(2) I AM NOT SUBJECT TO BACKUP WITHHOLDING EITHER BECAUSE
(A) I AM EXEMPT FROM BACKUP WITHHOLDING, OR (B) I HAVE NOT EXEMPT TIN [ ]
BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE ("IRS") ------------------------------
THAT I AM SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF
A FAILURE TO REPORT ALL INTEREST OR DIVIDENDS, OR (C)
THE IRS HAS NOTIFIED ME THAT I AM NO LONGER SUBJECT TO
BACKUP WITHHOLDING; AND
(3) ANY INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT
AND COMPLETE.
CERTIFICATION INSTRUCTIONS -- YOU MUST CROSS OUT ITEM (2)
IN PART 2 ABOVE IF YOU HAVE BEEN NOTIFIED BY THE IRS THAT
YOU ARE SUBJECT TO BACKUP WITHHOLDING BECAUSE OF
UNDER-REPORTING INTEREST OR DIVIDENDS ON YOUR TAX RETURN.
HOWEVER, IF AFTER BEING NOTIFIED BY THE IRS THAT YOU WERE
SUBJECT TO BACKUP WITHHOLDING YOU RECEIVED ANOTHER
NOTIFICATION FROM THE IRS STATING THAT YOU ARE NO LONGER
SUBJECT TO BACKUP WITHHOLDING, DO NOT CROSS OUT SUCH ITEM
(2).
---------------------------------------------------------------------------------------------
SIGNATURE __________ DATE , 2000
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF
SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I CERTIFY UNDER PENALTIES OF PERJURY THAT A TAXPAYER IDENTIFICATION NUMBER
HAS NOT BEEN ISSUED TO ME, AND EITHER (A) I HAVE MAILED OR DELIVERED AN
APPLICATION TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE APPROPRIATE
INTERNAL REVENUE SERVICE CENTER OR SOCIAL SECURITY ADMINISTRATION OFFICE OR (B)
I INTEND TO MAIL OR DELIVER AN APPLICATION IN THE NEAR FUTURE. I UNDERSTAND THAT
IF I DO NOT PROVIDE A TAXPAYER IDENTIFICATION NUMBER WITHIN SIXTY (60) DAYS, 31%
PERCENT OF ALL REPORTABLE PAYMENTS MADE TO ME WILL BE WITHHELD UNTIL I PROVIDE A
NUMBER.
SIGNATURE __________ DATE __________
NAME (PLEASE PRINT) __________
<PAGE> 12
Any questions or requests for assistance or additional copies of the
Prospectus, this Letter of Transmittal and other tender offer materials may be
directed to the Information Agent or the Dealer Manager at their respective
telephone numbers and locations listed below. Holders of shares may also contact
their broker, dealer, commercial bank or trust company or other nominee for
assistance concerning the offer.
The Information Agent for the Offer is:
INNISFREE M&A INCORPORATED LOGO
(212) 750-5833 (Call Collect)
or
Call Toll-Free (877) 750-5837
The Dealer Manager for the Offer is:
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free: (800) 881-8320
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
OF
CHAMPION INTERNATIONAL CORPORATION
TO
CONDOR ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY
OF
INTERNATIONAL PAPER COMPANY
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or a form substantially equivalent
hereto, must be used to accept the Offer (as defined below) if certificates
representing shares of common stock, par value $0.50 per share (together with
the associated rights to purchase preferred stock, the "Champion Shares"), of
Champion International Corporation, a New York corporation, are not immediately
available, if the procedure for book-entry transfer cannot be completed prior to
the expiration date (as defined in the Prospectus dated May 19, 2000 (the
"Prospectus")), or if time will not permit all required documents to reach
ChaseMellon Shareholder Services, L.L.C. (the "Exchange Agent") prior to the
expiration date. Such form may be delivered by hand, transmitted by facsimile
transmission or mailed to the Exchange Agent as described in the Prospectus.
The Exchange Agent for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand:
ChaseMellon Shareholder Services, (For eligible institutions only) ChaseMellon Shareholder Services,
L.L.C. (201) 296-4293 L.L.C.
P.O. Box 3301 120 Broadway, 13th Floor
South Hackensack, NJ 07606 Confirm Facsimile by Telephone: New York, NY 10271
(201) 296-4860
(For Confirmation Only)
By Overnight Courier:
ChaseMellon Shareholder Services,
L.L.C.
Mail Stop -- Reorg
85 Challenger Road
Ridgefield Park, NJ 07660
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION"
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Condor Acquisition Corporation
("Purchaser"), a New York corporation and a wholly owned subsidiary of
International Paper Company, a New York corporation ("IP"), upon the terms and
subject to the conditions set forth in the Prospectus and the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
constitute the "Offer"), receipt of which is hereby acknowledged, the number of
Champion Shares set forth below, pursuant to the guaranteed delivery procedures
set forth in the Prospectus.
Signature(s):
--------------------------------------
Name(s) of Record Holders:
---------------------
-----------------------------------------------------
PLEASE TYPE OR PRINT
Number of Champion
Shares:
--------------------------------
Certificate No(s). (if available)
------------------
Dated:
---------------------------------------, 2000
Address(es):
- ---------------------------------------
- -----------------------------------------------------
ZIP CODE
Area Code and Tel. No.(s):
- ----------------------
Check box if Champion Shares will be tendered by book-entry transfer: [ ]
Account Number:
- ---------------------------------
DELIVERY GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the Stock Exchange Medallion Program or the New York Stock Exchange
Medallion Signature Program, guarantees to deliver to the Exchange Agent
either certificates representing the Champion Shares tendered hereby, in
proper form for transfer, or confirmation of book-entry transfer of such
Champion Shares into the Exchange Agent's account at The Depository Trust
Company, in each case with delivery of a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof), with any
required signature guarantees, or an Agent's Message (as defined in the
Prospectus), and any other documents required by the Letter of Transmittal,
within three (3) New York Stock Exchange trading days after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Exchange Agent and must deliver the Letter of Transmittal and
certificates for Champion Shares to the Exchange Agent within the time period
shown herein. Failure to do so could result in a financial loss to such
Eligible Institution.
Name of Firm:
------------------------------------
Address:
-------------------------------------------
-----------------------------------------------------
ZIP CODE
Area Code and Tel. No.:
--------------------------
Authorized Signature:
- -----------------------------
Name:
- ---------------------------------------------
PLEASE PRINT
Title:
- -----------------------------------------------
Dated: ______________________________ , 2000
NOTE: DO NOT SEND CERTIFICATES WITH THIS NOTICE OF GUARANTEED DELIVERY.
CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE> 1
[CREDIT SUISSE FIRST BOSTON LETTERHEAD]
OFFER TO EXCHANGE
EACH OUTSTANDING SHARE OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
OF
CHAMPION INTERNATIONAL CORPORATION
FOR
SHARES OF COMMON STOCK
OF
INTERNATIONAL PAPER COMPANY
HAVING A VALUE OF $25
(SUBJECT TO THE LIMITATION DESCRIBED IN THE PROSPECTUS)
AND
$50 NET TO THE SELLER IN CASH
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JUNE 16, 2000, UNLESS THE OFFER IS EXTENDED.
May 19, 2000
To Brokers, Dealers, Commercial Banks,
Trust Companies And Other Nominees:
We have been appointed by Condor Acquisition Corporation ("Purchaser"), a
New York corporation and a wholly owned subsidiary of International Paper
Company ("IP"), to act as Dealer Manager in connection with Purchaser's offer to
exchange shares of IP common stock, par value $1.00 per share (the "IP Common
Shares"), having a value of $25 (subject to the limitation described in the
Prospectus dated May 19, 2000 (the "Prospectus")) and $50 net to the seller in
cash, without interest thereon, for each outstanding share of common stock, par
value $0.50 per share (together with the associated rights to purchase preferred
stock, the "Champion Shares"), of Champion International Corporation, a New York
corporation ("Champion"), upon the terms and subject to the conditions set forth
in the Prospectus and in the related Letter of Transmittal (which, together with
any amendments or supplements thereto, constitute the "Offer") enclosed
herewith. The Offer is being made in connection with the Agreement and Plan of
Merger, dated as of May 12, 2000 (the "Merger Agreement"), among IP, Purchaser
and Champion. The Merger Agreement provides, among other things, that following
the completion of the Offer and the satisfaction or waiver, if permissible, of
all conditions set forth in the Merger Agreement and in accordance with the New
York Business Corporation Law, Purchaser will be merged with and into Champion
(the "Merger"), with Champion surviving the Merger as a wholly owned subsidiary
of IP. Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Champion Shares registered in your name or in the
name of your nominee.
The Offer is subject to several conditions set forth in the Prospectus,
which you should review in detail.
<PAGE> 2
For your information and for forwarding to your clients for whom you hold
Champion Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. The Prospectus dated May 19, 2000;
2. The Letter of Transmittal, including a Certification of Taxpayer
Identification Number on Substitute Form W-9, for your use in accepting the
Offer and tendering Champion Shares. Facsimile copies of the Letter of
Transmittal with manual signature(s) may be used to tender Champion Shares;
3. The Notice of Guaranteed Delivery to be used to accept the Offer if
certificates evidencing Champion Shares are not immediately available or if
such certificates and all other required documents cannot be delivered to
ChaseMellon Shareholder Services, L.L.C. (the "Exchange Agent") on or prior
to the expiration date (as defined in the Prospectus) or if the procedures
for book-entry transfer cannot be completed, by the expiration date;
4. A printed form of letter which may be sent to your clients for
whose accounts you hold Champion Shares registered in your name or in the
name of your nominee, with space provided for obtaining such clients'
instructions with regard to the Offer;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9. Stockholders who fail to complete and sign the
Substitute Form W-9 may be subject to a required federal backup withholding
tax of 31% of the gross proceeds payable to such stockholder or other payee
pursuant to the Offer;
6. A return envelope addressed to the Exchange Agent for your use
only.
Your attention is invited to the following:
1. The consideration per Champion Share is IP Common Shares having a
value of $25 (subject to the limitation described in the Prospectus) and
$50 net to you in cash without interest.
2. The Offer is being made for all outstanding Champion Shares.
3. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Friday, June 16, 2000, unless the Offer is extended.
4. The Offer is conditioned upon, among other things, (1) there being
validly tendered and not properly withdrawn prior to the expiration of the
Offer that number of Champion Shares which represent not less than
two-thirds of the total issued and outstanding Champion Shares on a fully
diluted basis (excluding any shares held by Champion or any of its
subsidiaries) and (2) the expiration or termination of any and all waiting
periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, the Competition Act (Canada) and any similar regime in any other
country applicable to significant operations of IP or any of its
subsidiaries or Champion or any of its subsidiaries. The Offer is subject
to various other conditions set forth in the Prospectus, which you should
review in detail. The Offer is not conditioned upon IP or Purchaser
obtaining financing.
5. The Champion board of directors unanimously (1) determined that the
Offer, the Merger and the Merger Agreement are fair to, and in the best
interests of, the Champion's stockholders, (2) approved the Merger, the
Offer and the Merger Agreement and (3) recommends that Champion's
stockholders accept the Offer and tender their Champion Shares pursuant
thereto and approve and adopt the Merger Agreement.
6. Stockholders who fail to complete and sign the Substitute Form W-9
may be subject to a required federal backup withholding tax of 31% of the
gross proceeds payable to such stockholder or other payee pursuant to the
Offer.
7. Any stock transfer taxes applicable to the sale of Champion Shares
to Purchaser pursuant to the Offer will be paid by Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
2
<PAGE> 3
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for exchange Champion Shares which are
validly tendered prior to the expiration date and not theretofore properly
withdrawn when, as and if Purchaser gives oral or written notice to the Exchange
Agent of Purchaser's acceptance of such Champion Shares for exchange pursuant to
the Offer. Issuance of IP Common Shares and payment of cash for Champion Shares
purchased pursuant to the Offer will in all cases be made only after timely
receipt by the Exchange Agent of (i) certificates for such Champion Shares, or
timely confirmation of a book-entry transfer of such Champion Shares into the
Exchange Agent's account at The Depository Trust Company, pursuant to the
procedures described in "The Offer -- Procedure for Tendering" of the
Prospectus, (ii) a properly completed and duly executed Letter of Transmittal
(or a properly completed and manually signed facsimile thereof) or an Agent's
Message (as defined in the Prospectus) in connection with a book-entry transfer
and (iii) all other documents required by the Letter of Transmittal.
Neither IP nor any officer, director, stockholder, agent or other
representative of IP will pay any fees or commissions to any broker or dealer or
other person (other than the Dealer Manager, the Information Agent and the
Exchange Agent as described in the Prospectus) in connection with soliciting
tenders of Champion Shares pursuant to the Offer.
Purchaser will, however, upon request, reimburse brokers, dealers,
commercial banks and trust companies for customary mailing and handling costs
incurred by them in forwarding the enclosed materials to their customers.
Purchaser will pay or cause to be paid all stock transfer taxes applicable
to its purchase of Champion Shares pursuant to the Offer, subject to Instruction
6 of the Letter of Transmittal.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JUNE 16, 2000, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or a manually signed facsimile thereof), with
any required signature guarantees, or an Agent's Message in connection with a
book-entry transfer of Champion Shares, and any other required documents, should
be sent to the Exchange Agent, and certificates representing the tendered
Champion Shares should be delivered or such Champion Shares should be tendered
by book-entry transfer, all in accordance with the Instructions set forth in the
Letter of Transmittal and in the Prospectus.
If holders of Champion Shares wish to tender, but it is impracticable for
them to forward their certificates or other required documents or to complete
the procedures for delivery by book-entry transfer prior to the expiration date,
a tender may be effected by following the guaranteed delivery procedures
specified in "The Offer -- Procedure for Tendering" of the Prospectus.
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed materials may be obtained from, the
Dealer Manager or the Information Agent at their respective addresses and
telephone numbers set forth on the back cover of the Prospectus.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY PERSON AS THE AGENT OF IP, PURCHASER, THE DEALER MANAGER, THE INFORMATION
AGENT, THE EXCHANGE AGENT OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE
YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT OR MAKE ANY
STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE> 1
OFFER TO EXCHANGE
EACH OUTSTANDING SHARE OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
OF
CHAMPION INTERNATIONAL CORPORATION
FOR
SHARES OF COMMON STOCK
OF
INTERNATIONAL PAPER COMPANY
HAVING A VALUE OF $25
(SUBJECT TO THE LIMITATION DESCRIBED IN THE PROSPECTUS)
AND
$50 NET TO THE SELLER IN CASH
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JUNE 16, 2000, UNLESS THE OFFER IS EXTENDED.
May 19, 2000
To Our Clients:
Enclosed for your consideration are the Prospectus, dated May 19, 2000 (the
"Prospectus"), and the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer") in
connection with the offer by Condor Acquisition Corporation ("Purchaser"), a New
York corporation and a wholly owned subsidiary of International Paper Company, a
New York corporation ("IP"), to exchange shares of IP common stock, par value
$1.00 per share (the "IP Common Shares"), having a value of $25 (subject to the
limitation described in the Prospectus) and $50 net to the seller in cash,
without interest thereon, for each outstanding share of common stock, par value
$0.50 per share (together with the associated rights to purchase preferred
stock, the "Champion Shares"), of Champion International Corporation, a New York
corporation ("Champion"). The Offer is being made in connection with the
Agreement and Plan of Merger dated as of May 12, 2000 (the "Merger Agreement")
among IP, Purchaser and Champion. The Merger Agreement provides, among other
things, that following the completion of the Offer and the satisfaction or
waiver, if permissible, of all conditions set forth in the Merger Agreement and
in accordance with the New York Business Corporation Law, Purchaser will be
merged with and into Champion (the "Merger"), with Champion surviving the Merger
as a wholly owned subsidiary of IP.
WE ARE THE HOLDER OF RECORD (DIRECTLY OR INDIRECTLY) OF CHAMPION SHARES
HELD FOR YOUR ACCOUNT. A TENDER OF SUCH CHAMPION SHARES CAN BE MADE ONLY BY US
AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE ENCLOSED LETTER
OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED
BY YOU TO TENDER CHAMPION SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish us to tender any or all of
the Champion Shares held by us for your account, upon the terms and subject to
the conditions set forth in the Offer.
<PAGE> 2
Your attention is invited to the following:
1. The consideration per Champion Share is IP Common Shares having a
value of $25 (subject to the limitation described in the Prospectus) and
$50 net to you in cash without interest.
2. The Offer is being made for all outstanding Champion Shares.
3. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Friday, June 16, 2000, unless the Offer is extended.
4. The Offer is conditioned upon, among other things, (1) there being
validly tendered and not properly withdrawn prior to the expiration of the
Offer that number of Champion Shares which represent not less than
two-thirds of the total issued and outstanding Champion Shares on a fully
diluted basis (excluding any shares held by Champion or any of its
subsidiaries) and (2) the expiration or termination of any and all waiting
periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, the Competition Act (Canada) and any similar regime in any other
country applicable to significant operations of IP or any of its
subsidiaries or Champion or any of its subsidiaries. The Offer is subject
to various other conditions set forth in the Prospectus, which you should
review in detail. The Offer is not conditioned upon IP or Purchaser
obtaining financing.
5. The Champion board of directors unanimously (1) determined that the
Offer, the Merger and the Merger Agreement are fair to, and in the best
interests of, the Champion's stockholders, (2) approved the Merger, the
Offer and the Merger Agreement and (3) recommends that Champion's
stockholders accept the Offer and tender their Champion Shares pursuant
thereto and approve and adopt the Merger Agreement.
6. Stockholders who fail to complete and sign the Substitute Form W-9
may be subject to a required federal backup withholding tax of 31% of the
gross proceeds payable to such stockholder or other payee pursuant to the
Offer.
7. Any stock transfer taxes applicable to the sale of Champion Shares
to Purchaser pursuant to the Offer will be paid by Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
The Offer is made solely by the Prospectus and the related Letter of
Transmittal and any supplements and amendments thereto. Except as disclosed in
the Prospectus, IP and Purchaser are not aware of any state in which the making
of the Offer or the acceptance of Champion Shares pursuant to the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If IP or Purchaser become aware of any valid state statute prohibiting
the making of the Offer or the acceptance of Champion Shares pursuant to the
Offer, IP and Purchaser will make a good faith effort to comply with any such
state statute. If, after such good faith effort, IP and Purchaser cannot comply
with any such state statute, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Champion Shares residing in any
such jurisdiction. In any jurisdiction in which the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer will be deemed to be made on behalf of IP and Purchaser by Credit Suisse
First Boston Corporation, the Dealer Manager for the Offer, or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your Champion Shares, please so
instruct us by completing, executing and returning to us the instruction form
set forth on the reverse side of this letter. An envelope to return your
instruction form to us is enclosed. If you authorize the tender of your Champion
Shares, all your Champion Shares will be tendered unless otherwise specified on
the reverse side of this letter. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN
SUFFICIENT TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE
EXPIRATION DATE.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO EXCHANGE
EACH OUTSTANDING SHARE OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
OF
CHAMPION INTERNATIONAL CORPORATION
FOR
SHARES OF COMMON STOCK
OF
INTERNATIONAL PAPER COMPANY
HAVING A VALUE OF $25
(SUBJECT TO THE LIMITATION DESCRIBED IN THE PROSPECTUS)
AND
$50 NET TO THE SELLER IN CASH
The undersigned acknowledge(s) receipt of your letter and the enclosed
Prospectus dated May 19, 2000 (the "Prospectus") and the related Letter of
Transmittal in connection with the offer by International Paper Company, a New
York corporation ("IP"), to exchange shares of IP common stock, par value $1.00
per share, having a value of $25 (subject to the limitation described in the
Prospectus) and $50 net to the seller in cash, without interest thereon, for
each outstanding share of common stock, par value $0.50 per share (together with
the associated rights to purchase preferred stock, the "Champion Shares"), of
Champion International Corporation, a New York corporation.
This will instruct you to tender the number of Champion Shares indicated
below (or if no number is indicated below, all Champion Shares) held by you for
the account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
<TABLE>
<S> <C>
Account Number:
----------------------------------- SIGN HERE
- --------------------------------------------- ---------------------------------------------
Numbers of Champion Shares to be Tendered*: Signature(s)
- --------------------------------------------- ---------------------------------------------
Please Print
- ------------------ shares of Common Stock ---------------------------------------------
Address
Dated: --------------- , 2000
---------------------------------------------
Area Code and Telephone Number
---------------------------------------------
Tax Identification or Social Security
Number(s)
</TABLE>
- ---------------
* Unless otherwise indicated, it will be assumed that all Champion Shares held
by us for your account are to be tendered.
PLEASE RETURN THIS FORM TO THE
BROKERAGE FIRM MAINTAINING YOUR ACCOUNT
3
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- ------------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE ACCOUNT: NUMBER OF--
- ------------------------------------------------------------
<C> <S> <C>
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife (joint account) The actual owner of
the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and Minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent
minor, or incompetent person person(3)
7. a. The usual revocable savings The grantor-
trust account (grantor is also trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under State law
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE ACCOUNT: NUMBER OF--
- ------------------------------------------------------------
<C> <S> <C>
8. Sole proprietorship account The Owner(4)
9. A valid trust, estate, or pension Legal entity (Do
fund not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other tax- The organization
exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State or
local government, school,
district, or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you don't have a taxpayer identification number ("TIN") or you don't know
your number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service ("IRS")
and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding.
FILE THIS FORM WITH THE PAYER, FURNISH YOUR TIN, WRITE "EXEMPT" ON THE FACE OF
THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS,
OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the Treasury regulations under sections 6041,
6041A(a), 6045, 6050A. (All "section" references herein are to the Internal
Revenue Code of 1986).
PRIVACY ACT NOTICE--Section 6109 requires you to furnish your correct TIN to
persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, or contributions you made to an
IRA. The IRS uses the numbers for identification purposes and to help verify the
accuracy of your tax return. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
TIN to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TIN--If you fail to furnish your TIN to a
payer, you are subject to a penalty of $50 for each such failure unless your
failure is due to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING--If you make
a false statement with no reasonable basis which results in no imposition of
backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE IRS.
<PAGE> 1
EXHIBIT 99.6
Goldman, Sachs & Co./85 Broad Street/New York, New York 10004
Tel: 212-902-1000
PERSONAL AND CONFIDENTIAL
May 19, 2000
Board of Directors
Champion International Corporation
One Champion Plaza
Stamford, CT 06921
Re: Initially filed Registration Statement on Form S-4 of International
Paper Company ("IP") relating to shares of Common Stock, par value
$1.00 per share, being registered in connection with the offer to
exchange all of the outstanding shares of Common Stock, par value
$0.50 per share (the "Common Stock"), of Champion International
Corporation (the "Company")
Ladies and Gentlemen:
Reference is made to our opinion letter dated May 12, 2000 with respect to
the fairness from a financial point of view to the holders of the outstanding
shares of Common Stock (other than IP) of the Consideration (as defined therein)
to be received by such holders pursuant to the Agreement and Plan of Merger, by
and among IP, Condor Acquisition Corporation, a direct wholly-owned subsidiary
of IP, and the Company.
The foregoing opinion letter is provided for the information and assistance
of the Board of Directors of the Company in connection with its consideration of
the transaction contemplated therein and is not to be used, circulated, quoted
or otherwise referred to for any other purpose, nor is it to be filed with,
included in or referred to in whole or in part in any registration statement,
proxy statement or any other document, except in accordance with our prior
written consent. We understand that the Company has determined to refer to our
opinion in the above-referenced Registration Statement. Our opinion is not
intended to, and may not, be relied upon by IP or its shareholders.
In that regard, we hereby consent to the incorporation by reference of the
opinion of our Firm into the above-mentioned Registration Statement and to the
reference to such opinion under the captions "Questions and Answers about the
Proposed Acquisition" and "Reasons for the Offer -- Reasons for the Champion
Board's Recommendation; Factors Considered." Notwithstanding the foregoing, it
is understood that our consent is being delivered solely in connection with the
filing of the above-mentioned version of the Registration Statement and that our
opinion is not to be used, circulated, quoted or otherwise referred to for any
other purpose, nor is it to be filed with, included in or referred to in whole
or in part in any registration statement (including any subsequent amendments to
the above-mentioned Registration Statement), proxy statement or any other
document, except in accordance with our prior written consent. In giving such
consent, we do not thereby admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933 or the
rules and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ GOLDMAN, SACHS & CO.
--------------------------------------
(GOLDMAN, SACHS & CO.)
<PAGE> 1
EXHIBIT 99.7
CREDIT SUISSE FIRST BOSTON
ELEVEN MADISON AVENUE
NEW YORK, NY 10010
May 11, 2000
International Paper Company
Two Manhattanville Road
Purchase, New York 10577
Attention:
INTERNATIONAL PAPER COMPANY
SENIOR CREDIT FACILITY
COMMITMENT LETTER
Ladies and Gentlemen:
You have advised Credit Suisse First Boston ("CSFB") that International
Paper Company ("IP" or "you") intends to acquire (the "Acquisition") a company
you have identified to us as Eagle (the "Company"). You have further advised us
that the Acquisition will be accomplished either by (i) a tender or exchange
offer (collectively, the "Tender Offer") by a wholly owned subsidiary of IP
("Acquico") for the outstanding shares (the "Shares") of capital stock of the
Company followed by the Merger referred to in the succeeding clause or (ii) a
merger of Acquico and the Company, with the surviving entity of such merger
being a wholly owned subsidiary of IP (the "Merger"), pursuant to a merger
agreement to be entered into among IP, Acquico, and the Company and related
documents (collectively, the "Acquisition Agreement"). We understand that (i)
the Tender Offer will be conditioned, among other things, on the tender and
purchase (or exchange) of at least that number of Shares that will permit
Acquico, acting alone, to effectuate the Merger and (ii) the total consideration
for tendered Shares and the Merger will be not more than $75.00 per Share of
which not more than $50.00 will be paid in cash and the remainder will be paid
in the form of common stock of IP (the "Equity Issuance").
You have advised us that you wish to obtain senior unsecured financing in
the form of a 364-day revolving credit facility in the principal amount of
$6,000,000,000 (Six Billion Dollars) (the "Credit Facility"), (i) which would be
used to finance a portion of (a) the cash consideration paid in the Tender Offer
and (b) on the date of the Merger, the remaining cash consideration of the
Acquisition, the refinancing of existing indebtedness of the Company to the
extent required by the Acquisition (the "Refinancing"), and the payment of
related fees and expenses (including payment of a break-up fee (the "Break-up
Fee") payable in connection with the termination by the Company (in accordance
with its terms) of a merger agreement with a third party) and (ii) the remainder
of which would be used, after the date of the Merger, for other general
corporate purposes of IP and its subsidiaries. You have also advised us that
funds for the remaining portion of the Acquisition, the Refinancing and the
payment of related fees and expenses may come from (i) cash on hand of IP and
the Company and (ii) proceeds from the issuance of unsecured debt securities
(collectively, the "Debt Issuance"). You have further advised us that the Credit
Facility may be used to support one or more commercial paper programs
(collectively, the "CP Program"). A summary of preliminary terms and conditions
of the Credit Facility is set forth in Exhibit A hereto (the "Term Sheet"). The
(i) Acquisition, (ii) Tender Offer (if any), (iii) Merger, (iv) Refinancing, (v)
termination of the third party merger agreement and the payment of the Break-up
Fee, (vi) Equity Issuance, (vii) Debt Issuance (if any) and (viii) borrowings
under the Credit Facility (or issuances of commercial paper under the CP
Program) are collectively referred to herein as the "Transactions".
You have requested that CSFB (i) agree to structure, arrange and syndicate
the Credit Facility and (ii) commit to provide the Credit Facility and to serve
as administrative agent therefor.
<PAGE> 2
In connection with the foregoing, CSFB is pleased to advise you (i) that it
is willing to act as exclusive book manager and lead arranger for the Credit
Facility and (ii) of its commitment to provide the entire amount of the Credit
Facility upon the terms and subject to the conditions set forth or referred to
in this commitment letter (as the same may be amended from time to time in
accordance with its terms, the "Commitment Letter") and in the Term Sheet and in
Exhibit B hereto (the "Conditions").
CSFB intends to syndicate the Credit Facility to a group of financial
institutions (together with CSFB, the "Lenders") identified by us in
consultation with you. CSFB intends to commence syndication efforts promptly
upon the execution of this Commitment Letter or such later date as CSFB
determines to be appropriate in its sole discretion (the commencement date of
such syndication efforts being the "Syndication Commencement Date"). Our
commitments hereunder are conditioned upon, among other things, our having
sufficient time in our judgement prior to the Closing Date (as defined in the
Term Sheet) to complete syndication. CSFB will manage all aspects of the
syndication, including decisions, after consultation with you, as to the
selection of institutions to be approached and when they will be approached,
when their commitments will be accepted, which institutions will participate,
what titles (if any) they will be awarded, the allocation of the commitments
among the Lenders and the amount and distribution of fees among the Lenders. It
is agreed that CSFB will act as the sole and exclusive administrative agent,
book manager and lead arranger for the Credit Facility, and will, in such
capacities, perform the duties and exercise the authority customarily performed
and exercised by it in such roles. You agree that no other agents, book
managers, co-agents or arrangers will be appointed, no other titles will be
awarded and no compensation (other than that expressly contemplated by the Term
Sheet and the Fee Letter referred to below) will be paid in connection with the
Credit Facility unless you and we shall so agree.
You agree to assist CSFB, and to use your commercially reasonable efforts
to cause the Company to assist CSFB, in completing a syndication satisfactory to
it. Such assistance shall include (a) your using your commercially reasonable
efforts to ensure, and to use your commercially reasonable efforts to cause the
Company to use its commercially reasonable efforts to ensure, that the
syndication efforts benefit materially from your and the Company's existing
lending relationships, (b) direct contact between senior management and advisors
of you and the proposed Lenders (and your using your commercially reasonable
efforts to cause direct contact between senior management and advisors of the
Company and the proposed Lenders), (c) assistance by you and your using your
commercially reasonable efforts to cause assistance by the Company in the
preparation of a Confidential Information Memorandum and other marketing
materials to be used in connection with the syndication (such Confidential
Information Memorandum and other marketing materials to be completed and
delivered by you to us on or before the Syndication Commencement Date) and (d)
the hosting, with CSFB, of one or more meetings with prospective Lenders.
Additionally, you agree that prior to the Arranger's determination that the
syndication of the Credit Facility has been completed, or the earlier
termination of this Commitment Letter unless otherwise agreed to by CSFB, there
shall be no competing issues of debt securities or commercial bank facilities of
IP or any of its subsidiaries (it being understood that competing issues would
not include debt securities or commercial bank facilities currently outstanding
but would include, without limitation, issues of new (or refinancing of
existing) debt securities or commercial bank facilities) other than (i) debt
incurred to refinance outstanding debt which, in the ordinary course, becomes
due and owing at its scheduled maturity, (ii) debt guaranteed by you and issued
by a governmental authority in connection with any of your facilities, (iii)
debt issued by Carter Holt Harvey, Ltd. or Bush Boake & Allen Company and (iv)
any Debt Issuance (provided that you shall ensure that such issuance (and
related efforts) are coordinated with and reasonably acceptable to CSFB).
You agree to prepare and provide, and will use your commercially reasonable
efforts to cause the Company to provide, promptly to CSFB all information with
respect to you, the Company and the Transactions and the other transactions
contemplated hereby, including all financial information and projections (the
"Projections"), as we may reasonably request in connection with the arrangement
and syndication of the Credit Facility. You hereby represent and covenant that
(a) all information other than the Projections (the "Information") that has been
or will be made available to CSFB, any Lender or any potential Lender by or on
behalf of you or any of your representatives in connection with the
Transactions, taken as a whole, is or will be complete and correct in all
material respects and does not or will not contain any untrue
2
<PAGE> 3
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein not misleading in light of the
circumstances under which such statements are made and (b) all Projections that
have been or will be made available to CSFB, any Lender or any potential Lender
by or on behalf of you or any of your representatives in connection with the
Transactions, taken as a whole, have been or will be prepared in good faith
based upon what you believe to be reasonable assumptions. You agree to
supplement the Information and the Projections from time to time until the
completion of the syndication so that the representation and covenant in the
preceding sentence remain correct without regard to when such Information and
Projections were made available. You understand that in arranging and
syndicating the Credit Facility, CSFB may use and rely on the Information and
the Projections without responsibility for independent verification thereof.
As consideration for CSFB's commitment hereunder and agreement to perform
the services described herein, you agree to pay to CSFB the nonrefundable fees
set forth in the Term Sheet and in the Senior Credit Facility Fee Letter dated
April 24, 2000 (as the same may be amended from time to time in accordance with
its terms, the "Fee Letter").
CSFB reserves the right, after consultation with you, to change any or all
of the terms, structure, amount, tenor or pricing of the Credit Facility as set
forth herein and in the Term Sheet and the Fee Letter if such changes are
advisable, in CSFB's judgment, to ensure that the Credit Facility is
successfully syndicated (as determined by CSFB), provided that the aggregate
principal amount of the Credit Facility remains the same.
You agree to reimburse CSFB and its affiliates, upon request made from time
to time, for their reasonable fees and expenses incurred in connection with the
Credit Facility and the preparation, execution and delivery of any related
documentation and the activities thereunder or contemplated thereby, including
without limitation due diligence expenses, syndication expenses, consultants'
fees and expenses and the reasonable fees and expenses of counsel to CSFB and
its affiliates, whether incurred before or after the execution of this
Commitment Letter. You will also pay all costs and expenses of CSFB (including,
without limitation, reasonable fees and disbursements of counsel) incurred in
connection with the enforcement of any of its rights and remedies hereunder.
You hereby agree to indemnify and hold harmless CSFB, its affiliates and
their respective officers, directors, employees, agents, advisors and
controlling persons (each, an "Indemnified Person") from and against any and all
losses, claims, damages, liabilities and expenses, joint or several, to which
any such Indemnified Person may become subject arising out of or in connection
with this Commitment Letter, the Credit Facility, the use of the proceeds
thereof, the Transactions or any related transaction or any claim, litigation,
investigation or proceeding relating to any of the foregoing, regardless of
whether any Indemnified Person is a party thereto, and to reimburse each such
Indemnified Person for any reasonable legal or other expenses as they are
incurred in connection with investigating or defending any of the foregoing;
provided, however, that the foregoing indemnification will not, as to any
Indemnified Person, apply to losses, claims, damages, liabilities or expenses to
the extent that they are finally judicially determined by a court of competent
jurisdiction not subject to further appeal to have resulted from the gross
negligence or willful misconduct of such Indemnified Person. No Indemnified
Person shall be liable for any indirect or consequential damages in connection
with its obligations hereunder or its activities related to the Credit Facility.
This Commitment Letter is delivered to you on the understanding that
neither this Commitment Letter nor any other agreement between us related to
this Commitment Letter or the Transactions, including the Term Sheet, the
Conditions and the Fee Letter, nor any of their terms or substance shall be
disclosed, directly or indirectly, to any other person except (a) to your
officers, employees, agents and legal advisors who are directly involved in the
consideration of this matter (and then only on a confidential and need-to-know
basis) or (b) as may be required by law or compulsory legal process (in which
case you agree to inform us promptly thereof prior to any such disclosure);
provided, however, that, after your acceptance of this Commitment Letter and the
Fee Letter, you may disclose this Commitment Letter, the Term Sheet and the
Conditions and their terms and substance (but not the Fee Letter or its terms
and substance), on a confidential and need-to-know basis, to the Company and its
directors, officers, employees, agents and legal advisors.
3
<PAGE> 4
The reimbursement, indemnification and confidentiality provisions contained
herein and in the Fee Letter shall remain in full force and effect regardless of
whether definitive financing documentation shall be executed and delivered and
notwithstanding the termination of this Commitment Letter or CSFB's commitment
hereunder.
Upon your acceptance of this Commitment Letter, this Commitment Letter
shall amend, restate and supersede in its entirety the commitment letter among
the parties hereto dated as of April 28, 2000 (the "Original Commitment
Letter"). All references to the Commitment Letter in the Fee Letter shall
thereupon be deemed references to this Commitment Letter.
If the foregoing correctly sets forth our agreement, please indicate your
acceptance of the terms hereof and of the Term Sheet, the Conditions and the Fee
Letter by returning to us executed counterparts hereof and of the Fee Letter,
prior to the time you make any public announcement of (or governmental filing
with respect to) your proposed acquisition of the Company. CSFB's commitment and
agreements contained herein will expire at such time in the event CSFB has not
received such executed counterparts in accordance with the immediately preceding
sentence. If the initial borrowing in respect of the Credit Facility does not
occur on or before November 30, 2000, then this Commitment Letter and CSFB's
commitment and undertakings hereunder shall automatically terminate unless CSFB
shall, in its discretion, agree to an extension. Before such date, CSFB may
terminate this Commitment Letter if any event occurs or information has become
available that, in its judgment, results or is reasonably likely to result in
the failure to satisfy any condition set forth in Exhibit B. In any event, your
obligations with respect to indemnification and confidentiality shall remain in
full force and effect, regardless of any termination of the commitment of CSFB
made hereunder.
This Commitment Letter is intended to be solely for the benefit of the
parties hereto and the Indemnified Persons and is not intended to confer any
benefits upon, or create any rights in favor of, any person other than the
parties hereto and the Indemnified Persons. This letter is not intended to
create a fiduciary relationship among the parties hereto. This Commitment Letter
and CSFB's commitment hereunder shall not be assignable by you without the prior
written consent of CSFB (and any purported assignment without such consent shall
be null and void). CSFB's commitment hereunder may be assigned by CSFB to any of
its affiliates or any Lender. Any such assignment to an affiliate shall not
relieve CSFB from any of its obligations hereunder unless and until the portion
of the commitment so assigned shall have been funded by such affiliate. Any
assignment to a Lender shall be by novation and shall release CSFB from its
commitment hereunder pro tanto. This Commitment Letter, together with the Term
Sheet (and the annex thereto), the Conditions and the Fee Letter, contain the
entire agreement between the parties relating to the subject matter hereof and
supersede all oral statements and prior writings with respect thereto. This
Commitment Letter may not be amended or waived except by an instrument in
writing signed by you and CSFB. This Commitment Letter may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original and all of which together shall constitute one and the same
instrument. Delivery of an executed counterpart of a signature page of this
Commitment Letter by facsimile transmission shall be as effective as delivery of
a manually executed counterpart hereof. This Commitment Letter shall be governed
by, and construed in accordance with, the internal laws of the State of New
York, without reference to its choice of law rules.
EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ITS RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF ANY
PARTY RELATED TO OR ARISING OUT OF THIS COMMITMENT LETTER OR THE PERFORMANCE OF
SERVICES HEREUNDER.
You irrevocably and unconditionally submit to the exclusive jurisdiction of
any state or federal court sitting in the County of New York over any suit,
action or proceeding arising out of or relating to this Commitment Letter.
Service of any process, summons, notice or document in any such suit, action or
proceeding may be made by registered mail addressed to you or CSFB, as
appropriate, and you waive to the fullest extent permitted under applicable law
any claim that any such suit, action or proceeding has been brought in an
inconvenient forum. A final judgment in any such suit, action or proceeding
brought in any such
4
<PAGE> 5
court may be enforced in any other courts to whose jurisdiction you are or may
be subject, by suit upon such judgment.
You acknowledge that CSFB may provide debt financing, equity capital or
other services (including financial advisory services) to parties whose
interests may conflict with yours. Consistent with CSFB's policy to hold in
confidence the affairs of its customers, CSFB will not furnish confidential
information obtained from you to any of its other customers. Furthermore, CSFB
has no obligation to use in connection with the Transactions contemplated
hereby, or to furnish to you, confidential information obtained by CSFB from any
other person.
CSFB is pleased to have been given the opportunity to assist you in
connection with this important financing.
Very truly yours,
CREDIT SUISSE FIRST BOSTON,
By: /s/ RICHARD B. CAREY
------------------------------------
Name: Richard B. Carey
Title: Managing Director
By: /s/ CHRISTOPHER G. CUNNINGHAM
------------------------------------
Name: Christopher G. Cunningham
Title: Director
Accepted and agreed to as of
the date first written above,
INTERNATIONAL PAPER COMPANY,
By: /s/ TOBIN TREICHEL
----------------------------------
Name: Tobin Treichel
Title: Vice President-Finance
5
<PAGE> 6
CONFIDENTIAL EXHIBIT A
MAY 11, 2000
INTERNATIONAL PAPER COMPANY
SENIOR CREDIT FACILITY
SUMMARY OF PRINCIPAL TERMS AND CONDITIONS
(All capitalized terms not defined herein have the meanings given to
them in the Commitment Letter to which this Summary relates (as the
same may be amended from time to time in accordance with its terms))
BORROWER: International Paper Company ("IP" or the
"Borrower").
CREDIT FACILITY: Senior unsecured revolving credit facility in
an aggregate principal amount of $6 Billion
(the "Credit Facility").
ADMINISTRATIVE AGENT: CSFB will act as administrative agent (the
"Administrative Agent") for a syndicate of
financial institutions (the "Lenders"), and
will perform the duties customarily associated
with such role.
SOLE BOOK MANAGER AND SOLE
LEAD ARRANGER: CSFB will act as sole book manager and sole
lead arranger for the Credit Facility (the
"Arranger") and will perform the duties
customarily associated with such roles.
SYNDICATION AGENT(S): One or more financial institutions mutually
acceptable to the Arranger and IP will be given
the title of syndication agent.
DOCUMENTATION AGENT(S): One or more financial institutions mutually
acceptable to the Arranger and IP will be given
the title of documentation agent.
PURPOSE: (A) The Credit Facility will be used, together
with the Equity Issuance, the Debt Issuance
(if any) and cash on hand with IP and, on
the date of the Merger, the Company, (i) on
and after the Closing Date, to finance the
Tender Offer (if any) and (ii) on the date
of the Merger, to finance the Acquisition,
the Refinancing and to pay related fees and
expenses (including the Break-up Fee); and
(B) Thereafter, the proceeds of loans under the
Credit Facility other than proceeds used as
described in the immediately preceding
paragraph, will be used for general
corporate purposes of the Borrower and its
subsidiaries.
The Credit Facility may be used to provide
liquidity support for the CP Program, provided
the net proceeds of the commercial paper are
used for the purposes set forth in the
preceding clauses (A) and (B) (or to refinance
commercial paper).
AVAILABILITY AND MATURITY: The Credit Facility will be available on a
revolving basis during the period from the date
(the "Closing Date") of execution and delivery
by all parties of definitive documentation
relating to the Credit Facility (the "Credit
Agreement") to the date 364 days after the
Closing Date (the "Termination Date"). At the
option of the Borrower, amounts outstanding on
the Termination Date (not in excess of fifty
percent of the Commitments) may on the
Termination Date be converted to a term loan
with a maturity of one year, subject to the
satisfaction at such time of conditions
precedent to
<PAGE> 7
the making of all Loans under the Credit
Facility. The commitments under the Credit
Facility (whether relating to revolving loans
or a term loan, the "Commitments") will be
reduced from time to time pursuant to
provisions described under "Voluntary Permanent
Reductions in Commitments."
INTEREST RATE AND FEES: Alternate base rate or reserve-adjusted
eurodollar rate loans, with the Applicable
Margins determined according to a ratings grid
based on the Borrower's senior unsecured debt
rating, as set forth on Annex I.
Reserve-adjusted eurodollar rate loans will
have interest periods of 1, 2, 3 or 6 months.
All interest will be payable at the end of the
applicable interest period or quarterly,
whichever is earlier.
In addition, a competitive bid option will be
provided on terms and conditions usual for bid
options of this type for competitive bid loans
bearing interest at an absolute rate or a
margin over the reserve-adjusted eurodollar
rate, with maturities from 7 to 360 days.
Facility fees on the full amount of the
Commitments will be determined according to a
ratings grid based on the Borrower's senior
unsecured debt rating, as set forth on Annex I.
Facility Fees will accrue from the Closing Date
and will be payable quarterly in arrears and
upon the termination of any Commitment, and on
the final maturity of the term loan, if the
Borrower exercises the term loan conversion
option, in each case for the actual number of
days elapsed in a 360-day year.
Other fees will be payable in accordance with
the separate Fee Letter.
Interest will accrue on overdue amounts (i) in
the case of overdue principal of any loan, at
the applicable pre-default interest rate plus
2.0% per annum, and (ii) in the case of any
other overdue amount, at the alternate base
rate plus 2.0% per annum.
TAX GROSS UP: Payments of principal and interest under the
Credit Facility will be made without any
withholding tax except as required by
applicable law. If any withholding tax is
imposed, additional amounts will be required to
be paid by the Borrower so that the Lenders are
made whole.
MANDATORY PREPAYMENTS: Loans outstanding under the Credit Facility
will be subject to mandatory prepayment to the
extent required to cause such outstanding loans
never to exceed the amount of the Commitments
at any time.
VOLUNTARY PERMANENT REDUCTIONS
IN
COMMITMENTS (AND PREPAYMENTS): Voluntary reductions in the unused portion of
the Credit Facility will be permitted in whole
or in part, at the option of the Borrower, in
minimum principal amounts (and multiples
thereof) to be agreed upon. Voluntary
prepayments of loans under the Credit Facility
(other than competitive bid loans) will be
permitted in whole or in part, at the option of
the Borrower, in minimum principal amounts to
be agreed upon, without premium or penalty,
subject to reimbursement of the Lenders'
redeployment costs in
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<PAGE> 8
the case of prepayment of reserve-adjusted
eurodollar borrowings other than on the last
day of the relevant interest period.
REPRESENTATIONS AND
WARRANTIES: Usual for facilities and transactions of this
type and otherwise substantially in the form of
those contained in the Borrower's Amended and
Restated 364-Day Credit Agreement dated as of
March 29, 2000 (the "Existing Credit
Agreement"), including, but not limited to:
accuracy of financial statements; absence of
undisclosed liabilities; no material adverse
change (on the Closing Date only); absence of
material litigation; no violation of agreements
or instruments; compliance with laws (including
ERISA, margin regulations and environmental
laws); payment of taxes; solvency;
effectiveness of regulatory approvals;
environmental matters; and accuracy of
information.
CONDITIONS PRECEDENT TO
INITIAL
BORROWING: Usual for facilities and transactions of this
type, including but not limited to the
conditions set forth in Exhibit B hereto and
otherwise substantially in the form of those
contained in the Existing Credit Agreement.
AFFIRMATIVE COVENANTS: Usual for facilities and transactions of this
type and otherwise substantially in the form of
those contained in the Existing Credit
Agreement, including but not limited to: use of
proceeds; maintenance of corporate existence
and rights; compliance with laws; maintenance
of properties in good repair; maintenance of
appropriate and adequate insurance; inspection
of books and properties; payment of taxes and
other liabilities; notice of defaults,
litigation and other adverse action; delivery
of financial statements, financial projections
and compliance certificates; in the event of
the Tender Offer, consummation of the Merger
(on terms reasonably satisfactory to the
Arranger and the Lenders) within 180 days after
the Closing Date and the requirement to obtain
all requisite approvals and consents for
consummation of the Merger; and further
assurances.
NEGATIVE COVENANTS: Usual for facilities and transactions of this
type and otherwise substantially in the form of
those contained in the Existing Credit
Agreement, including, but not limited to:
limitations on mergers, acquisitions,
liquidations, dissolutions and asset sales;
limitations on liens and sale-leaseback
transactions; and limitations on transactions
with affiliates.
SELECTED FINANCIAL COVENANTS: Usual for facilities and transactions of this
type, including but not limited to: (a) a
maximum ratio of total debt to total capital
(including shareholders equity) covenant and
(b) a minimum consolidated net worth covenant.
EVENTS OF DEFAULT: Usual for facilities and transactions of this
type and otherwise substantially in the form of
those contained in the Existing Credit
Agreement, including but not limited to:
nonpayment of principal when due; nonpayment of
interest, fees or other amounts after a grace
period of three business days; violation of
covenants (subject to, in the case of certain
affirmative covenants, a grace period of thirty
days); failure of any representation or
warranty to be true in all material respects
when made or deemed made; cross default
(nonpayment of principal or interest when due
in respect of any of
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<PAGE> 9
its indebtedness in an aggregate amount of $200
million or more); in the event of the Tender
Offer, failure to consummate the Merger within
180 days after the Closing Date; Change in
Control (to be defined); bankruptcy events;
material judgments; and ERISA.
VOTING: Amendments and waivers of the Credit Agreement
and the other definitive credit documentation
will require the approval of Lenders holding
more than 50% of the aggregate amount of the
loans and commitments under the Credit
Facility, except that the consent of each
Lender adversely affected thereby shall be
required with respect to (a) increases in such
Lender's commitments, (b) reductions of
principal, interest or fees, and (c) extensions
of the termination date of the Commitments or
the final maturity of the loans and except that
the consent of all Lenders shall be required
with respect to any assignment by the Borrower
or modifications of the voting percentages of
the Lenders.
COST AND YIELD PROTECTION: Usual for facilities and transactions of this
type and substantially in the form of those
contained in the Existing Credit Agreement,
including standard protective provisions for
such matters as increased costs, funding
losses, capital adequacy, illegality and taxes.
ASSIGNMENT AND PARTICIPATIONS: The Lenders will be permitted to assign loans
and commitments to their affiliates, other
Lenders or their affiliates or to secure
extensions of credit to such lenders without
restriction, or to other financial institutions
with the consent of the Administrative Agent
and the Borrower, in each case not to be
unreasonably withheld. The Administrative Agent
will receive a customary processing and
recordation fee, payable by the assignor and/or
the assignee, with each assignment. Assignments
will be by novation.
The Lenders will be permitted to participate
loans and commitments to other financial
institutions without restriction. Voting rights
of participants shall be limited to matters in
respect of (a) reductions of principal,
interest or fees, and (b) extensions of the
termination date of the Commitments or the
final maturity of the loans.
EXPENSES AND INDEMNIFICATION: All reasonable out-of-pocket expenses
(including, without limitation, expenses
incurred in connection with due diligence) of
the Arranger and the Administrative Agent
associated with the syndication of the Credit
Facility and with the preparation, execution
and delivery, administration, waiver or
modification and enforcement of the Credit
Agreement and the other documentation
contemplated hereby and thereby (including the
reasonable fees, disbursements and other
charges of counsel) are to be paid by the
Borrower. In addition, all reasonable
out-of-pocket expenses of the Lenders for
enforcement costs and documentary taxes
associated with the Credit Facility are to be
paid by the Borrower.
The Borrower will indemnify the Arranger, the
Administrative Agent, the Lenders and their
respective officers, directors, employees,
affiliates, agents and controlling persons and
hold them harmless from and against all
liabilities, costs and expenses (including
reasonable fees, disbursements and other
charges of counsel) arising out of or relating
to any claim or any litigation or other
4
<PAGE> 10
proceedings (regardless of whether any such
indemnified person is a party thereto) that
relate to the Transactions, the Credit Facility
or any transactions connected therewith;
provided, however, that no indemnified person
will be indemnified for any cost, expense or
liability to the extent determined by a court
of competent jurisdiction in a final and
nonappealable judgment to have resulted from
its gross negligence or willful misconduct.
GOVERNING LAW AND FORUM: New York.
WAIVER OF JURY TRIAL: The parties to the definitive credit
documentation will waive trial by jury in any
action, proceeding, claim or counterclaim
brought on behalf of any party related to or
arising out of the Credit Facility.
COUNSEL TO ADMINISTRATIVE
AGENT AND
ARRANGER: Dewey Ballantine LLP.
5
<PAGE> 11
ANNEX I
TO EXHIBIT A
PRICING GRID
The "Applicable Margin" and "Applicable Facility Fee Rate" for any day are
the respective percentages set forth below in the applicable row under the
column corresponding to the Status that exists on such day:
<TABLE>
<CAPTION>
STATUS LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V LEVEL VI
- ------ ------- -------- --------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Applicable
Margin -- Eurodollar Rate
Loans (basis points)....... 31.5 42 52.5 62.5 85 125
Applicable Margin -- Base
Rate Loans (basis
points).................... 0 0 0 0 0 25
Applicable Facility Fee Rate
(basis points)............. 6 8 10 12.5 15 25
</TABLE>
For purposes of this Schedule, the following terms have the following
meanings (as modified by the provisos below):
"Level I Status" exists at any date if, at such date, the Borrower's
senior unsecured long-term debt is rated either A or higher by S&P or A2 or
higher by Moody's.
"Level II Status" exists at any date if, at such date, the Borrower's
senior unsecured long-term debt is rated either A- or higher by S&P or A3
or higher by Moody's.
"Level III Status" exists at any date if, at such date, the Borrower's
senior unsecured long-term debt is rated either BBB+ or higher by S&P or
Baa1 or higher by Moody's.
"Level IV Status" exists at any date if, at such date, the Borrower's
senior unsecured long-term debt is rated either BBB or higher by S&P or
Baa2 or higher by Moody's.
"Level V Status" exists at any date if, at such date, the Borrower's
senior unsecured long-term debt is rated either BBB- or higher by S&P or
Baa3 or higher by Moody's.
"Level VI Status" exists at any date if, at such date, no other Status
exists.
"Status" refers to the determination which of Level I Status, Level II
Status, Level III Status, Level IV Status, Level V Status or Level VI
Status exists at any date.
The credit ratings to be utilized for purposes of this Schedule are those
assigned to the senior unsecured long-term debt securities of the Borrower
without third-party credit enhancement and any rating assigned to any other debt
security of the Borrower shall be disregarded. The rating in effect at any date
is that in effect at the close of business on such date.
Provided, if the Borrower is split-rated and the ratings differential is one
level, the higher rating will apply. If the Borrower is split-rated and the
differential is two levels or more, the rating at the midpoint will apply. If
there is no midpoint rating, the higher of the two intermediate ratings will
apply.
Provided, further, Level I Status will apply in the event that the Borrower is
rated at or above either of the Moody's or Standard & Poor's ratings set out in
Level I Status above. Level VI Status will apply in the event that the Borrower
is rated below both the Moody's and Standard & Poor's ratings set out in Level V
Status above.
Provided, further, if as of the Closing Date Moody's and Standard & Poor's have
not reconfirmed their respective ratings after giving effect to the
Transactions, Level IV Status shall apply from the Closing Date to the date of
such reconfirmations.
Provided, further, and notwithstanding any of the foregoing, if at any time the
Borrower's senior unsecured commercial paper debt (without third-party credit
enhancement) is rated below P-2 by Moody's or below A-2
<PAGE> 12
by Standard & Poor's, then during such time Level V or, if such Level would
otherwise be applicable, Level VI shall apply.
A Utilization Fee will become payable while 25% or more of the Commitments have
been borrowed under the Credit Facility. The Utilization Fee will be calculated
on the outstanding principal amount under the Credit Facility (including
competitive bid loans) and determined in accordance with the pricing grid as
follows (in basis points): Level I Status -- 12.5, Level II Status -- 12.5,
Level III Status -- 12.5, Level IV Status -- 25, Level V Status -- 25, Level VI
Status -- 25.
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EXHIBIT B
CONDITIONS
The commitment of Credit Suisse First Boston ("CSFB" or the "Arranger")
pursuant to the Senior Credit Facility Commitment Letter dated May 11, 2000 (as
the same may be amended from time to time in accordance with its terms, the
"Commitment Letter"), between CSFB and International Paper Company ("IP" or the
"Borrower"), shall be subject to the following conditions (capitalized terms
used but not defined herein shall, unless otherwise specified, have the meanings
assigned to such terms in the Commitment Letter):
(i) after the date of the Commitment Letter, no information or other
matter relevant to the Transactions becomes known to the Arranger that it
in good faith believes is inconsistent in a material and adverse manner
with any information or other matter relevant to the Transactions disclosed
to the Arranger prior to the date of the Commitment Letter;
(ii) there shall not have occurred, exist or become known to the
Arranger any event, condition or change in or affecting IP or Acquico that,
singly or in the aggregate, could reasonably be expected to have a Material
Adverse Effect;
(iii) the preparation, execution and delivery of definitive
documentation satisfactory to the Arranger in connection with the Credit
Facility, and compliance with, and satisfaction of, all terms and
conditions to be performed at or prior to the first loan under the Credit
Facility;
(iv) the Company shall have effectively terminated (in accordance with
its terms) the merger agreement (and all other related arrangements) with
the applicable third party prior to the consummation of such merger and
shall have incurred no material liabilities with respect thereto in excess
of the Break-up Fee;
(v) the sources (including the amounts of the Debt Issuance (if any)
and cash on hand) and uses of funds necessary to consummate the
Transactions are as set forth in the Commitment Letter and otherwise
satisfactory to the Arranger, in its reasonable judgment;
(vi) after giving effect to the Transactions (and the sources and uses
necessary to consummate the Transactions), IP and its subsidiaries shall
have on a pro forma basis reasonably sufficient liquidity to conduct their
businesses in the normal course;
(vii) the terms, conditions and structure of the Acquisition
(including the Tender Offer (if any) and the Merger), the Equity Issuance
and the Debt Issuance (if any), including any documentation therefor, shall
be in form and substance reasonably satisfactory to the Arranger and the
Lenders. The Transactions shall be in compliance, in all material respects,
with all laws and regulations, including any state anti-takeover law
regulating the Acquisition, or the Arranger shall have determined such to
be inapplicable to the Acquisition. The Arranger shall have received
copies, certified by IP, of all material filings made with any governmental
authority in connection with the Transactions;
(viii) if the Acquisition is effected by means of the Tender Offer,
(a) not less than 66 2/3% (nor, if solely a cash tender offer, more
than 66 2/3%) of the Shares outstanding on a fully diluted basis (with
all options or other securities convertible into or exercisable or
exchangeable for Shares being deemed to have been so converted,
exercised or exchanged) shall have been validly tendered pursuant to the
Tender Offer and not withdrawn prior to the expiration of the Tender
Offer and accepted for payment (or exchange) in accordance with the
terms of the Tender Offer,
(b) the Arranger shall be satisfied, in its sole discretion, that
the provisions of Section 912 of the New York Business Corporation Law
have been complied with or are invalid or otherwise inapplicable to the
Tender Offer, and
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(c) the Arranger shall be satisfied, in its sole discretion, that
no provision of law or regulation, or of the certificate of
incorporation or by-laws of the Company or of any shareholder agreement
or shareholder rights program of the Company or of any other agreement,
shall prevent or impede the consummation of the Tender Offer or the
Merger (or the ability of Acquico to vote the Shares in favor of the
Merger) in a manner reasonably satisfactory to the Arranger and the
Lenders;
(ix) as of the Closing Date, the Transactions shall have been
consummated in accordance with documents in form and substance reasonably
satisfactory to the Arranger, which documents shall contain no material
terms and conditions which have not been satisfied and no material term
thereof shall have been amended, supplemented, otherwise modified in any
material respect or waived except with the consent of the Lenders and the
Administrative Agent;
(x) the Arranger shall be reasonably satisfied as to compliance, in
all material respects, by IP and Acquico, any applicable acquisition entity
and the Company with all applicable regulations;
(xi) all material approvals and consents of any governmental
authorities and third parties required in connection with the Transactions
and the other transactions contemplated by the Commitment Letter shall have
been obtained (without the imposition of any materially burdensome or
adverse conditions), and all such approvals and consents shall be in full
force and effect. All applicable waiting periods shall have expired without
any action being taken by any competent authority which restrains, prevents
or imposes materially adverse conditions upon the Transactions; and
(xii) customary closing conditions for transactions similar to the
Credit Facility, as applicable, including, without limitation, (a) the
accuracy in all material respects of all representations and warranties,
(b) the absence of any defaults, prepayment events or creation of liens
under debt instruments or other agreements (other than under any debt
instrument or agreement which is being repaid and terminated on the Closing
Date) as a result of the Transactions and the other transactions
contemplated by the Commitment Letter, (c) the absence of any change in the
capital, corporate and organizational structure of IP, Acquico or the
Company which would be materially adverse to the Lenders in their
reasonable determination, (d) compliance with applicable laws and
regulations (including employee health and safety, margin regulations, and
environmental laws), (e) evidence of reasonably satisfactory insurance, (f)
evidence of authority, (g) delivery of historical and pro forma financial
statements, and (h) the receipt by the Arranger of satisfactory legal
opinions (including, without limitation, as to no violation of any margin
regulations);
(xiii) there shall not exist any threatened or pending action,
proceeding or counterclaim by or before any court or governmental,
administrative or regulatory agency or authority, domestic or foreign, (a)
challenging the consummation of the Transactions or which would restrain,
prevent or impose burdensome conditions on the Transactions, individually
or in the aggregate, or any other transaction contemplated hereunder, which
could reasonably be expected to have a Material Adverse Effect, (b) seeking
to prohibit the ownership or operation by IP or any of its subsidiaries of
all or a material portion of any of their business or assets which could
reasonably be expected to have a Material Adverse Effect, or (c) seeking to
obtain, or having resulted in the entry of, any judgment, order or
injunction that (i) would restrain, prohibit or impose adverse conditions
on the ability of the Lenders to make the loans under the Credit Facility,
(ii) could reasonably be expected to affect the legality, validity or
enforceability of any Credit Document or the ability of any party thereto
to perform its obligations thereunder, (iii) would be materially
inconsistent with the stated assumptions underlying the projections
provided to the Arranger and the Lenders and could reasonably be expected
to have a Material Adverse Effect, or (iv) is seeking any material damages
as a result thereof;
(xiv) there shall not have occurred after the date of the Commitment
Letter (a) any general suspension (other than temporary "circuit breakers")
of trading in, or limitation on prices for, securities on any national
securities exchange or in the over-the-counter market in any Applicable
Jurisdiction, (b) the declaration of a banking moratorium or any suspension
of payments in respect of banks in any Applicable Jurisdiction, (c) the
commencement of a war, armed hostilities or other international or national
calamity or emergency, directly or indirectly involving any Applicable
Jurisdiction, which makes
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it, in the Arranger's reasonable discretion, impracticable or inadvisable
to provide the Credit Facility, (d) any limitations (whether or not
mandatory) imposed by any governmental authority on the nature or extension
of credit or further extension of credit by banks or other lending
institutions, which makes it, in the Arranger's reasonable discretion,
impracticable or inadvisable to provide the Credit Facility, or (e) in the
case of the foregoing clauses (c) and (d), a material escalation or
worsening thereof, which makes it, in the Arranger's reasonable discretion,
impracticable or inadvisable to provide the Credit Facility; and
(xv) payment of fees and expenses, including reasonable fees and
expenses of the Arranger's counsel.
"Material Adverse Effect" shall mean a material adverse change, or any
condition or event that, in the reasonable and good faith judgment of the
Arranger, could reasonably be expected to result in a material adverse change,
in (i) the business, assets, results of operations or financial condition of IP,
the Company and their respective subsidiaries taken as a whole, or (ii) the
validity or enforceability of any of the documents entered into in connection
with the Transactions or the other transactions contemplated by the Commitment
Letter or the rights, remedies and benefits available to the parties thereunder
or the ability of IP, Acquico or the Company to consummate the Transactions.
"Applicable Jurisdiction" means the United States and any State thereof.
3
