Filed Pursuant to Rule 424(b)(5)
Registration No. 333-103760
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 27, 2003)
[INTERNATIONAL PAPER LOGO]
$1,000,000,000
INTERNATIONAL PAPER COMPANY
$600,000,000 4.00% NOTES DUE 2010
$400,000,000 5.25% NOTES DUE 2016
---------------------
The 2010 notes will bear interest at the rate of 4.00% per year. The 2016
notes will bear interest at the rate of 5.25% per year. Interest on the notes
will be payable on April 1 and October 1 of each year, beginning on October 1,
2004. The 2010 notes will mature on April 1, 2010 and the 2016 notes will mature
on April 1, 2016. We may redeem some or all the notes at any time. The
redemption prices are discussed under the caption "Description of
Notes -- Optional Redemption."
The notes will be our unsecured senior obligations and will rank equally
with all of our other unsecured senior indebtedness.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
---------------------
PER 2010 PER 2016
NOTE TOTAL NOTE TOTAL
--------- ------------ --------- ------------
Public Offering Price........................ 99.9130% $599,478,000 99.6620% $398,648,000
Underwriting Discount........................ 0.6125% $ 3,675,000 0.6750% $ 2,700,000
Proceeds to International Paper (before
expenses).................................. 99.3005% $595,803,000 98.9870% $395,948,000
Interest on the notes will accrue from March 18, 2004 to the date of
delivery.
---------------------
The notes will not be listed on any securities exchange. Currently, there
is no public market for the notes.
The underwriters expect that the notes will be ready for delivery in
book-entry form only through The Depository Trust Company, on or about March 18,
2004.
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CITIGROUP MORGAN STANLEY UBS INVESTMENT BANK
---------------------
BANC OF AMERICA SECURITIES LLC JPMORGAN LEHMAN BROTHERS
---------------------
ABN AMRO INCORPORATED BNP PARIBAS MERRILL LYNCH & CO.
March 15, 2004
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. WE HAVE
NOT, AND THE UNDERWRITERS HAVE NOT, AUTHORIZED ANY OTHER PERSON TO PROVIDE YOU
WITH DIFFERENT INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR
INCONSISTENT INFORMATION, YOU SHOULD NOT RELY ON IT. WE ARE NOT, AND THE
UNDERWRITERS ARE NOT, MAKING AN OFFER TO SELL THESE SECURITIES IN ANY
JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. YOU SHOULD ASSUME THAT
THE INFORMATION APPEARING IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS, AS WELL AS INFORMATION WE PREVIOUSLY FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION (THE "SEC") AND INCORPORATED BY REFERENCE, IS ACCURATE AS OF
THE DATE ON THE FRONT COVER OF THIS PROSPECTUS SUPPLEMENT ONLY. OUR BUSINESS,
FINANCIAL CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY HAVE CHANGED SINCE
THAT DATE. AS USED IN THIS PROSPECTUS SUPPLEMENT, THE TERMS "INTERNATIONAL
PAPER," "WE," "US" AND "OUR" REFER TO INTERNATIONAL PAPER COMPANY AND ITS
SUBSIDIARIES, UNLESS THE CONTEXT REQUIRES OTHERWISE.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
DOCUMENTS INCORPORATED BY REFERENCE......................... S-3
FORWARD-LOOKING STATEMENTS.................................. S-4
THE OFFERING................................................ S-5
INTERNATIONAL PAPER COMPANY................................. S-6
USE OF PROCEEDS............................................. S-7
RATIO OF EARNINGS TO FIXED CHARGES.......................... S-7
CAPITALIZATION.............................................. S-8
DESCRIPTION OF THE NOTES.................................... S-9
UNDERWRITING................................................ S-13
LEGAL MATTERS............................................... S-14
EXPERTS..................................................... S-14
PROSPECTUS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS........... ii
INTERNATIONAL PAPER COMPANY................................. 1
THE TRUSTS.................................................. 1
USE OF PROCEEDS............................................. 3
RATIO OF EARNINGS TO FIXED CHARGES AND EARNINGS TO FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS..................... 3
DESCRIPTION OF DEBT SECURITIES.............................. 4
DESCRIPTION OF CAPITAL STOCK................................ 20
DESCRIPTION OF WARRANTS..................................... 27
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES................ 29
DESCRIPTION OF TRUST PREFERRED SECURITIES AND TRUST
GUARANTEES................................................ 30
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE
UNITS..................................................... 34
PLAN OF DISTRIBUTION........................................ 35
WHERE YOU CAN FIND MORE INFORMATION......................... 36
VALIDITY OF SECURITIES...................................... 37
EXPERTS..................................................... 37
S-2
THESE OFFERING MATERIALS CONSIST OF TWO DOCUMENTS: (A) THIS PROSPECTUS
SUPPLEMENT, WHICH DESCRIBES THE TERMS OF THE NOTES THAT WE ARE CURRENTLY
OFFERING, AND (B) THE ACCOMPANYING PROSPECTUS, WHICH PROVIDES GENERAL
INFORMATION ABOUT OUR DEBT SECURITIES, SOME OF WHICH MAY NOT APPLY TO THE NOTES
THAT WE ARE CURRENTLY OFFERING. THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT SUPERSEDES ANY INCONSISTENT INFORMATION
INCLUDED OR INCORPORATED BY REFERENCE IN THE ACCOMPANYING PROSPECTUS.
IN VARIOUS PLACES IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS, WE REFER YOU TO OTHER SECTIONS OF SUCH DOCUMENTS FOR ADDITIONAL
INFORMATION BY INDICATING THE CAPTION HEADING OF SUCH OTHER SECTIONS. THE PAGE
ON WHICH EACH PRINCIPAL CAPTION INCLUDED IN THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS CAN BE FOUND IS LISTED IN THE TABLE OF CONTENTS ABOVE.
ALL SUCH CROSS REFERENCES IN THIS PROSPECTUS SUPPLEMENT ARE TO CAPTIONS
CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND NOT IN THE ACCOMPANYING PROSPECTUS,
UNLESS OTHERWISE STATED.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you directly to those documents. The information incorporated by
reference is considered to be part of this prospectus supplement. In addition,
information we file with the SEC in the future will automatically update and
supersede information contained in this prospectus supplement and any
accompanying prospectus. We incorporate by reference our Annual Report on Form
10-K for the fiscal year ended December 31, 2003 and any future filings made by
us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 until we sell all of the notes we are offering. These
documents update and supersede the information that we have previously
incorporated by reference.
S-3
FORWARD-LOOKING STATEMENTS
This prospectus supplement, the accompanying prospectus and the documents
incorporated by reference herein and therein contain certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act, as amended. These
include statements concerning our financial condition, results of operations and
business. These statements are often identified by the words "will," "may,"
"should," "continue," "anticipate," "believe," "expect," "plan," "appear,"
"project," "estimate," "intend," and words of similar import.
These forward looking statements reflect our current views with respect to
future events and are subject to risks and uncertainties. Actual results may
differ materially from those expressed or implied in these statements. Factors
which could cause actual results to differ include, among other things, the
following factors:
- the timing and strength of an economic recovery;
- changes in interest rates and plan asset values which could have an
impact on reported earnings and shareholders' equity;
- the strength of demand for our product and changes in overall demand;
- whether expected non-price improvements can be realized;
- the effects of competition from foreign and domestic producers;
- the level of housing starts;
- changes in the cost or availability of raw materials;
- unanticipated expenditures relating to the cost of compliance with
environmental and other governmental regulations;
- our ability to continue to realize anticipated cost savings;
- performance of our manufacturing operations;
- results of legal proceedings;
- changes related to international economic conditions;
- changes in currency exchange rates, particularly the relative value of
the U.S. dollar to the Euro;
- economic conditions in developing countries, specifically Brazil and
Russia; and
- the war on terrorism.
In view of such uncertainties, investors are cautioned not to place undue
reliance on these forward-looking statements. We note these factors for
investors as permitted by the Private Securities Litigation Reform Act of 1995.
We undertake no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise. Additional
information concerning these and other factors is contained in our filings with
the SEC, including, but not limited to, our Annual Report on Form 10-K for the
year ended December 31, 2003.
S-4
THE OFFERING
ISSUER........................ International Paper Company
NOTES OFFERED................. $600,000,000 aggregate principal amount of
4.00% notes due 2010. $400,000,000 aggregate
principal amount of 5.25% notes due 2016. We
refer to the 4.00% notes due 2010 and the 5.25%
notes due 2016 collectively as the notes.
INTEREST RATE................. 4.00% per year in the case of the notes due
2010. 5.25% per year in the case of the notes
due 2016.
MATURITY DATE................. The 4.00% notes will mature on April 1, 2010.
The 5.25% notes will mature on April 1, 2016.
INTEREST PAYMENT DATES........ April 1 and October 1 of each year, beginning
October 1, 2004.
RANKING....................... The notes will be senior unsecured debt and
will rank equally with all of our existing and
future senior unsecured debt. The notes will be
effectively subordinated to all of our existing
and future secured debt to the extent of the
assets securing that indebtedness.
OPTIONAL REDEMPTION........... We may redeem all or a portion of the notes at
any time, at our option, at a redemption price
equal to the greater of (1) 100% of the
aggregate principal amount of the notes being
redeemed, plus accrued and unpaid interest to
the date of redemption, or (2) the sum of the
present values of the remaining scheduled
payments of principal and interest in respect
of the notes being redeemed (not including any
portion of the payments of interest accrued as
of the date of redemption) discounted to the
redemption date, on a semi-annual basis, at the
treasury rate plus (i) 20 basis points with
respect to the 2010 notes or (ii) 25 basis
points with respect to the 2016 notes, plus
accrued and unpaid interest to the date of
redemption. See "Description of the
Notes -- Optional Redemption."
SINKING FUND.................. None.
FORM OF NOTE.................. One or more global notes, held in the name of
The Depository Trust Company.
USE OF PROCEEDS............... We estimate that the net proceeds, after
deducting underwriters' discounts and
commissions and before deducting other
estimated offering expenses payable by us, from
the offering will be approximately $991.8
million. We intend to use the net proceeds from
the offering of the notes to redeem all of the
outstanding $1.0 billion aggregate principal
amount of our 8 1/8% notes due July 8, 2005.
S-5
INTERNATIONAL PAPER COMPANY
We are a global forest products, paper and packaging company that is
complemented by an extensive distribution system, with primary markets and
manufacturing operations in the United States, Canada, Europe, the Pacific Rim
and South America. We are a New York corporation and were incorporated in 1941
as the successor to the New York corporation of the same name organized in 1898.
In the United States at December 31, 2003, we operated 26 pulp, paper and
packaging mills, 88 converting and packaging plants, 25 wood products facilities
and seven specialty chemicals plants. Production facilities at December 31, 2003
in Europe, Asia, Latin America, South America and Canada included 10 pulp, paper
and packaging mills, 44 converting and packaging plants, 10 wood products
facilities, two specialty panels and laminated products plants and six specialty
chemicals plants. We distribute printing, packaging, graphic arts, maintenance
and industrial products principally through over 270 distribution branches
located primarily in the United States. At December 31, 2003, we owned or
managed approximately 8.3 million acres of forestlands in the United States,
mostly in the South, approximately 1.5 million acres in Brazil and had, through
licenses and forest management agreements, harvesting rights on government-owned
forestlands in Canada and Russia.
Carter Holt Harvey, a New Zealand company which is approximately 50.5%
owned by us, operates five mills producing pulp, paper, packaging and tissue
products, 23 converting and packaging plants and 72 wood products manufacturing
and distribution facilities, primarily in New Zealand and Australia. In New
Zealand, Carter Holt Harvey owns approximately 795,000 acres of forestlands.
For management and financial reporting purposes, our businesses are
separated into six segments: Printing Papers; Industrial and Consumer Packaging;
Distribution; Forest Products; Carter Holt Harvey; and Specialty Businesses and
Other.
S-6
USE OF PROCEEDS
The net proceeds, after deducting underwriters' discounts and commissions
and before deducting other estimated offering expenses payable by us, from the
sale of the notes offered hereby are estimated to be approximately $991.8
million. We intend to use the net proceeds from the sale of the notes to redeem
all of the outstanding $1.0 billion aggregate principal amount of our 8 1/8%
notes due July 8, 2005.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of earnings to fixed charges on a
historical basis for each of the five years in the period ended December 31,
2003.
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------
1999 2000 2001 2002 2003
---- ---- ---- ---- ----
Ratio of earnings to fixed charges.......................... 1.27 1.42 --(1) 1.26 1.25
---------------
(1) Our deficiency in earnings necessary to cover fixed charges was $1,379.9
million for the year ended December 31, 2001.
For purposes of computing the ratio of earnings to fixed charges, earnings
include pre-tax earnings before extraordinary items and the cumulative effect of
accounting changes, interest expense, the estimated interest factor in rent
expense (which, we believe, approximates one-third of rent expense), preferred
dividends of subsidiaries, adjustments for undistributed equity earnings and the
amortization of capitalized interest. Fixed charges include interest incurred
(including amounts capitalized), the estimated interest factor in rent expense
and preferred dividends of subsidiaries.
S-7
CAPITALIZATION
Set forth below is our (i) actual unaudited consolidated capitalization as
of December 31, 2003 and (ii) unaudited consolidated capitalization as of
December 31, 2003, as adjusted to give effect to the issuance of the notes and
the application of the proceeds therefrom. This information should be read in
conjunction with the audited financial statements, including the notes thereto,
and other financial information pertaining to us incorporated herein by
reference.
AS OF DECEMBER 31, 2003
------------------------
AS
ACTUAL ADJUSTED
--------- ----------
(UNAUDITED)
(IN MILLIONS)
INDEBTEDNESS:
Notes payable and current maturities of long-term debt.... $ 2,087 $ 2,087
Notes offered hereby...................................... -- 1,000
Other long-term debt, excluding current maturities........ 13,450 12,530(1)
------- -------
Total Indebtedness.......................................... 15,537 15,617
COMMON SHAREHOLDERS' EQUITY:
Common stock.............................................. 485 485
Paid-in capital........................................... 6,500 6,500
Retained earnings......................................... 3,082 3,082
Accumulated other comprehensive income (loss)............. (1,690) (1,690)
Common stock held in treasury, at cost.................... (140) (140)
------- -------
TOTAL COMMON SHAREHOLDERS' EQUITY........................... 8,237 8,237
TOTAL CAPITALIZATION........................................ $23,774 $23,854
======= =======
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(1) Other long-term debt, excluding current maturities, as adjusted, is net of
the estimated premium to be paid to retire the 8 1/8% notes due July 8,
2005, calculated as of the date of this prospectus supplement.
S-8
DESCRIPTION OF THE NOTES
The following description of the particular terms of the notes supplements
the description of the general terms and provisions of the debt securities set
forth under the heading "Description of Debt Securities" in the accompanying
prospectus. If a particular term is inconsistent with the more general term
described in the prospectus, the particular term replaces the more general term.
The following description does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all of the provisions of the
indenture, the supplemental indenture relating to the notes and the notes. As
used in this description of the notes, the words "we", "us" or "our" refer only
to International Paper Company and do not include any current or future
subsidiaries of International Paper Company.
GENERAL
We will issue the notes under an indenture, dated April 12, 1999, between
us and The Bank of New York, as trustee, as supplemented by a supplemental
indenture, to be dated as of March 18, 2004, between us and the trustee. We
refer to the indenture, as supplemented, as the indenture. We will file the
supplemental indenture as an exhibit to a Current Report on Form 8-K.
The notes will initially be limited to $1,000,000,000 aggregate principal
amount, consisting of $600,000,000 aggregate principal amount of notes due 2010
and $400,000,000 aggregate principal amount of notes due 2016. We may, without
notice to or the consent of the holders of the notes, issue additional notes of
the same tenor as the notes, so that such additional notes and the notes offered
hereby shall form a single series, and references herein to the notes shall
include (unless the context otherwise requires) any further notes issued as
described in this paragraph.
The notes due 2010. The notes due 2010 will mature on April 1, 2010. The
notes due 2010 will bear interest from March 18, 2004 at the rate per annum of
4.00%, payable semiannually on April 1 and October 1 of each year, commencing
October 1, 2004, to the persons in whose names such notes are registered,
subject to certain exceptions, at the close of business on March 15 or September
15, as the case may be, next preceding such interest payment date.
The notes due 2016. The notes due 2016 will mature on April 1, 2016. The
notes due 2016 will bear interest from March 18, 2004 at the rate per annum of
5.25%, payable semiannually on April 1 and October 1 of each year, commencing
October 1, 2004, to the persons in whose names such notes are registered,
subject to certain exceptions, at the close of business on March 15 or September
15, as the case may be, next preceding such interest payment date.
The notes will not be entitled to the benefit of any sinking fund.
The notes will be our senior unsecured obligations and will rank equal in
right of payment with all of our other existing and future unsecured and
unsubordinated debt. The notes will be effectively subordinated in right of
payment to our existing and future senior secured indebtedness to the extent of
the assets securing that indebtedness.
The notes will be issued only in fully registered form, without coupons, in
denominations of $1,000 and any integral multiple of $1,000. The notes will be
payable at the principal corporate trust office of the paying agent, which
initially will be an office or agency of the trustee, or an office or agency
maintained by us for such purpose, in the Borough of Manhattan, The City of New
York. Notes may be presented for exchange or registration of transfer at the
office of the security registrar.
S-9
OPTIONAL REDEMPTION
We may redeem all or a portion of the notes, at our option, at any time or
from time to time as set forth below. We will mail notice to registered holders
of the notes of our intent to redeem on not less than 30 nor more than 60 days'
notice. We may redeem the notes at a redemption price equal to the greater of:
- 100% of the principal amount plus accrued and unpaid interest to the
redemption date; or
- the sum of the present values of the remaining scheduled payments of
principal and interest (exclusive of interest accrued to the date of
redemption) discounted to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate plus (1) 20 basis points with respect to the 2010 notes or
(2) 25 basis points with respect to the 2016 notes, plus accrued interest
on the principal amount being redeemed to the redemption date.
"Business Day" means any calendar day that is not a Saturday, Sunday or
legal holiday in New York, New York and on which commercial banks are open for
business in New York, New York.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term ("Remaining Life") of the notes to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the notes.
"Comparable Treasury Price" means, with respect to any redemption date, (A)
the average of four Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if the Independent Investment Banker obtains fewer than four
such Reference Treasury Dealer Quotations, the average of all such Quotations.
"Independent Investment Banker" means an independent investment banking
institution of national standing appointed by us.
"Reference Treasury Dealer" means (i) Citigroup Global Markets Inc., Morgan
Stanley & Co. Incorporated and UBS Securities LLC and their respective
successors, provided, however, that if any of the foregoing shall cease to be a
primary U.S. Government securities dealer in the United States (a "Primary
Treasury Dealer"), we will substitute therefor another Primary Treasury Dealer
and (ii) any other Primary Treasury Dealer selected by us.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Independent Investment Banker, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Independent Investment Banker by such
Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such
redemption date.
"Treasury Rate" means, with respect to any redemption date, (i) the yield,
under the heading which represents the average for the immediately preceding
week, appearing in the most recently published statistical release designated
"H.15(519)" or any successor publication which is published weekly by the Board
of Governors of the Federal Reserve System and which establishes yields on
actively traded United States Treasury securities adjusted to constant maturity
under the caption "Treasury Constant Maturities," for the maturity corresponding
to the Comparable Treasury Issue (if no maturity is within three months before
or after the Remaining Life, yields for the two published maturities most
closely corresponding to the Comparable Treasury Issue shall be determined and
the Treasury Rate shall be interpolated or extrapolated from such yields on a
straight line basis, rounding to the nearest month) or (ii) if such release (or
any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semiannual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date. The Treasury Rate shall be calculated on the third
Business Day preceding the redemption date.
S-10
MODIFICATION
The indenture will provide that modifications and amendments of the
indenture may be made by us and the trustee under the indenture only with the
consent of the holders of not less than a majority in aggregate principal amount
of the notes issued under the indenture and affected by such modification or
amendment. However, without the consent of any holders of notes, we and the
trustee may supplement the indenture in respect of the matters described in the
accompanying prospectus under "Description of Debt Securities -- Meetings,
Modifications and Waiver."
No such modification or amendment may, without the consent of each holder
of the notes affected thereby:
- change the maturity of the principal of, or any installment of principal
of or interest on, any such note,
- reduce the principal amount of, or any premium or interest on, any such
note,
- change the coin or currency in which any such note or any premium or
interest thereon is payable,
- impair the right to institute suit for the enforcement of any payment on
or with respect to any such note,
- reduce the percentage in principal amount of outstanding notes, the
consent of whose holders is required for modification or amendment of the
indenture or for waiver of compliance with certain provisions of the
indenture or for waiver of certain defaults,
- change any obligations of ours to maintain an office or agency in the
places and for the purposes required by the indenture, or
- modify any of the above provisions.
BOOK-ENTRY SYSTEM
The notes will be issued in the form of one or more registered global
securities and will be deposited with, or on behalf of The Depository Trust
Company, as Depository under the indenture, and registered in the name of DTC's
nominee.
DTC has advised us as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a "banking organization"
within the meaning of the New York banking law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the provisions
of section 17A of the Securities Exchange Act of 1934, as amended. DTC was
created to hold securities of its participants and to facilitate the clearance
and settlement of securities transactions among its participants in such
securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations, some of
whom (and/or their representatives) own DTC. Access to DTC's book-entry system
is also available to others, such as banks, brokers, dealers and trust
companies, that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
Upon the issuance of a global security in registered form, DTC will credit,
on its book-entry registration and transfer system, ownership of beneficial
interests in notes represented by such global security to the accounts of
institutions that have accounts with DTC or its nominee. Ownership of beneficial
interests in the global security will be limited to participants or persons that
may hold interests through participants. Ownership of beneficial interests by
participants in the global security will be shown on, and the transfer of that
ownership interest will be effected only through, records maintained by DTC or
its nominee. Ownership of beneficial interests in the global security by persons
that hold through a participant will be shown on, and the transfer of that
ownership interest within such participant will be effected only through,
records maintained by such participant. The laws of some jurisdictions require
that certain purchasers of securities
S-11
take physical delivery of such securities in definitive form. Such laws may
impair the ability to own or to transfer beneficial interests in the notes as
long as they continue to be issued in the form of a global security.
So long as DTC or its nominee is the registered owner of a global security,
it will be considered the sole owner or holder of the notes represented by such
global security for all purposes under the indenture. Except as set forth below,
owners of beneficial interests in such global security will not be entitled to
have the notes represented thereby registered in their names, will not receive
or be entitled to receive physical delivery of certificates representing the
notes and will not be considered the owners or holders thereof under the
indenture.
Payment of principal of and any interest on the notes represented by a
global security will be made to DTC or its nominee, as the registered owner or
the holder of the global security. Neither we, the trustee nor any paying agent
or registrar for the notes will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the global security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
We have been advised by DTC that DTC will credit participants' accounts
with payments of principal or interest on the payment date thereof in amounts
proportionate to their respective beneficial interests in the principal amount
of the global security as shown on the records of DTC. We expect that payments
by participants to owners of beneficial interests in the global security held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers registered in "street name," and will be the responsibility of such
participants.
A global security may not be transferred except as a whole to a nominee or
successor of DTC. Notes represented by a global security will be exchangeable
for certificated securities with the same terms only if: (i) DTC is at any time
unwilling or unable to continue as depositary or DTC ceases to be a clearing
agency registered under the Securities Exchange Act of 1934, (ii) we at any time
and in our sole discretion determine not to have the notes represented by a
global security or (iii) an event of default under the indenture occurs and is
continuing.
NOTICES
Notices to holders of registered securities will be given by mail to the
holder's address as it appears in our security register.
FURTHER ISSUES
We may from time to time, without notice to or consent of the holders of
the notes, issue additional notes of the same tenor, coupon and other terms as
the notes, so that such notes and the notes offered hereby shall form a single
series. We refer to this additional issuance of notes as a "further issue."
References herein to the notes shall include, unless the context otherwise
requires, any further notes issued as described in this paragraph.
GOVERNING LAW
The indenture and the notes will be governed by and construed in accordance
with the laws of the State of New York without regard to conflicts of laws.
REGARDING THE TRUSTEE
The indenture contains specific limitations on the rights of the trustee,
should it become a creditor of ours, to obtain payment of claims in specific
cases, or to realize on specific property received in respect of a claim as
security or otherwise. The trustee will be permitted to engage in other
transactions. However, if the trustee acquires any conflicting interest when the
notes are in default under specified circumstances, it must eliminate the
conflict within 90 days or resign unless it satisfies specified conditions.
The Bank of New York acts as trustee under various indentures of ours. We
and some of our subsidiaries at various times maintain deposit accounts and
conduct our banking transactions with The Bank of New York in the ordinary
course of business.
S-12
UNDERWRITING
Citigroup Global Markets Inc., Morgan Stanley & Co. Incorporated and UBS
Securities LLC are acting as joint bookrunning managers of the offering and
representatives of the underwriters named below.
Subject to the terms and conditions stated in the underwriting agreement
dated the date of this prospectus supplement, each underwriter named below has
agreed to purchase, and we have agreed to sell to that underwriter, the
principal amount of notes set forth opposite the underwriter's name.
PRINCIPAL AMOUNT OF PRINCIPAL AMOUNT OF
UNDERWRITER 2010 NOTES 2016 NOTES
----------- ------------------- -------------------
Citigroup Global Markets Inc.............. $ 140,000,000 $ 93,334,000
Morgan Stanley & Co. Incorporated......... 140,000,000 93,333,000
UBS Securities LLC........................ 140,000,000 93,333,000
Banc of America Securities LLC............ 48,000,000 32,000,000
J.P. Morgan Securities Inc. .............. 48,000,000 32,000,000
Lehman Brothers Inc. ..................... 48,000,000 32,000,000
ABN AMRO Incorporated..................... 12,000,000 8,000,000
BNP Paribas Securities Corp. ............. 12,000,000 8,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................. 12,000,000 8,000,000
------------- -------------
Total..................................... $ 600,000,000 $ 400,000,000
============= =============
The underwriting agreement provides that the obligations of the
underwriters to purchase the notes included in this offering are subject to
approval of legal matters by counsel and to other conditions. The underwriters
are obligated to purchase all the notes if they purchase any of the notes.
The underwriters propose to offer some of the notes directly to the public
at the public offering price set forth on the cover page of this prospectus
supplement and some of the notes to dealers at the public offering price less a
concession not to exceed 0.35% of the principal amount of the 2010 notes and
0.40% of the principal amount of the 2016 notes. The underwriters may allow, and
dealers may reallow, a concession not to exceed 0.25% of the principal amount of
each of the 2010 notes and the 2016 notes on sales to other dealers. After the
initial offering of the notes to the public, the representatives may change the
public offering prices and concessions.
The following table shows the underwriting discounts and commissions that
we are to pay to the underwriters in connection with this offering (expressed as
a percentage of the principal amount of the notes).
PER 2010 PER 2016
NOTE TOTAL NOTE TOTAL
-------- ---------- -------- ----------
Underwriting Discount.......... 0.6125% $3,675,000 0.6750% $2,700,000
In connection with the offering, Citigroup Global Markets Inc., on behalf
of the underwriters, may purchase and sell notes in the open market. These
transactions may include over-allotment, syndicate covering transactions and
stabilizing transactions. Over-allotment involves syndicate sales of notes in
excess of the principal amounts of notes to be purchased by the underwriters in
the offering, which creates a syndicate short position. Syndicate covering
transactions involve purchases of the notes in the open market after the
distribution has been completed in order to cover syndicate short positions.
Stabilizing transactions consist of certain bids or purchases of notes made for
the purpose of preventing or retarding a decline in the market prices of the
notes while the offering is in progress.
The underwriters also may impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when
Citigroup Global Markets Inc., in covering syndicate short positions or making
stabilizing purchases, repurchases notes originally sold by that syndicate
member.
S-13
Any of these activities may have the effect of preventing or retarding a
decline in the market prices of the notes. They may also cause the price of the
notes to be higher than the prices that otherwise would exist in the open market
in the absence of these transactions. The underwriters may conduct these
transactions in the over-the-counter market or otherwise. If the underwriters
commence any of these transactions, they may discontinue them at any time.
We estimate that our total expenses for this offering will be $600,000.
The underwriters have performed investment banking, commercial banking and
advisory services for us, from time to time, for which they have received
customary fees and expenses. The underwriters may, from time to time, engage in
transactions with and perform services for us in the ordinary course of their
business.
We have agreed to indemnify the underwriters and certain controlling
persons against certain liabilities, including certain liabilities under the
Securities Act of 1933, as amended, or to contribute to payments which the
underwriters may be required to make in respect of any such liabilities.
LEGAL MATTERS
The validity of the notes will be passed upon for us by Debevoise &
Plimpton LLP, New York, New York. Skadden, Arps, Slate, Meagher & Flom LLP, New
York, New York, will pass upon certain legal matters for the underwriters.
EXPERTS
The consolidated financial statements as of and for the years ended
December 31, 2003 and December 31, 2002 from our Annual Report on Form 10-K for
the year ended December 31, 2003, incorporated by reference in this prospectus,
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report (which report expresses an unqualified opinion and contains
explanatory paragraphs for the adoption of Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets" and the application of
procedures relating to certain disclosures of financial statement amounts
related to the 2001 financial statements that were audited by other auditors who
have ceased operations and for which Deloitte & Touche LLP has expressed no
opinion or other form of assurance other than with respect to such disclosures);
and the related financial statement schedule as of and for the years ended
December 31, 2003 and 2002, appearing in our Annual Report on Form 10-K for the
year ended December 31, 2003, has been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is incorporated by
reference in this prospectus, and have been so incorporated in reliance upon the
reports of such firm given upon their authority as experts in accounting and
auditing.
The consolidated financial statements for the year ended December 31, 2001
from our Annual Report on Form 10-K for the year ended December 31, 2003
incorporated by reference in this prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports with
respect thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
On April 9, 2002, we announced that we engaged Deloitte & Touche LLP to
replace Arthur Andersen LLP as our independent auditors. During the year ended
December 31, 2001 and the subsequent interim period preceding the change of
auditors, we had no disagreements with Arthur Andersen LLP on any matter of
accounting principles or practices, financial statement disclosures or auditing
scope or procedures which, if not resolved to Arthur Andersen LLP's
satisfaction, would have caused it to make reference to the disagreement in
connection with its report. Our audit and finance committee and board of
directors have no reason to question the quality or integrity of the audit and
other assurance services previously provided to us by Arthur Andersen LLP.
S-14
PROSPECTUS
$6,070,000,000
INTERNATIONAL PAPER COMPANY
DEBT SECURITIES, PREFERRED STOCK, COMMON STOCK,
DEPOSITARY SHARES, WARRANTS, STOCK PURCHASE CONTRACTS AND
STOCK PURCHASE UNITS
INTERNATIONAL PAPER CAPITAL TRUST IV
INTERNATIONAL PAPER CAPITAL TRUST VI
TRUST PREFERRED SECURITIES FULLY AND UNCONDITIONALLY
GUARANTEED BY INTERNATIONAL PAPER COMPANY
---------------------
We may offer, from time to time, debt securities, preferred stock, common
stock, depositary shares, warrants, contracts to purchase shares of our common
stock or stock purchase units consisting of (1) a stock purchase contract and
(2) our debt securities, the trust preferred securities or debt obligations of
third parties, including United States Treasury securities, that are pledged to
secure the stock purchase unit holders' obligations to purchase our common stock
under the stock purchase contracts.
Specific terms of these securities will be provided in one or more
supplements to this prospectus. You should read this prospectus and any
applicable prospectus supplement carefully before you invest.
International Paper Capital Trust IV and International Paper Capital Trust
VI are Delaware statutory trusts. Each trust may offer, from time to time, trust
preferred securities. We will guarantee the payments of dividends and payments
on liquidation or redemption of the trust preferred securities, as described in
this prospectus and in an applicable prospectus supplement. We will own the
trust interests represented by the common securities to be issued by each trust.
Each trust exists for the sole purpose of issuing its trust interests and
investing the proceeds in debt securities, unless an applicable prospectus
supplement indicates otherwise.
Our common stock is listed on the New York Stock Exchange under the symbol
"IP."
---------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS MARCH 27, 2003.
TABLE OF CONTENTS
PAGE
----
Special Note Regarding Forward-Looking
Statements.......................... ii
International Paper Company........... 1
The Trusts............................ 1
Use of Proceeds....................... 3
Ratio of Earnings to Fixed Charges and
Earnings to Fixed Charges and
Preferred Stock Dividends........... 3
Description of Debt Securities........ 4
Description of Capital Stock.......... 20
Description of Warrants............... 27
Limitation on Issuance of Bearer
Securities.......................... 29
Description of Trust Preferred
Securities and Trust Guarantees..... 30
Description of Stock Purchase
Contracts and Stock Purchase
Units............................... 34
Plan of Distribution.................. 35
Where You Can Find More Information... 36
Validity of Securities................ 37
Experts............................... 37
This prospectus is part of a joint registration statement filed by
International Paper Company and the trusts with the Securities and Exchange
Commission using a "shelf" registration process. Under this shelf process, we
may sell any combination of the securities described in this prospectus in one
or more offerings up to an aggregate offering price of $6,070,000,000. This
prospectus provides you with a general description of the securities we and the
trusts may offer. Each time we or the trusts sell securities, we or the trusts
will provide a prospectus supplement that will contain specific information
about the terms of that offering. The prospectus supplement may also add, update
or change information contained in this prospectus. If there is any
inconsistency between the information in this prospectus and any applicable
prospectus supplement, you should rely on the information in the applicable
prospectus supplement. You should read both this prospectus and any applicable
prospectus supplement, together with additional information described under the
heading "Where You Can Find More Information."
The registration statement containing this prospectus, including the
exhibits to the registration statement, provides additional information about
us, the trusts and the securities to be offered. The registration statement,
including the exhibits, can be read at the SEC web site or at the SEC offices
mentioned under the heading "Where You Can Find More Information."
You should rely only on the information contained in this prospectus and
the information to which we have referred you. We have not authorized anyone to
provide you with information that is different. This prospectus may only be used
where it is legal to sell these securities. The information in this prospectus
may only be accurate on the date of this document.
All references to "we," "us," "our," or "International Paper" in this
prospectus are to International Paper Company.
i
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including information included or incorporated by
reference in this prospectus, contains certain forward-looking statements
concerning our financial condition, results of operations and business.
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:
- the timing and strength of an economic recovery in the U.S. and changes
to international economic conditions;
- the relative value of the U.S. dollar compared with other foreign
currencies, especially the Euro;
- economic conditions in developing countries, specifically Brazil and
Russia;
- the effects of continued geographical unrest and uncertainty;
- the strength of demand for our products and changes in overall demand;
- the effects of competition from domestic and foreign producers;
- the level of housing starts;
- our ability to continue to realize anticipated cost savings;
- the performance of our manufacturing operations;
- the results of legal proceedings;
- changes in the cost or availability of raw materials;
- changes in interest rates and plan assets values which could have an
impact on reported earnings and shareholder's equity; or
- the cost of compliance with environmental laws and other governmental
regulations.
In light of these risks, uncertainties, and assumptions, the
forward-looking events discussed in this prospectus and any future prospectus
supplement might not occur.
ii
INTERNATIONAL PAPER COMPANY
We are a global forest products, paper and packaging company that is
complemented by an extensive distribution system, with primary markets and
manufacturing operations in the United States, Canada, Europe, the Pacific Rim,
and South America. Substantially all of our businesses have experienced, and are
likely to continue to experience, cycles relating to available industry capacity
and general economic conditions. We are a New York corporation and were
incorporated in 1941 as the successor to the New York corporation of the same
name organized in 1898.
In the United States at December 31, 2002, we operated 28 pulp, paper and
packaging mills, 87 converting and packaging plants, 27 wood products
facilities, seven specialty chemicals plants. Production facilities at December
31, 2002 in Europe, Asia, Latin America, South America and Canada included 13
pulp, paper and packaging mills, 45 converting and packaging plants, 11 wood
products facilities, two specialty panels and laminated products plants and
seven specialty chemicals plants. We distribute printing, packaging, graphic
arts, maintenance and industrial products through over 283 distribution branches
located primarily in the United States. At December 31, 2002, we owned or
managed approximately 9 million acres of forestlands in the United States, 1.5
million acres in Brazil and had, through licenses and forest management
agreements, harvesting rights on government-owned timberlands in Canada and
Russia.
At December 31, 2002, through Carter Holt Harvey, a New Zealand company
which is approximately 50.5% owned by us, we operated five mills producing pulp,
paper, packaging and tissue products, 24 converting and packaging plants and 67
wood products manufacturing and distribution facilities, primarily in New
Zealand and Australia. Carter Holt Harvey distributes paper and packaging
products through six distribution branches located in New Zealand and Australia.
In New Zealand, Carter Holt Harvey owns approximately 810,000 acres of
forestlands.
Our principal executive offices are located at 400 Atlantic Street,
Stamford, Connecticut 06921 and our telephone number is (203) 541-8000.
THE TRUSTS
We created two Delaware statutory trusts, each pursuant to a declaration of
trust executed by us as sponsor for each trust and their respective trustees.
The trusts are named International Paper Capital Trust IV and International
Paper Capital Trust VI. We refer to the trusts, collectively, as the trusts.
We have filed, as an exhibit to the registration statement of which this
prospectus is a part, a form of Amended and Restated Declaration of Trust for
each trust which contains the terms and conditions under which the trusts will
issue and sell their preferred securities and common securities. We refer to
each Amended and Restated Declaration of Trust as a declaration with respect to
that trust.
Unless an applicable prospectus supplement provides otherwise, each trust
exists solely to:
- issue and sell preferred securities, which we refer to as trust preferred
securities. The proceeds of the trust preferred securities will be
invested in a specified series of our debt securities;
- issue and sell common securities, which we refer to as trust common
securities. The trust common securities will be issued and sold to us in
exchange for cash. The proceeds from the sale will be invested in
additional series of our debt securities; and
- engage in other activities only as are necessary, convenient or
incidental to the above two purposes.
Neither trust will borrow money, issue debt, reinvest proceeds derived from
investments, pledge any of its assets, nor otherwise undertake or permit to be
undertaken any activity that would cause it to not be classified as a grantor
trust for United States federal income tax purposes.
We will own all of the trust common securities. The holder of the trust
common securities will receive payments that will be made on a ratable basis
with the trust preferred securities. However, the right of the holder of the
trust common securities to payment in respect of distributions and payments upon
liquidation,
1
redemption or otherwise will be subordinated to the right of the trust preferred
securities holders if there is a continuing event of default under the
declaration.
We will acquire trust common securities having an aggregate liquidation
amount equal to the percentage set forth in the applicable prospectus supplement
of the total capital of each trust.
Each trust will have a term of 40 years, but may end earlier if its
declaration so provides.
We will pay all fees and expenses related to each trust and the offering of
the trust preferred securities by each trust.
The principal place of business of each trust is c/o International Paper
Company, 400 Atlantic Street, Stamford, Connecticut 06921. The telephone number
is: (203) 541-8000.
The trustees of each trust will conduct the business and affairs of their
respective trusts. The trustees' duties and obligations will be governed by the
declaration of their respective trust. Each trust's trust common securities
holders will be entitled to appoint, remove, replace, or change the number of
trustees for their respective trust.
Each trust will include the following trustees:
- at least one regular trustee, which is a person who is an employee or
officer of or who is affiliated with us;
- at least one property trustee, which is a financial institution that is
not affiliated with us and which will act as property trustee and
indenture trustee for the purposes of the Trust Indenture Act of 1939, as
amended, pursuant to the terms described in an applicable prospectus
supplement; and
- at least one Delaware trustee, which is an individual resident of, or a
legal entity with a principal place of business in, the State of
Delaware, unless the trust's property trustee maintains a principal place
of business in the State of Delaware and otherwise meets the requirements
of applicable law.
The trustees of each trust are collectively referred to as the trustees.
Unless otherwise indicated in an applicable prospectus supplement, the property
trustee will be The Bank of New York and the Delaware trustee will be The Bank
of New York (Delaware), with its Delaware office located at White Clay Center,
Route 273, Newark, Delaware 19711.
2
USE OF PROCEEDS
Unless otherwise indicated in an applicable prospectus supplement, we will
use the net proceeds from the sale of the offered securities for general
corporate purposes. The trusts will use all proceeds from the sale of trust
preferred securities to purchase our debt securities. We may provide additional
information on the use of the net proceeds from the sale of the offered
securities in an applicable prospectus supplement relating to the offered
securities.
RATIO OF EARNINGS TO FIXED CHARGES AND EARNINGS
TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth our ratio of earnings to fixed charges and
earnings to fixed charges and preferred stock dividends on a historical basis
for each of the five years in the period ended December 31, 2002.
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------
1998 1999 2000 2001 2002
---- ---- ---- ---- ----
Ratio of earnings to fixed charges.......................... 1.38 1.27 1.42 --(1) 1.26
Ratio of earnings to fixed charges and preferred stock
dividends................................................. 1.38 1.27 1.42 --(2) 1.26
---------------
(1) Our deficiency in earnings necessary to cover fixed charges was $1,379.9
million for the year ended December 31, 2001.
(2) Our deficiency in earnings necessary to cover fixed charges and preferred
stock dividends was $1,379.9 million for the year ended December 31, 2001.
For purposes of computing the ratio of earnings to fixed charges and the
ratio of earnings to fixed charges and preferred stock dividends, earnings
include pre-tax earnings before extraordinary items and cumulative effect of
accounting changes, interest expense, the estimated interest factor in rent
expense (which, in our opinion, approximates one-third of rent expense)
preferred dividends of subsidiaries, adjustments for undistributed equity
earnings and the amortization of capitalized interest. Fixed charges include
interest incurred (including amounts capitalized), the estimated interest factor
in rent expense and preferred dividends of subsidiaries.
3
DESCRIPTION OF DEBT SECURITIES
We may issue, from time to time, debt securities directly to the public, to
the trusts or as part of a stock purchase unit. The debt securities offered by
this prospectus and any applicable prospectus supplement will be our unsecured
obligations and will be either senior or subordinated debt. Senior debt will be
issued under a senior debt indenture. Subordinated debt will be issued under a
subordinated debt indenture. The senior debt indenture and the subordinated debt
indenture are sometimes referred to in this prospectus individually as an
"indenture" and collectively as the "indentures." Forms of the indentures have
been filed as exhibits to, or incorporated by reference in, the registration
statement of which this prospectus is part.
We have summarized the material provisions of the indentures and the debt
securities. You should read the more detailed provisions of the applicable
indenture, including the defined terms, for provisions that may be important to
you. You should also read the particular terms of a series of debt securities,
which will be described in more detail in an applicable prospectus supplement.
Copies of the indentures may be obtained from us or the applicable trustee. So
that you may easily locate the more detailed provisions, the numbers in
parentheses below refer to sections in the applicable indenture or, if no
indenture is specified, to sections in each of the indentures. Wherever
particular sections or defined terms of the applicable indenture are referred
to, the sections or defined terms are incorporated by reference into this
prospectus.
GENERAL
The indentures do not limit the amount of debt securities that we may issue
under the indentures, nor do they limit us from incurring or issuing other
secured or unsecured debt.
Unless otherwise specified in an applicable prospectus supplement, the debt
securities issued under the senior indenture will rank equally with all of our
other unsecured and unsubordinated obligations. The debt securities issued under
the subordinated indenture will be subordinate and junior in right of payment,
as more fully described in the subordinated indenture, to all of our senior
indebtedness. See "Description of Debt Securities -- Subordination of
Subordinated Debt Securities."
The applicable prospectus supplement will describe the following terms and
provisions as they relate to the particular series of debt securities:
- the title of the debt securities;
- whether the debt securities are senior debt securities or subordinated
debt securities;
- any limit on the aggregate principal amount of the debt securities of
that series;
- whether the debt securities are to be issuable as registered securities
or bearer securities, or both;
- whether any of the debt securities will be issuable, in whole or in part,
in temporary or permanent global form or in the form of book-entry
securities and, if so, the circumstances under which a global security or
securities or book-entry securities may be exchanged for debt securities
registered in the name of, or any transfer of a global or book-entry
securities may be registered to, a person other than the depositary for
such temporary or permanent global securities or book-entry securities or
its nominee;
- the price or prices, expressed as a percentage of the aggregate principal
amount, at which the debt securities will be issued;
- the date or dates on which the debt securities will mature;
- the rate or rates per year at which the debt securities will bear
interest, if any, and the date from which any interest will accrue and
any conditions under which such interest payments may be deferred;
- the dates on which interest payments on the debt securities are due, the
regular record date for any interest payable on any debt securities which
are registered securities on any interest payment date, and the extent to
and the manner in which interest on a temporary global security is to be
paid on the
4
interest payment dates, if other than as described under "Description of
Debt Securities -- Global and Book-Entry Debt Securities";
- any mandatory or optional sinking fund or analogous provisions;
- each office or agency where the principal, premium, if any, and interest
on the debt securities will be payable, or the debt securities may be
presented for registration of transfer or exchange;
- the date, if any, after which and price or prices at which the debt
securities may be redeemed, in whole or in part, pursuant to any optional
or mandatory redemption provisions;
- a detailed description of the terms of any optional or mandatory
redemption provisions regarding a particular series of debt securities
within a series or a redemption option of holders upon the conditions
defined in the applicable indenture;
- the denominations in which any debt securities, which are registered
securities, will be issuable, if other than denominations of $1,000 and
any integral multiple of $1,000, and the denomination or denominations in
which any debt securities which are bearer securities will be issuable,
if other than the denomination of $5,000 and any integral multiple of
$5,000;
- the currency or currency units of payment of principal of and any
premium, if any, and interest on the debt securities;
- any index used to determine the amount of payments of principal of and
any premium, if any, and interest on the debt securities and the manner
in which the amounts will be determined;
- the terms and conditions, if any, pursuant to which the debt securities
are convertible or exchangeable into a security or securities of ours;
- any other terms of the debt securities consistent with the provisions of
the applicable indenture; and
- descriptions of any special provisions for the payment of additional
amounts regarding the debt securities (Section 3.1).
We may also issue debt securities under the indentures upon the exercise of
warrants. See "Description of Warrants."
We may also issue debt securities as original issue discount securities,
which are securities, including zero-coupon securities, which are issued at a
price significantly lower than the amount payable upon their stated maturity.
These securities provide that upon redemption or acceleration of the stated
maturity, an amount less than the amount payable upon the stated maturity,
determined in accordance with the terms of the debt securities, will become due
and payable. Specific United States federal income tax considerations applicable
to original issue discount securities will be described in any applicable
prospectus supplement.
In addition, specific United States federal income tax or other
considerations applicable to any debt securities denominated other than in
United States dollars, and to any debt securities which provide for application
of an index to determine principal and interest, will be described in any
applicable prospectus supplement.
We may, in certain circumstances, without notice to or consent of the
holders of the debt securities, issue additional debt securities having the same
terms and conditions as the debt securities issued under this prospectus and any
applicable prospectus supplement, so that such additional debt securities and
the debt securities offered under this prospectus and any applicable prospectus
supplement, form a single series, and references in this prospectus and any
applicable prospectus supplement to the debt securities shall include, unless
the context otherwise requires, any further debt securities issued as described
in this paragraph. We refer to such issuance of additional debt securities as a
further issue.
Purchasers of debt securities after the date of any further issue will not
be able to differentiate between the debt securities sold as part of the further
issue and previously issued debt securities. If we were to issue debt securities
with a greater amount of original issue discount, persons that are subject to
United States
5
federal income taxation, who purchase debt securities after such further issue,
may be required to accrue greater amounts of original issue discount than they
would otherwise have accrued with respect to the debt securities. This may
affect the price of outstanding debt securities as a result of a further issue.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
We may issue debt securities of a series in definitive form solely as
registered securities, solely as bearer securities, or both. Interest coupons
will be attached to bearer securities, unless otherwise indicated in an
applicable prospectus supplement. (Section 2.1) The applicable indenture may
also provide that debt securities of a series may be issued in temporary or
permanent global form or as book-entry securities that will be deposited with,
or on behalf of, The Depository Trust Company, or DTC, or another depositary
named by us and identified in an applicable prospectus supplement for such
series. (Sections 2.1 and 2.4).
Any bearer security, including any debt security that is exchangeable for a
bearer security or that is in global form and is either a bearer security or
exchangeable for bearer securities, will not be mailed or otherwise delivered to
any location in the United States (as defined under "Limitations on Issuance of
Bearer Securities"). A bearer security, other than temporary global debt
securities and bearer securities that satisfy the requirements of United States
Treasury Regulations Section 1.163-5(c)(2)(i)(D)(3)(iii), may not be delivered
in definitive form, and no interest will be paid on them, unless the person
entitled to receive it furnishes written certification of the beneficial
ownership of the bearer security, as required by Treasury Regulation Sections
1.163-5(c)(2)(i)(D)(3) or an electronic certificate described in Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(3)(ii). For bearer securities issued in
permanent global form, certification must be given in connection with notation
of a beneficial owner's interest in it upon the original issuance of the debt
security. (Section 3.3) See "-- Global and Book-Entry Debt Securities" and
"Limitations on Issuance of Bearer Securities" below.
Registered securities of any series will be exchangeable for other
registered securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations. In addition, if debt
securities of any series are issuable as both registered securities and bearer
securities, at the option of the holder, upon request confirmed in writing, and
subject to the terms of the applicable indenture, bearer securities (with all
unmatured coupons, except as provided below, and all matured coupons in default)
of such series will be exchangeable into registered securities of the same
series of any authorized denominations and of a like aggregate principal amount
and tenor.
Bearer securities surrendered in exchange for registered securities between
a regular or special record date and the relevant date for payment of interest
will be surrendered without the coupon relating to that interest payment.
Interest accrued at the time the bearer securities are exchanged for the
registered security will be payable only to the holder of the applicable coupon
when due, in accordance with the terms of the applicable indenture. Accrued
interest will not be payable in respect of the registered security that is
exchanged for the bearer security. Bearer securities will not be issued in
exchange for registered securities. (Section 3.5)
Each bearer security, other than a temporary global bearer security, and
any coupon attached thereto, will bear the following legend:
"Any United States person who holds this obligation will be subject to
limitations under the United States income tax laws, including the
limitations provided in sections 165(j) and 1287(a) of the Internal Revenue
Code."
A book-entry security may not be registered for transfer or exchange, other
than as a whole by DTC to a nominee or by a nominee to the depositary, unless:
- DTC or its nominee notifies us that it is unwilling or unable to continue
as depositary;
- DTC ceases to be qualified as required by the applicable indenture;
- we instruct the trustee, in accordance with the applicable indenture,
that the book-entry securities will be so registrable and exchangeable;
6
- an event of default has occurred and is continuing regarding the series
of debt securities evidenced by the book-entry securities; or
- other circumstances exist as are specified in an applicable prospectus
supplement. (Section 3.5).
Debt securities may be presented for exchange as provided above, and
registered securities may be presented for registration of transfer (with the
form of transfer endorsed thereon duly executed), at the office of the security
registrar or at the office of any transfer agent designated by us for such
purposes regarding any series of debt securities and referred to in an
applicable prospectus supplement, without service charge and upon payment of any
taxes and other governmental charges as described in the applicable indenture.
Such transfer or exchange will be effected upon the security registrar or
transfer agent, as the case may be, being satisfied with the documents of title
and identity of the person making the request.
We have appointed the trustee as security registrar. (Section 3.5) If an
applicable prospectus supplement refers to any transfer agents, in addition to
the security registrar, initially designated by us regarding any series of debt
securities, we may at any time rescind the designation or may change the
location through which the transfer agent acts. However, if debt securities of a
series are issuable solely as registered securities, we must maintain a transfer
agent in each place of payment for such series. If debt securities of a series
are issuable as bearer securities, we must maintain, in addition to the security
registrar, a transfer agent in a place of payment for such series that is
located outside of the United States. We may at any time designate additional
transfer agents regarding any series of debt securities. (Section 10.2)
Upon any redemption in part, unless otherwise indicated in an applicable
prospectus supplement, we will not be required to:
- issue, register the transfer of, or exchange debt securities of any
series during the period beginning at the opening of business 15 days
before selection of any debt securities of such series for redemption,
and ending at the close of business on:
- the day the relevant notice of redemption is mailed, if debt securities
of the series are issuable only as registered securities;
- the first day of publication of the relevant notice of redemption, if
debt securities of the series are issuable as bearer securities; or
- the day the relevant notice of redemption is mailed, if debt securities
of the series may be issued as either bearer or registered securities
and there is no publication;
- register the transfer of, or exchange, any registered security or portion
of a registered security that is called for redemption, except for the
unredeemed portion of any registered security that is partially redeemed;
or
- exchange any bearer security called for redemption, unless exchanged for
a registered security of the same series and a like tenor, and which is
immediately surrendered for redemption. (Section 3.5)
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable prospectus supplement, payment
of any principal, premium, if any, and interest on bearer securities will be
made, subject to any applicable laws and regulations, at the offices of the
paying agents located outside the United States that we designate at various
times. The paying agent may make payment by check, or by transfer to an account
maintained by the payee with a bank located outside of the United States.
Unless otherwise indicated in an applicable prospectus supplement, payment
of interest on bearer securities at any interest payment date will be made only
upon surrender of the applicable coupon to the paying agent. (Section 10.1) No
payment regarding any bearer security will be made at any of our offices or
agencies in the United States, by check mailed to any address in the United
States, or by transfer to an account maintained with a bank located in the
United States. However, payments of any principal, premium, if any, and interest
on bearer securities denominated and payable in U.S. dollars must be made at the
office of our paying agent in the Borough of Manhattan, The City of New York,
but only if full payment in U.S. dollars
7
is illegal or effectively precluded by exchange controls or similar restrictions
at all offices or agencies located outside the Untied States. (Section 10.2)
Unless otherwise indicated in an applicable prospectus supplement:
- payment of any principal, premium, if any, and interest on registered
securities will be made at the office of the paying agent or paying
agents designated by us, but we or the paying agent may make any interest
payment by check mailed to the address described in the security register
for the person entitled to the interest payment;
- payment of any interest installments on registered securities will be
made to the person in whose name the security is registered at the close
of business on the regular record date for the interest payment (Section
3.7);
- the corporate trust office of the trustee in The City of New York will be
designated as a paying agent for us for payments regarding debt
securities which are issuable solely as registered securities; and
- we will maintain, subject to the limitations described above in the case
of bearer securities, a paying agent outside of the United States for
payments regarding debt securities which are issuable solely as bearer
securities or as both registered and bearer securities.
An applicable prospectus supplement will specify the name of any other
paying agent located within the United States and any paying agent located
outside the United States and initially designated by us for the debt
securities. We may at any time designate additional paying agents, rescind the
designation of any paying agent, or approve a change in the office through which
any paying agent acts.
If a series of debt securities of a series are issuable solely as
registered securities, we will maintain a paying agent in each place of payment
for such series.
If a series of debt securities are issuable as bearer securities we will
maintain:
- a paying agent in the Borough of Manhattan, The City of New York for
payments regarding any registered securities of the series, and for
payments regarding bearer securities of the series but only in the
circumstances described above; and
- a paying agent in a place of payment located outside the United States
where debt securities of such series and any coupons pertaining to such
series may be presented and surrendered for payment.
However, if the debt securities of such series are listed on The Stock
Exchange of the United Kingdom and the Republic of Ireland, the
Luxembourg Stock Exchange or any other stock exchange located outside the
United States, and that stock exchange requires, we will maintain a
paying agent in London, Luxembourg, or any other required city located
outside the United States, as the case may be, for the debt securities of
such series. (Section 10.2)
Payment of any principal, premium, if any, and interest on book-entry
securities registered in the name of any depositary or its nominee will be made
to the depositary or nominee as the registered owner of the global security
representing the book-entry securities. We expect the depositary, upon receipt
of any payment of principal, premium, or interest, to immediately credit the
participants' accounts in an amount proportionate to their respective beneficial
interests as shown on the records of the depositary or its nominee.
Neither we, the trustee, the securities registrar nor any paying agent for
the debt securities will have any responsibility or liability for any aspect of
the records relating to, or payments made on account of, beneficial ownership
interests in the book-entry securities, nor will we or they have any
responsibility or liability for maintaining, supervising or reviewing any
records relating to beneficial ownership interests.
All moneys paid by us to a paying agent in respect of any principal,
premium, if any, or interest on any debt security and which is unclaimed for two
years after the amount becomes due and payable will be repaid to us. After that
time the holder of the debt security or coupon can look only to us for payment.
(Section 10.3)
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GLOBAL AND BOOK-ENTRY DEBT SECURITIES
If so specified in an applicable prospectus supplement, the portion of a
series of debt securities which are issuable as bearer securities will initially
be represented by one or more temporary or permanent global debt securities,
without interest coupons, to be deposited with a common depositary in London for
the Euro-clear System and CEDEL S.A. for credit to the designated accounts.
Unless otherwise indicated in an applicable prospectus supplement, each
temporary global debt security, on or after 40 days following its issuance, may
be exchanged for definitive bearer securities, definitive registered securities,
all or a portion of a permanent global debt security, or any combination
thereof, as specified in an applicable prospectus supplement and upon written
certification in the form and to the effect described under "-- Form, Exchange,
Registration and Transfer." No bearer security, including a debt security in
permanent global form, that is delivered in exchange for a portion of a
temporary or permanent global debt security will be mailed or otherwise
delivered in connection with the exchange to any location in the United States.
(Sections 3.4 and 3.5)
Any person with a beneficial interest in a permanent global debt security
will be treated by us, the trustee, or any agent of ours or the trustee, as the
holder of the outstanding debt securities represented by the global debt
security, in the principal amount as is specified in a written statement by
either the holder of the global debt security or, if the security is in bearer
form, the operator of Euro-clear or CEDEL S.A., and provided to the trustee by
such person. (Section 2.3)
If debt securities to be sold in the United States are designated by us in
an applicable prospectus supplement as book-entry securities, a global security
representing the book-entry securities will be deposited in the name of Cede &
Co. as nominee for DTC representing the debt securities to be sold in the United
States. Upon deposit of the book-entry securities, DTC will credit an account
maintained or designated by an institution to be named by us or any purchaser of
the debt securities represented by the book-entry securities with an aggregate
amount of debt securities equal to the total number of debt securities that have
been so purchased. An applicable prospectus supplement will describe the
specific terms of any depositary arrangement regarding any portion of a series
of debt securities to be represented by one or more global securities.
Beneficial interests in the debt securities will only be evidenced by, and
transfers of the debt securities will only be effected through, records
maintained by DTC and the institutions that are its participants.
CERTAIN COVENANTS
We have covenanted in the senior indenture that with regard to the senior
debt securities, we will not, nor will we permit any subsidiary (as defined
below) to, issue, assume or guarantee any debt for money borrowed that is
secured by a mortgage, pledge, security interest or lien (a "mortgage" or
"mortgages") upon any forestlands or principal manufacturing facility (each as
defined below) which we or it now owns or hereafter acquires, unless we or it
provides that the senior debt securities are secured equally and ratably with,
or with preference to, that debt. The foregoing restrictions will not apply if
an applicable prospectus supplement provides otherwise, and will not apply to
the following:
- mortgages on any property acquired, constructed or improved by us or any
subsidiary after April 12, 1999 which are created within 180 days after
such acquisition (or, in the case of property constructed or improved,
after the completion and commencement of commercial operation of such
property, whichever is later) to secure or provide for the payment of the
purchase price or cost thereof, or existing mortgages on property
acquired, provided such mortgages shall not apply to any property
theretofore owned by us or any subsidiary other than theretofore
unimproved real property;
- mortgages on any property acquired from a corporation that is merged with
or into us or a subsidiary, or mortgages outstanding at the time any
corporation becomes a subsidiary;
- mortgages for us or any subsidiary; or
- any extension, renewal or replacement, or successive extensions, renewals
or replacements, in whole or in part, of any of the mortgages listed
above.
9
The following types of transactions, among others, will not be deemed to
create debt secured by a mortgage:
- the sale, mortgage or other transfer of timber in connection with an
arrangement under which we are, or a subsidiary is, obligated to cut such
timber or a portion of such timber to provide the transferee with a
specified amount of money however determined; and
- mortgages for governmental bodies of the United States, which secure
advances, progress payments or other payments pursuant to any contract or
statute, or which secure indebtedness incurred to finance the purchase
price or cost of constructing or improving the property subject to such
mortgages. (Section 10.7 of senior indenture)
However, we and any subsidiary may, without securing the senior debt
securities, issue, assume or guarantee secured debt which would otherwise be
subject to the foregoing restrictions; provided that the aggregate amount of
secured debt that we may issue, assume or guarantee will not exceed 10% of the
net tangible assets of us and our consolidated subsidiaries as of the latest
fiscal year-end, when considered together with all other such debt and
attributable debt (as defined below) then existing in respect of sale and lease-
back transactions (as defined below) of us and our subsidiaries, other than sale
or lease-back transactions whose proceeds were applied to the retirement of
funded debt (as defined below). (Section 10.7 of senior indenture)
The term "net tangible assets" means the aggregate assets, net of
applicable reserves and other properly deductible items, less current
liabilities and goodwill, tradenames, trademarks, patents, unamortized debt
discount and expense (to the extent included in the aggregate assets), and other
similar intangibles. Such amounts will be as described in our most recent
consolidated balance sheet, and computed in accordance with generally accepted
accounting principles.
We will not, nor will we permit any subsidiary to, lease from any person
for greater than a three year term any forestlands or principal manufacturing
facility which was owned (and in the case of any such principal manufacturing
facility, placed in commercial operation by us or a subsidiary for more than 180
days) and then sold or transferred to that person by us or a subsidiary (a "sale
and lease-back transaction"), unless either:
- we or the subsidiary would be entitled to incur debt secured by a
mortgage on the property to be leased, in an amount equal to the
attributable debt regarding such sale and lease-back transaction, without
equally and ratably securing the senior debt securities; or
- we apply, or covenant that we will apply, an amount equal to the fair
value of the leased property, as determined by our board of directors, to
the retirement, within 180 days of the effective date of any such sale
and lease-back transaction, of debt securities or our funded debt which
ranks equally with the senior debt securities. (Section 10.8 of senior
indenture)
The term "forestlands" means property in the United States which contains
standing timber which is, or is expected upon completion of a growth cycle then
in process to become, of a commercial quantity and merchantable quality.
However, this does not include any land which at the time is held by, or has
been, or after the date of this prospectus is, transferred to a subsidiary
primarily for development and/or sale rather than for the production of lumber
or other timber products. (Section 1.1 of senior indenture)
The term "principal manufacturing facility" means any paperboard, paper or
pulp mill, or paper converting plant of ours or any subsidiary which is located
within the United States, other than any mill or plant or portion thereof which:
- is financed by obligations issued by a state, territory, or possession of
the United States, any political subdivision, or the District of
Columbia, the interest on which is excludible from its holders' gross
income pursuant to the provisions of Section 103(a) of the Internal
Revenue Code or any successor to such provision, as in effect at the time
the obligations are issued; or
- is not, in the opinion of our board of directors, of material importance
to the total business conducted by us and our subsidiaries. (Section 1.1
of senior indenture)
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The term "subsidiary" means any corporation of which at least a majority of
the outstanding stock having by its terms the ordinary voting power to elect a
majority of its board of directors is at the time directly or indirectly owned
or controlled by us, by any one or more subsidiaries, or by us and one or more
subsidiaries, irrespective of whether any other class or classes of the
corporation's stock has or might have voting power by reason of the happening of
any contingency. (Section 1.1 of senior indenture)
The term "attributable debt" means the present value at the time of
determination of the lessee's net rental payment obligation over the term,
including any extensions, of any lease entered into in connection with a sale
and leaseback transaction. The present value will be determined by using a
discount rate equal to the weighted average yield to maturity of the senior debt
securities then outstanding, compounded semiannually. The average will be
weighted by the principal amount of the senior debt securities of each series
or, in the case of original issue discount securities, the amount to be
determined as provided in the definition of "outstanding" in the applicable
senior indenture. (Section 1.1 of senior indenture)
The term "funded debt" means debt which by its terms matures at, or is
extendible or renewable at the option of the obligor to, a date more than twelve
months after the date the debt is created. (Section 1.1 of senior indenture)
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
Unless otherwise indicated in an applicable prospectus supplement, the
following provisions will apply to the subordinated debt securities.
The subordinated debt securities will, to the extent described in the
subordinated indenture, be subordinate in right of payment to the prior payment
in full of all senior indebtedness (as defined below). Upon any payment or
distribution of assets to creditors pursuant to any liquidation, dissolution,
winding up, reorganization, assignment for the benefit of creditors, marshaling
of assets or any bankruptcy, insolvency, debt restructuring or similar
proceedings in connection with any insolvency or bankruptcy proceeding of ours,
the holders of senior indebtedness will be entitled to payment in full of any
principal, premium, if any, and interest on such senior indebtedness, before the
holders of the subordinated debt securities will be entitled to any payment in
respect of any principal, premium, if any, or interest on the subordinated debt
securities. (Section 16.2 of subordinated indenture) Because of the
subordination, our creditors may ratably recover less than the holders of senior
indebtedness, and more than the holders of the subordinated debt securities,
upon liquidation or insolvency.
If the maturity of any subordinated debt securities is accelerated, the
holders at that time of all senior indebtedness then outstanding will first be
entitled to receive payment in full of all amounts due thereon, before the
holders of the subordinated debt securities will be entitled to receive any
payment of any principal, premium, if any, and interest on the subordinated debt
securities. (Section 16.3 of subordinated indenture)
No principal, premium, or interest payments may be made in respect of the
subordinated debt securities if:
- a default in any payment has occurred and is continuing regarding any
senior indebtedness;
- an event of default resulting in the acceleration of the maturity of any
senior indebtedness has occurred and is continuing; or
- any judicial proceeding is pending regarding any such default. (Section
16.4 of subordinated indenture)
For purposes of the subordination provisions of the subordinated indenture,
the payment, issuance and delivery of cash, property or securities, other than
stock and our specified subordinated securities, upon conversion of a
subordinated debt security, is a principal payment in respect of the
subordinated debt security.
The subordinated indenture does not limit or prohibit the incurrence of
additional senior indebtedness, including indebtedness that is senior to the
subordinated debt securities, but subordinate to our other obligations. The
senior debt securities constitute senior indebtedness under the subordinated
indenture.
11
The term "senior indebtedness" includes all amounts due on and obligations
incurred in connection with any of the following, whether outstanding at the
date the subordinated indenture is executed or incurred or created after the
subordinated indenture is executed, unless the instrument creating or evidencing
the obligation provides that it is not senior in right of payment to the
subordinated debt securities, or is equally senior with or junior to the
subordinated debt securities (Section 1.1 of subordinated indenture):
- our indebtedness, obligations and other liabilities, contingent or
otherwise, incurred for money borrowed or evidenced by bonds, debentures,
notes or similar instruments;
- our reimbursement obligations and other liabilities, contingent or
otherwise, regarding letters of credit, bankers' acceptances issued for
our account, interest rate protection agreements or currency exchange or
purchase agreements;
- obligations and liabilities, contingent or otherwise, in respect of
leases by us as lessee which are accounted for as capitalized lease
obligations on our balance sheet in accordance with generally accepted
accounting principles;
- all direct or indirect guarantees or similar agreements in respect of,
and obligations or liabilities (contingent or otherwise) to purchase or
otherwise acquire or assure a creditor against our loss in respect of,
indebtedness, obligations or liabilities of another person described in
any of the three immediately preceding provisions;
- any indebtedness described in any of the four immediately preceding
provisions and which is secured by any mortgage, pledge, lien or other
encumbrance existing on property owned or held by us, regardless of
whether the indebtedness secured thereby has been assumed by us; and
- any deferrals, renewals, extensions and refunds of, or amendments,
modifications or supplements to, any indebtedness, obligation or
liability described in any of the five immediately preceding provisions.
The applicable prospectus supplement may further describe the provisions,
if any, applicable to the subordination of the subordinated debt securities of a
particular series.
CONVERSION RIGHTS
If applicable, the terms pursuant to which debt securities of any series
are convertible into or exchangeable for our common stock or our other
securities will be described in an applicable prospectus supplement. These terms
will describe whether conversion or exchange is mandatory, at the option of the
holder, or at our option. These terms may include provisions pursuant to which
the number of shares of our common stock or our other securities to be received
by the holders of debt securities would be subject to adjustment.
EVENTS OF DEFAULT
Each of the following events is an event of default under the applicable
indenture, regarding debt securities of any series, unless otherwise indicated
in an applicable prospectus supplement:
- failure to pay any interest on a debt security of such series when due,
continuing for 30 days, and in the case of the subordinated indenture,
whether or not the payment is prohibited by the subordination provisions;
- failure to pay any principal of or premium on any debt security of such
series when due, and in the case of the subordinated indenture, whether
or not the payment is prohibited by the subordination provisions;
- failure to deposit any sinking fund payment when due, in respect of any
debt security of such series, and in the case of the subordinated
indenture whether or not the deposit is prohibited by the subordination
provisions;
12
- our failure to perform any other covenant under the applicable indenture
or debt security, other than one included solely for the benefit of a
series of debt securities other than such series, and continuing for 60
days after written notice has been provided in accordance with the
applicable indenture;
- specific events in bankruptcy, insolvency or reorganization involving us;
and
- any other event of default regarding the debt securities of such series.
(Section 5.1)
If an event of default regarding the outstanding debt securities of any
series occurs and is continuing, either the trustee or the holders of at least
25% in aggregate principal amount of the outstanding debt securities of such
series may declare, by notice as provided in the applicable indenture, the
principal amount of the debt securities of such series to be due and immediately
payable.
For any debt security that is an original issue discount security or whose
principal amount is not then determinable, the amount due and immediately
payable is that portion of the principal amount of the debt security (or other
amount in lieu of the principal amount) as is specified in the terms of the debt
security. At any time after a declaration of acceleration regarding debt
securities of any series has been made, but before a judgment or decree for
payment of money has been obtained by the trustee, the holders of a majority in
aggregate principal amount of the outstanding debt securities of such series
may, under specific circumstances, rescind and annul such acceleration. (Section
5.2)
The indentures provide that, subject to the trustee's duty to act with the
required standard of care during default, the trustee has no obligation to
exercise any of its rights or powers under the applicable indenture at the
request or direction of any of the holders, unless the holders have offered
reasonable indemnity to the trustee. (Sections 6.1, 6.3) Subject to the trustee
indemnification provisions, the holders of a majority in aggregate principal
amount of the outstanding debt securities of any series may direct the time,
method and place of conducting any proceeding for any remedy available to the
trustee, or of exercising any trust or power conferred upon the trustee,
regarding the debt securities of such series. (Section 5.12)
We will annually furnish to the applicable trustee a statement as to the
performance of specific obligations under the applicable indenture and as to any
default in performance. (Section 10.9)
DEFEASANCE
We may, if so specified regarding any particular series of debt securities,
discharge our indebtedness and certain of our obligations under the applicable
indenture, by depositing with the applicable trustee funds or obligations issued
or guaranteed by the United States, unless an applicable prospectus supplement
indicates otherwise.
Defeasance and Discharge. The indentures provide that, if so specified
regarding the debt securities of any series, we will be discharged from all
obligations in respect of the debt securities of such series upon deposit in
trust of cash and/or U.S. government obligations with the applicable trustee,
the payment of interest and principal upon which will provide sufficient cash to
pay any principal, premium, each installment of interest, and any sinking fund
payments on the debt securities of such series at the stated maturity of such
payments and in accordance with the terms of the applicable indenture and debt
securities of such series. This will include, in the case of subordinated debt
securities, the subordination provisions described under "-- Subordination of
Subordinated Debt Securities."
The term "U.S. government obligations" means direct obligations of the
United States or of an agency or instrumentality of the United States that is,
or is unconditionally guaranteed as, a full faith and credit obligation of the
United States and that is not callable or redeemable at the option of the issuer
thereof. The term also includes certain depository receipts with respect to such
obligations.
Such a deposit in trust may be made only if, among other things, the
following conditions are met:
- we have delivered to the applicable trustee an opinion of counsel to the
effect that the holders of such series of debt securities will not
recognize income, gain or loss for United States federal income tax
purposes as a result of such deposit, defeasance and discharge, and will
be subject to United States
13
federal income tax as if no deposit, defeasance and discharge had
occurred, which opinion will be based upon either of the following:
- we having received a ruling from the Internal Revenue Service, or the
Internal Revenue Service having published such a ruling; or
- there having been a change in applicable United States federal income
tax law since the date of the applicable indenture; and
- it will not result in the delisting of the debt securities of such
series, if then listed on any domestic or foreign securities exchange;
and
- in the case of the subordinated debt securities:
- no default, beyond any applicable grace period, in the payment of any
principal, premium, if any, or interest on any senior indebtedness will
have occurred and be continuing; or
- no other default regarding any senior indebtedness will have occurred
and be continuing and have caused the acceleration of the senior
indebtedness. (Section 4.3).
The restrictions within this provision will not apply to specific
obligations relating to:
- temporary debt securities and exchange of debt securities,
- registration of transfer or exchange of debt securities of such series,
- replacement of stolen, lost or mutilated debt securities of such series,
- maintenance of paying agencies to hold monies for payment in trust, and
- payment of any additional amounts required as a result of United States
withholding taxes imposed on payments to non-United States persons.
Defeasance of Certain Obligations. The senior indenture provides that, if
so specified regarding the senior debt securities of any series, we may omit
compliance with the restrictive covenants described under "Certain Covenants"
and any other covenants applicable to the senior debt securities which are
subject to covenant defeasance, and that such omission will not be an event of
default regarding the debt securities of such series, upon a deposit in trust
with the trustee. Such deposit in trust must be of cash and/or U.S. government
obligations, which through the scheduled payment of interest and principal
thereon will provide sufficient cash to pay any principal, premium, each
installment of interest, and any sinking fund payments on the senior debt
securities of such series at the stated maturity of such payments in accordance
with the senior indenture and senior debt securities of such series. Our
obligations under the senior indenture and senior debt securities of such
series, other than regarding such covenant, will remain in full force and
effect.
Such a trust may be established only if, among other things, we have
delivered to the trustee an opinion of counsel to the effect that:
- the holders of the senior debt securities of such series will not
recognize income, gain or loss for United States federal income tax
purposes as a result of such deposit and defeasance of specific
obligations and will be subject to United States federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if the deposit and defeasance had not occurred; and
- the senior debt securities of such series, if then listed on any domestic
or foreign securities exchange, will not be delisted as a result of the
deposit and defeasance. (Section 10.11 of senior indenture)
In the event we exercise our option to omit compliance with the covenants
described under "Certain Covenants" regarding the senior debt securities of any
series, as described above, and the senior debt securities of such series are
declared due and payable because of the occurrence of any event of default, then
the amount of money and U.S. government obligations on deposit with the trustee
must be sufficient to pay amounts due on the senior debt securities of such
series at the time of their stated maturity, but may be insufficient to pay
14
amounts due on the senior debt securities of such series at the time of the
acceleration resulting from the default. We will in any event remain liable for
the payments as provided in the senior indenture.
MEETINGS, MODIFICATION AND WAIVER
Unless otherwise indicated in an applicable prospectus supplement,
modifications of and amendments to the indentures may be made by us and the
trustee under the applicable indenture only with the consent of the holders of
not less than 66 2/3% of the aggregate principal amount of the outstanding debt
securities issued under the applicable indenture and affected by such
modification or amendment.
No such modification or amendment may, without the consent of each holder
of the outstanding debt security affected thereby, do any of the following:
- change the stated maturity of the principal of, or any installment of
principal of or interest on, any debt security;
- reduce the principal amount of, premium, if any, or interest on, any debt
security;
- change any obligation of ours to pay additional amounts;
- reduce the amount of principal of an original issue discount security or
any other debt security payable upon acceleration of the maturity
thereof;
- change the coin or currency in which any debt security or any premium or
interest thereon is payable;
- impair the right to institute suit for the enforcement of any payment on
or regarding any debt security;
- adversely change the right to convert or exchange, including decreasing
the conversion rate or increasing the conversion price of, the debt
security, if applicable;
- modify the subordination provisions in a manner adverse to the holders of
the subordinated debt securities, in the case of the subordinated
indenture;
- reduce the percentage of the holders, in principal amount, of any series
of outstanding debt securities whose consent is required to either modify
or amend the applicable indenture, to waive compliance with specific
provisions of the applicable indenture, or to waive specific defaults;
- reduce the requirements contained in the applicable indenture for quorum
or voting;
- change any obligations of ours to maintain an office or agency in the
places and for the purposes required by the indentures; or
- modify any of the above provisions. (Section 9.2)
However, without the consent of any holders of debt securities, we and the
trustee may supplement the indentures to, among other things:
- reflect that another entity has succeeded us and assumed our covenants
under the applicable indenture and any debt securities;
- add to our covenants for the benefit of the holders of debt securities
(and if the covenants are to be for the benefit of less than all series
of debt securities, stating which series are entitled to benefit) or to
surrender any right or power conferred upon us;
- add any additional events of default;
- provide additional provisions for bearer debt securities so long as the
action does not adversely affect the interests of holders of any debt
securities in any material respect;
- change or eliminate any of the provisions of the applicable indenture,
provided that any change or elimination will become effective only when
there are no outstanding debt securities of any series created prior to
the execution of the supplemental indenture which is entitled to the
benefit of that provision;
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- establish the form or terms of any series of debt securities and any
related coupons provided by the applicable indenture;
- make provision with respect to the conversion rights of holders pursuant
to the applicable indenture, including providing for the conversion of
the debt securities into any security or property (other than our common
stock);
- secure the notes pursuant to the requirements described above under
"-- Certain Covenants;"
- change the trustee or provide for any additional trustee; or
- cure any ambiguity or correct or supplement any inconsistency in the
indenture or in the notes or make any other provisions necessary or
desirable, as long as the action shall not adversely affect the interest
of the holders of the notes in any material respect.
The holders of at least a majority in aggregate principal amount of the
outstanding debt securities of each series may, on behalf of all holders of such
series of debt securities, waive, insofar as such series is concerned,
compliance by us with specific restrictive provisions of the applicable
indenture, unless a greater percentage is specified in the applicable prospectus
supplement. (Section 10.10) The holders of at least a majority in aggregate
principal of the outstanding debt securities of each series may, on behalf of
all holders of such series of debt securities and any coupons pertaining
thereto, waive any past default under the applicable indenture, except a
default:
- in any payment of principal, premium, if any, or interest on any debt
security of such series; and
- in respect of a covenant or provision of the applicable indenture and the
debt securities, if applicable, which cannot be modified or amended
without the consent of the holder of each outstanding debt security of
the series affected. (Section 5.13)
The applicable indenture provides that in determining whether the holders
of the requisite principal amount of outstanding debt securities have given any
request, demand, authorization, direction, notice, consent or waiver thereunder,
or are present at a meeting of holders of debt securities for quorum purposes,
the following will apply:
- the outstanding principal amount of an original issue discount security
will be the amount of the principal of the security that would be due and
payable as of the date of determination, upon acceleration of the
maturity thereof;
- the principal amount of a debt security denominated in a foreign currency
or currency units will be the U.S. dollar equivalent, determined on the
date the debt security was originally issued, of the principal amount of
the debt security;
- the principal amount of an original issue discount security denominated
in a foreign currency or currency units will be the U.S. dollar
equivalent, determined on the date of original issuance of the debt
security, of the amount that would be due and payable as of the date of
determination, upon acceleration of the maturity thereof. (Section 1.1)
The applicable indenture will contain provisions for convening meetings of
the holders of debt securities of a series if debt securities of such series are
issuable as bearer securities. (Section 13.1) A meeting may be called at any
time by the trustee, or upon request, by us or the holders of at least 10% in
principal amount of the outstanding debt securities of such series. In either
case, notice of the meeting must be given in accordance with "-- Notices" below.
(Section 13.2)
Unless otherwise provided in an applicable prospectus supplement, except
for any consent which must be given by the holder of each outstanding debt
security affected thereby, as described above, any resolution presented at a
meeting or adjourned meeting at which a quorum is present may be adopted by the
affirmative vote of the holders of a majority in principal amount of the
outstanding debt securities of such series.
Additionally, any resolution regarding any request, demand, authorization,
direction, notice, consent, waiver or other action which the indenture expressly
provides may be made, given or taken by the holders of a
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specified percentage which is less than a majority in principal amount of the
outstanding debt securities of a series, may be adopted at a meeting or
adjourned meeting duly reconvened at which a quorum is present. Adoption of a
resolution is accomplished by the affirmative vote of the holders of the
specified percentage in the principal amount of the outstanding debt securities
of such series, except for any consent which must be given by the holder of each
outstanding debt security affected thereby, as described above.
Any resolution passed or decision taken at any meeting of holders of debt
securities of any series duly held in accordance with the applicable indenture
will be binding on all holders of debt securities of such series and the related
coupons. The quorum at any meeting that is called to adopt a resolution, and at
any reconvened meeting, will be persons holding or representing a majority in
principal amount of the outstanding debt securities of a series. (Section 13.4)
CONSOLIDATION, MERGER AND SALE OF ASSETS
Unless otherwise indicated in an applicable prospectus supplement, we,
without the consent of the holders of any of the outstanding debt securities
under either indenture, may consolidate or merge with or into or, sell, lease,
transfer or otherwise dispose of our assets substantially as an entirety to, any
person that is a corporation, partnership or trust organized and validly
existing under the laws of any domestic jurisdiction, or may permit any person
to consolidate or merge with or into us or sell, lease, transfer or otherwise
dispose of its assets substantially as an entirety to us, provided that:
- any successor person must assume our obligations on the debt securities
and the applicable indenture; and
- after giving effect to the transaction no event of default, and no event
which after notice or lapse of time would become an event of default,
will have occurred and be continuing; and
- specific other conditions are met. (Section 8.1)
REDEMPTION AT THE OPTION OF HOLDERS UPON CHANGE IN CONTROL
If so specified in an applicable prospectus supplement, upon any change in
control (as defined below) of us, that occurs prior to the maturity of the debt
securities of a series and which has not been approved by our continuing
directors (as defined below), debt securities of such series may be submitted
for redemption on and after the date specified in, or determined pursuant to the
terms of the securities, in the case of debt securities of any series issuable
as bearer securities, or at any time in the case of all other debt securities,
at the option of the holders. Bearer securities may be so redeemed only in whole
and registered securities in whole or in part in increments of $1,000. Any debt
securities to be so submitted must be submitted during a period commencing on
the date of our notice described below to holders of any change in control and
expiring on the 20th business day after notice is given. We refer to this period
as the "exercise period."
Unless otherwise provided in the applicable prospectus supplement, debt
securities submitted for redemption will be redeemed on a redemption date that
will be the 15th day after expiration of the exercise period, at a redemption
price of 100% of the principal amount of the debt security, plus accrued
interest to the redemption date. Exercise of this redemption option by the
holder of a debt security will be irrevocable.
On or before the tenth day after a change in control, we are obligated,
unless the continuing directors have approved a change in control before that
date, to give notice to holders as described under "-- Notices" below, and
written notice to the trustee, regarding the change in control, the date of
expiration of the exercise period, the applicable redemption date, the
redemption price and the procedure which the holder must follow to exercise this
option. To exercise this option, the holder must deliver, on or before the
expiration of the exercise period and to one of the paying agents referred to
below, written notice of the holder's exercise of such option, together with the
debt securities regarding which option is being exercised, duly endorsed (in the
case of registered securities) for transfer. Each bearer security delivered for
redemption must be delivered with all coupons maturing after the redemption
date. If the redemption date falls between any regular record date and the next
succeeding payment date, registered securities must be accompanied by payment of
an amount equal to the interest which the registered holder is to receive on the
interest payment date.
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As used in this prospectus, a "change in control" will be deemed to have
occurred when:
- we determine that any person or related group of persons is the
beneficial owner, directly or indirectly, of 20% or more of our
outstanding common stock; or
- individuals who constitute the continuing directors cease for any reason
to constitute at least a majority of our directors. "Continuing director"
means any director who is a director on the date of this prospectus and
any director who is nominated or elected by a majority of continuing
directors who are then directors.
We could, in the future, enter into specific transactions, including
certain recapitalizations or leveraged transactions, that would increase the
amount of our indebtedness outstanding at that time but would not constitute a
change in control, or would constitute a change of control but would not trigger
the change of control purchase feature of the debt securities if approved by the
continuing directors.
If a change in control were to occur, there can be no assurance that we
would have sufficient funds to pay the change in control purchase price for all
debt securities tendered by the holders. In addition, our ability to purchase
debt securities with cash may be limited by the terms of our then-existing
borrowing agreements. A default by us on our obligation to pay the change in
control purchase price or a breach of our covenant would result in an event of
default and could result in acceleration of the maturity of our other
indebtedness, outstanding at the time, pursuant to cross-default provisions. We
will comply with the provisions of Rule 13e-4, Rule 14e-1 and any other tender
offer rules under the Exchange Act which may then be applicable and will file a
Schedule 13E-4 or any other schedule required thereunder and will otherwise
comply with all federal or state securities laws, as required, in connection
with any of the debt securities providing for redemption at the option of
holders.
NOTICES
Except as otherwise provided in the applicable indenture, notices to
holders of bearer securities will be given by publication at least twice in a
daily newspaper in the City of New York and in any other city or cities
specified in the debt securities. Notices to holders of registered securities
will be given by mail to the holder's address as it appears in the Security
Register. (Sections 1.1, 1.6)
TITLE
Title to any temporary global debt security, any bearer securities,
including bearer securities in permanent global form, and any coupons
appertaining to the securities will pass by delivery. We, the trustee and any
agent of ours or the trustee's may treat the bearer of any bearer security and
the bearer of any coupon and the registered owner of any registered security as
the absolute owner (whether or not the debt security or coupon will be overdue
and notwithstanding any notice to the contrary) for the purpose of making
payment and for all other purposes. (Section 3.8)
REPLACEMENT OF DEBT SECURITIES AND COUPONS
Any mutilated debt security or a debt security with a mutilated coupon
appertaining thereto will be replaced by us at the expense of the holder upon
surrender of the debt security to the trustee. Debt securities or coupons that
became destroyed, stolen or lost will be replaced by us at the expense of the
holder upon delivery of the trustee of the debt security and coupons or evidence
of the destruction, loss or theft satisfactory to us and the trustee; in the
case of any coupon which becomes destroyed, stolen or lost, the coupon will be
replaced by issuance of a new debt security in exchange for the debt security to
which the coupon appertains. In the case of a destroyed, lost or stolen debt
security or coupon, an indemnity satisfactory to the trustee and us may be
required at the expense of the holder of the debt security or coupon before a
replacement debt security will be issued. (Section 3.6)
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GOVERNING LAW
The indentures, the debt securities and the coupons will be governed by,
and construed in accordance with, the laws of the State of New York without
regard to principles of conflicts of laws. (Section 1.13)
REGARDING THE TRUSTEE
The indentures contain specific limitations on the rights of the trustee,
should it become a creditor of ours, to obtain payment of claims in specific
cases, or to realize on specific property received in respect of a claim as
security or otherwise. The trustee will be permitted to engage in other
transactions. However, if the trustee acquires any conflicting interest, it must
eliminate the conflict within 90 days and apply to the SEC for permission to
continue or resign.
The Bank of New York acts as trustee under various indentures. We and some
of our subsidiaries at various times maintain deposit accounts and conduct our
banking transactions with The Bank of New York in the ordinary course of their
business. The applicable prospectus supplement will describe the relationships
between us and/or certain of our subsidiaries and any other trustee named in the
applicable prospectus supplement.
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DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock at February 21, 2003 consisted of:
- 990,850,000 shares of common stock, $1.00 par value per share;
- 400,000 shares of cumulative $4 preferred stock, without par value; and
- 8,750,000 shares of serial preferred stock, $1.00 par value per share.
At February 21, 2003, there were outstanding 478,808,232 shares of common
stock. At January 31, 2003, there were employee stock options to purchase an
aggregate of approximately 37,355,685 shares of common stock. In addition,
approximately 8,330,000 shares of common stock at February 21, 2003 were
reserved for issuance upon conversion of the obligated mandatorily redeemable
preferred securities of a subsidiary trust. At February 21, 2003, we had 15,696
shares of our $4 preferred stock outstanding.
COMMON STOCK
GENERAL
Subject to the rights of the holders of any shares of our preferred stock
or $4 preferred stock, which may at the time be outstanding, common stock
holders are entitled to receive dividends as may be declared at various times by
the board of directors out of legally available funds.
The common stock holders are entitled to one vote per share on all matters
submitted to a vote of shareholders and do not have cumulative voting rights.
Common stock holders are entitled to receive, upon any liquidation of
International Paper, all remaining assets available for distribution to
shareholders after satisfaction of our liabilities and the preferential rights
of any preferred stock that may then be issued and outstanding. The outstanding
shares of common stock are, and the shares offered pursuant to any applicable
prospectus supplement will be, fully paid and nonassessable. The common stock
holders have no preemptive, conversion or redemption rights. The common stock is
listed on the New York Stock Exchange. The registrar and transfer agent for the
common stock is JPMorgan Chase Bank.
SPECIFIC PROVISIONS
Our restated certificate of incorporation, as amended, contains provisions
which:
- divide our board of directors into three classes of as nearly equal size
as possible, with directors in each class being elected for terms of
three years;
- require the affirmative vote of 80% of the outstanding shares of voting
stock to remove any director, except for cause;
- require the affirmative vote of 80% of the outstanding shares of voting
stock and a majority of the voting stock not owned by interested
stockholders (as defined below) to approve any business combination with
an interested stockholder unless:
- the business combination is approved by our board of directors at a time
when disinterested directors (as defined below) constitute a majority of
the entire board of directors; or
- in the case of a business combination involving the payment of
consideration to holders of capital stock, specific conditions concerning
the adequacy of the consideration are met;
- require the affirmative vote of 80% of the outstanding shares of voting
stock to amend or repeal either of the first two provisions described
above; and
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- require, to approve any proposal to amend or repeal either of the first
two provisions described above by an interested stockholder and upon the
recommendation of our board of directors at a time when disinterested
directors constitute a majority of our entire board of directors, the
affirmative vote of:
- 80% of the outstanding shares of voting stock; and
- a majority of the voting stock not owned by interested stockholders.
The overall effect of these provisions may be to deter or discourage
hostile takeover attempts by making it more difficult for a person who has
gained a substantial equity interest in us to effectively exercise control.
An "interested stockholder" means any owner of 10% or more of voting power.
A "disinterested director" means those directors unaffiliated with an interested
stockholder and who were on either the board of directors before the interested
stockholder became such, or who succeeded a disinterested director and were
recommended for nomination or election by a majority of the disinterested
directors.
PREFERRED STOCK
The following summarizes briefly some general terms of our preferred stock.
You should read the terms of any series of preferred stock, which will be
described in more detail in an applicable prospectus supplement. If indicated in
an applicable prospectus supplement, the terms of any series may differ from the
terms described below. You should also read the more detailed provisions of our
restated certificate of incorporation and the certificate of designation
relating to each particular series of preferred stock, which will be filed or
incorporated by reference as an exhibit to the registration statement of which
this prospectus is a part, for provisions that may be important to you.
GENERAL
Under our restated certificate of incorporation, our board of directors is
authorized, without further stockholder action, to provide for the issuance of
up to 8,750,000 shares of preferred stock. The preferred stock may be issued in
one or more series, with specific designations of:
- titles;
- dividend rates;
- any redemption provisions;
- special or relative rights in the event of the liquidation, dissolution,
distribution or winding up of International Paper;
- any sinking fund provisions;
- any conversion provisions;
- any voting rights; and
- any other preferences, privileges, powers, rights, qualifications,
limitations and restrictions, as will be described as and when
established by our board of directors.
The shares of each series of preferred stock will be, when issued, fully
paid and non-assessable and holders will have no preemptive rights in connection
with the shares.
So long as any shares of $4 preferred stock are outstanding, the
preferences, privileges and voting powers, if any, of the shares of preferred
stock of any series, and the restrictions or qualifications thereof will be
subject to the preferences, privileges and voting powers, if any, of the shares
of $4 preferred stock and the restrictions and qualifications of those shares.
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RANK
Each series of preferred stock will, regarding rights on liquidation,
winding up and dissolution, rank:
- senior to all classes of common stock and to all equity securities issued
by us, the terms of which specifically provide that the equity securities
will rank junior to each series of preferred stock. We refer to these
securities as the junior liquidation securities;
- on a parity with all equity securities issued by us, the terms of which
specifically provide that the equity securities will rank on a parity
with each series of preferred stock. We refer to these securities as
parity liquidation securities; and
- junior to all equity securities issued by us, the terms of which
specifically provide that the equity securities will rank senior to each
series of preferred stock, including the $4 preferred stock.
In addition, each series of preferred stock will, regarding dividend
rights, rank:
- senior to all equity securities issued by us, the terms of which
specifically provide that the equity securities will rank junior to each
series of preferred stock and, to the extent provided in the applicable
certificate of designation, to common stock;
- on a parity with all equity securities issued by us, the terms of which
specifically provide that the equity securities will rank on a parity
with each series of preferred stock and, to the extent provided in the
applicable certificate of designation, to common stock parity dividend
securities; and
- junior to all equity securities issued by us, the terms of which
specifically provide that the equity securities will rank senior to each
series of preferred stock, including the $4 preferred stock. As used in
any certificate of designation for these purposes, the term equity
securities will not include debt securities convertible into or
exchangeable for equity securities.
DIVIDENDS
Preferred stock holders will be entitled to receive, when and if declared
by our board of directors out of legally available funds, cash dividends at the
rates and on the dates described in an applicable prospectus supplement.
Dividends will be payable to holders of record of preferred stock as they appear
on our books, or if applicable, the records of the depositary referred to below
under the caption "-- Description of Depositary Shares," on the record dates
fixed by our board of directors. Dividends on any series of preferred stock may
be cumulative or non-cumulative.
No full dividends may be declared or paid on funds set apart for the
payment of dividends on any series of preferred stock, unless dividends will
have been paid or set apart for the payment on the parity dividend securities.
If full dividends are not so paid, each series of preferred stock will share
dividends pro rata with the parity dividend securities.
CONVERSION AND EXCHANGE
The applicable prospectus supplement for each series of preferred stock
will state the terms, if any, that shares of such series are convertible into
shares of another series of preferred stock or common stock or exchangeable for
another series of preferred stock, common stock or debt securities of ours. Our
common stock is described above under the caption "-- Common Stock."
REDEMPTION
A series of preferred stock may be redeemable at any time, in whole or in
part, at our option or the option of the holders of the shares and may be
subject to mandatory redemption pursuant to a sinking fund or otherwise upon
terms and at the redemption prices described in the applicable prospectus
supplement relating to the series.
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In the event of partial redemptions of preferred stock, whether by
mandatory or optional redemption, the shares to be redeemed will be determined
by lot or pro rata, as may be determined by our board of directors, or by any
other method determined by our board of directors to be equitable. On and after
a redemption date, unless we default in the payment of the redemption price,
dividends will cease to accrue on shares of preferred stock that are called for
redemption, and all rights of the holders of the shares will end except for the
right to receive the redemption price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
International Paper, holders of each series of preferred stock that ranks senior
to the junior liquidation securities will be entitled to receive, out of our
assets available for distribution to shareholders, before any distribution is
made on any junior liquidation securities (including common stock),
distributions upon liquidation in the amount described in an applicable
prospectus supplement relating to each series of preferred stock, plus any
accrued and unpaid dividends.
If, upon any voluntary or involuntary liquidation, dissolution or winding
up of International Paper, the amounts payable regarding the preferred stock of
any series and any other parity liquidation securities are not paid in full, the
holders of the preferred stock of the series and the parity liquidation
securities will share ratably in any distribution of our assets, in proportion
to the full liquidation preferences to which each is entitled. After payment of
the full amount of the liquidation preference to which they are entitled, the
holders of each series of preferred stock will not be entitled to any further
participation in any distribution of our assets.
VOTING RIGHTS
Except as indicated below or in an applicable prospectus supplement
relating to a particular series of preferred stock or except as expressly
required by applicable law, the holders of shares of preferred stock will have
no voting rights.
PREFERRED STOCK OUTSTANDING
Our $4 preferred stock is senior to the common stock and the preferred
stock as to the payment of dividends and distributions of assets on liquidation,
dissolution or winding up of International Paper. The $4 preferred stock bears a
dividend of $4.00 per share per annum from our surplus or net profits, but only
when and as declared by our board of directors. Dividends on the $4 preferred
stock are cumulative. Such dividends are payable quarterly in each year on the
dates as at various times may be fixed by our board of directors. Accumulated
dividends do not bear interest.
If dividends on all outstanding shares of the $4 preferred stock for all
past quarterly dividend periods and the then current quarterly period have not
been paid in full or declared and set apart for payment, no dividends, other
than those dividends payable in stock ranking junior to the $4 preferred stock,
will be declared or paid or set apart for payment on, nor will any distribution
be made to, any class of stock ranking junior to the $4 preferred stock.
Holders of the $4 preferred stock have no general voting rights but have
the right to vote in specified circumstances.
If at the time of any annual meeting of shareholders, dividends have not
been paid on the shares of the $4 preferred stock in an aggregate amount equal
to four full quarterly dividends, whether consecutive or not, then at the annual
meeting, the holders of the $4 preferred stock will have the sole right, to the
exclusion of all other classes of stock, to vote for and elect one-third, or the
nearest whole number thereto, of the total number of directors to be elected at
the annual meeting and thereafter at all meetings for the election of directors
until all arrearages of dividends accumulated on the $4 preferred stock for all
preceding dividend periods have been paid or declared and set apart for payment.
Whenever all arrearages of dividends have been paid or declared
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and set apart for payment, all powers of the holders of the $4 preferred stock
to vote for directors will end, and the tenure of all directors elected by them
will automatically end.
So long as any shares of the $4 preferred stock are outstanding, we may
not, without first obtaining a majority vote of the holders of the outstanding
shares of the $4 preferred stock:
- increase the authorized number of shares of $4 preferred stock;
- authorize, create or issue stock of any class ranking on a parity with
the $4 preferred stock as to the payment of dividends or distributions
upon dissolution, liquidation or winding up; or
- sell, lease or otherwise dispose of all or substantially all of our
assets, otherwise than by merger or consolidation.
In addition, so long as any shares of $4 preferred stock are outstanding,
we may not, without first obtaining the vote of holders of at least two-thirds
of the outstanding shares of $4 preferred stock, authorize, create or issue
stock of any class ranking, as to the payment of dividends or distribution upon
dissolution, liquidation or winding up, senior to the $4 preferred stock.
Our restated certificate of incorporation, as amended, provides that for so
long as any shares of preferred stock are outstanding, we will not issue any
shares of $4 preferred stock without first obtaining the affirmative vote of the
holders of at least a majority of the outstanding shares of preferred stock.
Upon the dissolution, liquidation or winding up of International Paper, the
holders of the $4 preferred stock will be entitled to receive out of our net
assets, whether represented by capital or surplus, the following:
- if the dissolution, liquidation or winding up is voluntary, cash in an
amount per share of $105; and
- if the dissolution, liquidation or winding up is involuntary, cash in the
amount of $100 per share.
In addition, holders will be entitled to receive, in either case, an amount
equal to all dividends accrued and unpaid on shares up to and including the date
fixed for distribution, whether or not earned or declared and, in either case,
before any distribution of the assets to be distributed is made to the holders
of stock ranking junior to the $4 preferred stock.
DEPOSITARY SHARES
The following summarizes briefly the material provisions of the deposit
agreement and the depositary shares and depositary receipts. You should read the
particular terms of any depositary shares and any depositary receipts that are
offered by us, and any deposit agreement relating to a particular series of
preferred stock, which will be described in more detail in an applicable
prospectus supplement. A copy of the form of deposit agreement, including the
form of depositary receipt, is incorporated by reference as an exhibit in the
registration statement of which this prospectus is a part.
GENERAL
We may, at our option, elect to offer fractional shares of preferred stock,
rather than full shares of preferred stock. In the event we exercise this
option, we will issue receipts for depositary shares, each of which will
represent a fraction, to be described in an applicable prospectus supplement, of
a share of a particular series of preferred stock as described below.
The shares of each series of preferred stock represented by depositary
shares will be deposited under a deposit agreement between us and a bank or
trust company selected by us and having its principal office in the United
States and having a combined capital and surplus of at least $50,000,000.
Subject to the terms of the deposit agreement, each owner of a depositary share
will be entitled to all of the rights and preferences of the preferred stock in
proportion to the applicable fraction of a share of preferred stock represented
by the depositary share, including dividend, voting, redemption, conversion and
liquidation rights.
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The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement. Depositary receipts will be distributed to
those persons purchasing the fractional shares of preferred stock in accordance
with the terms of the offering.
Pending the preparation of definitive depositary receipts, the depositary
may, upon our written order or the written order of any holder of deposited
preferred stock, execute and deliver temporary depositary receipts which are
substantially identical to, and which entitle the holders to all the rights
pertaining to, the definitive depositary receipts. Depositary receipts will be
prepared thereafter without unreasonable delay, and temporary depositary
receipts will be exchangeable for definitive depositary receipts at our expense.
DIVIDENDS AND OTHER DISTRIBUTIONS
The depositary will distribute all cash dividends and other cash
distributions received in respect of the deposited preferred stock to the record
holders of depositary shares relating to the preferred stock, in proportion to
the numbers of the depositary shares owned by such holders.
In the event of a non-cash distribution, the depositary will distribute
property it receives to the appropriate record holders of depositary shares. If
the depositary determines that it is not feasible to make a distribution, it
may, with our approval, sell the property and distribute the net proceeds from
the sale to the holders.
REDEMPTION OF STOCK
If a series of preferred stock represented by depositary shares is to be
redeemed, the depositary shares will be redeemed from the proceeds received by
the depositary resulting from the redemption, in whole or in part, of each
series of preferred stock held by the depositary. The depositary shares will be
redeemed by the depositary at a price per depositary share equal to the
applicable fraction of the redemption price per share payable in respect of the
shares of preferred stock so redeemed. Whenever we redeem shares of preferred
stock held by the depositary, the depositary will redeem, as of the same date,
the number of depositary shares representing shares of preferred stock redeemed.
If fewer than all the depositary shares are to be redeemed, the depositary
shares to be redeemed will be selected by the depositary by lot or pro rata or
by any other equitable method as may be determined by the depositary.
WITHDRAWAL OF STOCK
Any holder of depositary shares may, upon surrender of the depositary
receipts at the corporate trust office of the depositary, unless the related
depositary shares have previously been called for redemption, receive the number
of whole shares of the related series of preferred stock and any money or other
property represented by the depositary receipts. Holders of depositary shares
making withdrawals will be entitled to receive whole shares of preferred stock
on the basis described in an applicable prospectus supplement for such series of
preferred stock, but holders of whole shares of preferred stock will not
thereafter be entitled to deposit the preferred stock under the deposit
agreement or to receive depositary receipts therefor. If the depositary shares
surrendered by the holder in connection with a withdrawal exceed the number of
depositary shares that represent the number of whole shares of preferred stock
to be withdrawn, the depositary will deliver to the holder at the same time a
new depositary receipt evidencing the excess number of depositary shares.
VOTING DEPOSITED PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of any series of
deposited preferred stock are entitled to vote, the depositary will mail the
information contained in the notice of meeting to the record holders of the
depositary shares relating to such series of preferred stock. Each record holder
of the depositary shares on the record date, which will be the same date as the
record date for the relevant series of preferred stock, will be entitled to
instruct the depositary as to the exercise of the voting rights pertaining to
the amount of the preferred stock represented by the holder's depositary shares.
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The depositary will attempt, insofar as practicable, to vote the amount of
such series of preferred stock represented by the depositary shares in
accordance with the instructions, and we will agree to take all reasonable
actions that may be deemed necessary by the depositary to enable the depositary
to do so. The depositary will refrain from voting shares of the preferred stock
to the extent it does not receive specific instructions from the holder of
depositary shares representing the preferred stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may at any time be amended by agreement
between us and the depositary. However, any amendment which materially and
adversely alters the rights of the holders of the depositary shares representing
preferred stock of any series will not be effective unless the amendment has
been approved by the holders of at least the amount of the depositary shares
then outstanding representing the minimum amount of preferred stock of such
series necessary to approve any amendment that would materially and adversely
affect the rights of the holders of the preferred stock of such series. Every
holder of an outstanding depositary receipt at the time any the amendment
becomes effective, or any transferee of the holder, will be deemed, by
continuing to hold the depositary receipt, or by reason of the acquisition
thereof, to consent and agree to the amendment and to be bound by the deposit
agreement as amended thereby. The deposit agreement automatically terminates if:
- all outstanding depositary shares have been redeemed;
- each share of preferred stock has been converted into other preferred
stock or common stock or has been exchanged for debt securities; or
- a final distribution in respect of the preferred stock has been made to
the holders of depositary shares in connection with any liquidation,
dissolution or winding up of International Paper.
CHARGES OF DEPOSITARY
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will pay all
charges of the depositary in connection with the initial deposit of the relevant
series of preferred stock and any redemption of the preferred stock. Holders of
depositary receipts will pay other transfer and other taxes and governmental
charges and other charges or expenses as are expressly provided in the deposit
agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
The depositary may resign at any time by delivering to us notice of its
election to do so, and we may at any time remove the depositary, any resignation
or removal to take effect upon the appointment of a successor depositary and its
acceptance of the appointment. The successor depositary must be appointed within
60 days after delivery of the notice of resignation or removal and must be a
bank or trust company having its principal office in the United States and
having a combined capital and surplus of at least $50,000,000.
MISCELLANEOUS
The depositary will forward all reports and communications from us which
are delivered to the depositary and which we are required to furnish to the
holders of the deposited preferred stock.
Neither we nor the depositary will be liable if we are or it is prevented
or delayed by law or any circumstances beyond our or its control in performing
any obligations under the deposit agreement. Our and their obligations under the
deposit agreement will be limited to performance in good faith of our and their
duties under the deposit agreement and neither we nor they will be obligated to
prosecute or defend any legal proceeding in respect of any depositary shares,
depositary receipts or shares of preferred stock unless satisfactory indemnity
is furnished. They may rely upon written advice of counsel or accountants, or
upon information provided by holders of depositary receipts or other persons
believed to be competent and on documents believed to be genuine.
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DESCRIPTION OF WARRANTS
We may issue warrants, including warrants to purchase debt securities, as
well as other types of warrants to purchase securities. Warrants may be issued
independently or together with any securities and may be attached to or separate
from the securities. The warrants are to be issued under warrant agreements to
be entered into between us and a bank or trust company, as warrant agent. You
should read the particular terms of the warrants, which will be described in
more detail in the applicable prospectus supplement. The applicable prospectus
supplement will also state whether any of the general provisions summarized
below do not apply to the warrants being offered.
DEBT WARRANTS
The applicable prospectus supplement will describe the terms of debt
warrants offered thereby, the warrant agreement relating to the debt warrants
and the certificates representing the debt warrants, including the following:
- the title of the debt warrants;
- the aggregate number of debt warrants;
- the price or prices at which the debt warrants will be issued;
- the currency or currencies, including composite currencies or currency
units, in which the price of the debt warrants may be payable;
- the designation, aggregate principal amount and terms of the debt
securities purchasable upon exercise of the debt warrants, and the
procedures and conditions relating to the exercise of the debt warrants;
- the designation and terms of any related debt securities with which the
debt warrants are issued, and the number of the debt warrants issued with
each debt security;
- the currency or currencies, including composite currencies or currency
units, in which any principal, premium, if any, or interest on the debt
securities purchasable upon exercise of the debt warrants will be
payable;
- the date, if any, on and after which the debt warrants and the related
debt securities will be separately transferable;
- the principal amount of debt securities purchasable upon exercise of each
debt warrant, and the price at which and the currency or currencies,
including composite currencies or currency units, in which the principal
amount of debt securities may be purchased upon exercise;
- the date on which the right to exercise the debt warrants will commence,
and the date on which the right will expire;
- the maximum or minimum number of the debt warrants which may be exercised
at any time;
- a discussion of any material United States federal income tax
considerations; and
- any other terms of the debt warrants and terms, procedures and
limitations relating to the exercise of the debt warrants.
Certificates representing debt warrants will be exchangeable for new
certificates representing debt warrants of different denominations, and debt
warrants may be exercised at the corporate trust office of the warrant agent or
any other office indicated in the applicable prospectus supplement. Before the
exercise of their debt warrants, holders of debt warrants will not have any of
the rights of holders of the debt securities issuable upon exercise and will not
be entitled to payment of principal of or any premium or interest on the debt
securities issuable upon exercise.
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OTHER WARRANTS
The applicable prospectus supplement will describe the following terms of
any other warrants that we may issue:
- the title of the warrants;
- the securities (which may include preferred stock or common stock) for
which the warrants are exercisable;
- the price or prices at which the warrants will be issued;
- the currency or currencies, including composite currencies or currency
units, in which the price of the warrants may be payable;
- if applicable, the designation and terms of the preferred stock or common
stock with which the warrants are issued, and the number of the warrants
issued with each share of preferred stock or common stock;
- if applicable, the date on and after which the warrants and the related
preferred stock or common stock will be separately transferable;
- if applicable, a discussion of any material United States federal income
tax considerations; and
- any other terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants.
EXERCISE OF WARRANTS
Each warrant will entitle the holder to purchase for cash the principal
amount of debt securities or the number of shares of preferred stock or common
stock at the exercise price as will in each case be described in, or can be
determined from, the applicable prospectus supplement relating to the offered
warrants. Warrants may be exercised at any time up to the close of business on
the expiration date described in the applicable prospectus supplement. After the
close of business on the expiration date, unexercised warrants will become void.
Warrants may be exercised as described in the applicable prospectus
supplement. Upon receipt of payment and the certificate representing the warrant
properly completed and duly executed at the corporate trust office of the
warrant agent or any other offices indicated in the applicable prospectus
supplement, we will, as soon as practicable, forward the securities issuable
upon exercise. If less than all of the warrants represented by the certificate
are exercised, a new certificate will be issued for the remaining warrants.
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LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
In compliance with United States federal tax laws and regulations, bearer
securities (including debt securities that are exchangeable for bearer
securities and debt securities in permanent global form that are either bearer
securities or exchangeable for bearer securities) may not be offered, sold,
resold or delivered, directly or indirectly, in connection with their original
issuance in the United States or to United States persons, each as defined
below, except as otherwise permitted by Treasury Regulations Section 1.163-
5(c)(2)(i)(D) including offers and sales to offices of United States financial
institutions (as defined in Treasury Regulations Section 1.165-12(c)(l)(iv))
located outside the United States and which agree in writing to comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code
and the regulations thereunder. Any underwriters, agents and dealers
participating in the offering of debt securities, directly or indirectly, must
agree in writing that they will not offer, sell or resell any bearer securities
to persons within the United States or to United States persons (except as
described above) or deliver bearer securities within the United States other
than as permitted by the applicable Treasury Regulations described above. In
addition, any underwriters, agents and dealers must represent in writing that
they have in effect, in connection with the offer and sale of the debt
securities, procedures reasonably designed to ensure that their employees or
agents who are directly engaged in selling the debt securities are aware that
bearer securities cannot be offered or sold to a person who is within the United
States or is a United States person except as otherwise permitted by Treasury
Regulation Section 1.163-5(c)(2)(i)(D). Furthermore, the owner of the
obligation, or the financial institution or clearing organization through which
the owner holds the obligation, must certify to us that the owner is not a
United States person.
Bearer securities and any coupons attached hereto will bear the following
legend:
"Any United States person who holds this obligation will be subject to
limitations under the United States income tax laws, including the
limitations provided in sections 165(j) and 1287(a) of the United States
Internal Revenue Code."
The sections referred to in the above legend provide that, with exceptions, a
United States person who holds the bearer security or coupon will not be
permitted to deduct any loss, and will not be eligible for capital gain
treatment with respect to any gain realized on the sale, exchange or redemption
of the bearer security or coupon.
Purchasers of bearer securities may be affected by limitations under United
States tax laws. The applicable prospectus supplement will describe the
limitations for any bearer securities relating thereto.
For purposes of the laws and regulations described in this section, "United
States person" means:
- an individual who is, for United States federal income tax purposes, a
citizen or resident of the United States;
- a corporation, partnership or other entity created or organized in or
under the laws of the United States or of any political subdivision; or
- an estate or trust the income of which is subject to United States
federal income taxation regardless of its source.
"United States" means the United States of America, including the States and the
District of Columbia, its territories and its possessions.
29
DESCRIPTION OF TRUST PREFERRED SECURITIES AND TRUST GUARANTEES
TRUST PREFERRED SECURITIES
Each declaration will authorize the trustees of each trust to issue on
behalf of the trust one series of trust preferred securities and one series of
trust common securities. We collectively refer to the trust preferred securities
and the trust common securities as the trust securities. The trust preferred
securities will be issued to the public pursuant to the registration statement
of which this prospectus is a part, and the trust common securities will be
issued directly or indirectly to us.
The trust preferred securities will have the terms, including dividends,
redemption, voting, conversion, liquidation rights and other preferred, deferred
or other special rights or restrictions as are described in the applicable
declaration or made part of the declaration by the Trust Indenture Act.
Refer to the applicable prospectus supplement relating to the trust
preferred securities of each trust for specific terms, including:
- the distinctive designation of trust preferred securities;
- the number of trust preferred securities issued by the trust;
- the annual distribution rate, or method of determining the rate, for
trust preferred securities issued by the trust and the date or dates upon
which the distributions will be payable and any right to defer payment
thereof;
- whether distributions on trust preferred securities issued by the trust
will be cumulative, and, in the case of trust preferred securities having
cumulative distribution rights, the date or dates or method of
determining the date or dates from which distributions on trust preferred
securities issued by the trust will be cumulative;
- the amount or amounts which will be paid out of the assets of the trust
to the trust preferred securities holders upon voluntary or involuntary
dissolution, winding-up or termination of the trust;
- the terms and conditions, if any, under which trust preferred securities
may be converted into shares of our capital stock, including the
conversion price per share and the circumstances, if any, under which the
conversion right will expire;
- the terms and conditions, if any, upon which the related series of our
debt securities may be distributed to trust preferred securities holders;
- the obligation, if any, of the trust to purchase or redeem trust
preferred securities issued by the trust and the price or prices at
which, the period or periods within which and the terms and conditions
upon which trust preferred securities issued by the trust will be
purchased or redeemed, in whole or in part, pursuant to the obligation;
- the voting rights, if any, of trust preferred securities issued by the
trust in addition to those required by law, including the number of votes
per trust preferred security and any requirement for the approval by the
trust preferred securities holders, as a condition to specified action or
amendments to the applicable declaration; and
- any other relevant rights, preferences, privileges, limitations or
restrictions of trust preferred securities issued by the trust that are
consistent with the applicable declaration or applicable law.
Pursuant to the applicable declaration, the property trustee will own our
debt securities purchased by the applicable trust for the benefit of the trust
preferred securities holders and the trust common securities holders. The
payment of dividends out of money held by the applicable trust, and payments
upon redemption of trust preferred securities or liquidation of any trust, will
be guaranteed by us to the extent described below under "-- Trust Guarantees."
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Specific United States federal income tax considerations applicable to an
investment in trust preferred securities will be described in the applicable
prospectus supplement.
In connection with the issuance of trust preferred securities, each trust
will also issue one series of trust common securities. Each declaration will
authorize the regular trustees of a trust to issue on behalf of the trust one
series of trust common securities having the terms, including dividends,
conversion, redemption, voting, liquidation rights or the restrictions described
in the applicable declaration. Except as otherwise provided in the applicable
prospectus supplement, the terms of the trust common securities issued by the
trust will be substantially identical to the terms of the trust preferred
securities issued by the trust, and the trust common securities will rank on
equal terms with, and payments will be made on a ratable basis with, the trust
preferred securities. However, upon an event of default under the applicable
declaration, the rights of the holders of the trust common securities to payment
in respect of dividends and payments upon liquidation, redemption and otherwise
will be subordinated to the rights of the trust preferred securities holders.
Except in limited circumstances, the trust common securities will also carry the
right to vote and appoint, remove or replace any of the trustees of the related
trust. All of the trust common securities of each trust will be directly or
indirectly owned by us.
The applicable prospectus supplement will describe whether we and/or
certain of our subsidiaries maintain deposit accounts and conduct other banking
transactions, including borrowings in the ordinary course of business, with the
property trustee.
TRUST GUARANTEES
Below is a summary of information concerning the trust guarantees which
will be executed and delivered by us, at various times, for the benefit of the
trust preferred securities holders. The applicable prospectus supplement will
describe any significant differences between the actual terms of the trust
guarantees and the summary below. This summary does not describe all exceptions
and qualifications contained in the indenture or all of the terms of the trust
guarantees. You should read the trust guarantees for provisions that may be
important to you. Copies of the trust guarantees have been filed with the
Securities and Exchange Commission and incorporated by reference as an exhibit
to the registration statement of which this prospectus is a part.
General. We will irrevocably and unconditionally agree, to the extent
described in the trust guarantees, to pay in full, to the trust preferred
securities holders of each trust, the trust guarantee payments (as defined
below), except to the extent paid by the trust, as and when due, regardless of
any defense, right of set-off or counterclaim which the trust may have or
assert. Our obligation to make a trust guarantee payment may be satisfied by
direct payment of the required amounts by us to the trust preferred securities
holders or by causing the applicable trust to pay the required amounts to the
holders.
The following payments regarding the trust preferred securities, which we
refer to as the trust guarantee payments, to the extent not paid by the
applicable trust, will be subject to the trust guarantees, without duplication:
- any accrued and unpaid distributions which are required to be paid on the
trust preferred securities, to the extent the trust will have funds
legally available;
- the redemption price, including all accrued and unpaid distributions,
payable out of legally available funds, regarding any trust preferred
securities called for redemption by the trust; and
- upon a liquidation of the trust, other than in connection with the
distribution of our debt securities to the trust preferred securities
holders or the redemption of all of the trust preferred securities issued
by the trust, the lesser of:
- the aggregate of the liquidation preference and all accrued and unpaid
distributions on the trust preferred securities to the date of payment;
and
- the amount of assets of the trust remaining available for distribution to
the holders of the trust's trust preferred securities in liquidation of
the trust.
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Covenants of International Paper. In each trust guarantee, we will
covenant that, so long as any trust preferred securities issued by the
applicable trust remain outstanding, and if there will have occurred any event
that would constitute an event of default under the trust guarantee or the
declaration, we will not do any of the following:
- declare or pay any dividend on, make any distributions regarding, or
redeem, purchase or acquire or make a liquidation payment regarding, any
of our capital stock;
- make any payment of the principal of and any premium and interest on or
repay, repurchase or redeem any debt securities issued by us which rank
junior to the debt securities owned by the trust; and
- make any guarantee payments regarding the trust preferred securities,
other than pursuant to the trust guarantees.
However, even during such circumstances, we may:
- purchase or acquire our capital stock in connection with the satisfaction
by us of our obligations under any employee benefit plans or pursuant to
any contract or security outstanding on the first day of any such event
requiring us to purchase our capital stock;
- reclassify our capital stock or exchange or convert one class or series
of our capital stock for another class or series of our capital stock;
- purchase fractional interests in shares of our capital stock pursuant to
the conversion or exchange provisions of such capital stock or the
security being converted or exchanged;
- declare dividends or distributions in our capital stock, including stock
dividends paid by us which consist of the stock of the same class as that
on which any dividend is being paid;
- redeem or repurchase any rights pursuant to a rights agreement; and
- make payments under the trust guarantee related to the trust preferred
securities.
Amendment and Assignment. Except regarding any changes which do not
adversely affect the rights of trust preferred securities holders of any trust,
in which case no vote will be required, the trust guarantees regarding the trust
preferred securities may be changed only with the prior approval of the holders
of not less than a majority in liquidation preference of the outstanding trust
preferred securities. The manner of obtaining the approval of trust preferred
securities holders will be as described in the applicable prospectus supplement.
All guarantees and agreements contained in the trust guarantees will bind our
successors, assigns, receivers, trustees and representatives and for the benefit
of the holders of the outstanding trust preferred securities.
Termination of the Trust Guarantees. Each trust guarantee will end as to
the trust preferred securities issued by the applicable trust upon any of the
following:
- full payment of the redemption price of all trust preferred securities;
- distribution of our debt securities held by the trust to the trust
preferred securities holders; or
- full payment of the amounts payable in accordance with the declaration
upon liquidation of the trust.
Each trust guarantee will continue to be effective or will be reinstated,
as the case may be, if at any time any holder of trust preferred securities
issued by the applicable trust must restore payment of any sums paid under the
trust preferred securities or the trust guarantee.
Each trust guarantee represents a guarantee of payment and not of
collection. Each trust guarantee will be deposited with the property trustee to
be held for the benefit of the trust preferred securities of the applicable
trust. The property trustee will have the right to enforce the trust guarantees
on behalf of the trust preferred securities holders of the applicable trust. The
holders of not less than a majority in aggregate liquidation preference of the
trust preferred securities of the applicable trust will have the right to direct
the time, method and place of conducting any proceeding for any remedy available
in respect of the applicable trust guarantee, including the giving of directions
to the property trustee.
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If the property trustee fails to enforce a trust guarantee as provided
above, any holder of trust preferred securities of the applicable trust may
institute a legal proceeding directly against us to enforce its rights under the
trust guarantee, without first instituting a legal proceeding against the
applicable trust, or any other person or entity. Each trust guarantee will not
be discharged except by payment of the trust guarantee payments in full to the
extent not paid by the applicable trust, and by complete performance of all
obligations under the trust guarantee.
Governing Law. Each trust guarantee will be governed by, and construed in
accordance with, the laws of the State of New York.
The applicable prospectus supplement will set out the status of the trust
guarantee.
EXPENSES OF THE TRUSTS
We will agree to pay all of the costs, expenses or liabilities of the
trusts, other than obligations of the trusts to pay to the holders of any trust
preferred securities or trust common securities the amounts due pursuant to the
terms of the trust preferred securities or trust common securities.
33
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
We may issue stock purchase contracts representing contracts obligating
holders to purchase from us, and us to sell to the holders, a specified or
varying number of shares of our common stock, preferred stock or depository
shares at a future date or dates. Alternatively, the stock purchase contracts
may obligate us to purchaser from holders, and obligate holders to sell to us, a
specified or varying number of shares of common stock, preferred stock or
depositary shares. The price per share of our common stock, preferred stock or
depository shares and number of shares of our common stock may be fixed at the
time the stock purchase contracts are entered into or may be determined by
reference to a specific formula set forth in the stock purchase contracts. The
stock purchase contracts may be entered into separately or as a part of a stock
purchase unit that consists of (a) a stock purchase contract; (b) warrants;
and/or (c) debt securities, trust preferred securities or debt obligations of
third parties (including United States treasury securities, other stock purchase
contracts or common stock), that would secure the holders's obligations to
purchase or to sell, as the case may be, common stock, preferred stock or
depository shares under the stock purchase contract. The stock purchase
contracts may require us to make periodic payments to the holders of the stock
purchase units or vice-versa. These payments may be unsecured or prefunded and
may be paid on a current or on a deferred basis. The stock purchase contracts
may require holders to secure their obligations under the contracts in a
specified manner.
The applicable prospectus supplement will describe the terms of any stock
purchase contract or stock purchase unit and will contain a discussion of the
material United States federal income tax considerations applicable to the stock
purchase contracts and stock purchase units. The description in the applicable
prospectus supplement will not necessarily be complete, and reference will be
made to the stock purchase contracts, and, if applicable, collateral or
depositary arrangements, relating to the stock purchase contracts or stock
purchase units.
34
PLAN OF DISTRIBUTION
We and/or the trusts may sell the securities covered by this prospectus in
any of three ways (or in any combination):
- to or through underwriters or dealers;
- directly to a limited number of purchasers or to a single purchaser; or
- through agents.
In addition, we may enter into derivative transactions with third parties,
or sell securities not covered by this prospectus to third parties in privately
negotiated transactions. If the applicable prospectus supplement indicates, in
connection with such a transaction the third parties may, pursuant to this
prospectus and the applicable prospectus supplement, sell securities covered by
this prospectus and applicable prospectus supplement. If so, the third party may
use securities borrowed from others to settle such sales and may use securities
received from us to close out any related short positions. We may also loan or
pledge securities covered by this prospectus and the applicable prospectus
supplement to third parties, who may sell the loaned securities or, in an event
of default in the case of a pledge, sell the pledged securities pursuant to this
prospectus and the applicable prospectus supplement.
The applicable prospectus supplement will set forth the terms of the
offering of the securities covered by this prospectus, including:
- the name or names of any underwriters, dealers or agents and the amounts
of securities underwritten or purchased by each of them;
- the initial public offering price of the securities and the proceeds to
us and any discounts, commissions or concessions allowed or reallowed or
paid to dealers; and
- any securities exchanges on which the securities may be listed.
Any initial public offering price and any discounts or concessions allowed
or reallowed or paid to dealers may be changed from time to time.
Underwriters or the third parties described above may offer and sell the
offered securities from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices
determined at the time of sale. If underwriters are used in the sale of any
securities, the securities will be acquired by the underwriters for their own
account and mat be resold from time to time in one or more transactions
described above. The securities may be either offered to the public through
underwriting syndicates represented by managing underwriters, or directly by
underwriters. Generally, the underwriters' obligations to purchase the
securities will be subject to certain conditions precedent. The underwriters
will be obligated to purchase all of the securities if they purchase any of the
securities.
If indicated in an applicable prospectus supplement, we and/or the trusts
may sell the securities through agents from time to time. The applicable
prospectus supplement will name any agent involved in the offer or sale of the
securities and any commissions we and/or the trusts pay to them. Generally, any
agent will be acting on a best efforts basis for the period of its appointment.
We and/or trusts may authorize underwriters, dealers or agents to solicit offers
by certain purchasers to purchase the securities from us and/or the trusts at
the public offering price set forth in the applicable prospectus supplement
pursuant to delayed delivery contracts providing for payment and delivery on a
specified date in the future.
The delayed delivery contracts will be subject only to those conditions set
forth in the applicable prospectus supplement, and the applicable prospectus
supplement will set forth any commissions we and/or the trusts pay for
solicitation of these delayed delivery contracts.
Each underwriter, dealer and agent participating in the distribution of any
offered securities which are issuable in bearer form will agree that it will not
offer, sell, resell or deliver, directly or indirectly, offered securities in
bearer form in the United States or to United States persons except as otherwise
permitted by Treasury Regulations Section 1.163-5(c)(2)(i)(D).
35
Offered securities may also be offered and sold, if so indicated in the
applicable prospectus supplement, in connection with a remarketing upon their
purchase, in accordance with a redemption or repayment pursuant to their terms,
or otherwise, by one or more remarketing firms, acting as principals for their
own accounts or as agents for us. Any remarketing firm will be identified and
the terms of its agreements, if any, with us and its compensation will be
described in the applicable prospectus supplement.
Agents, underwriters and other third parties described above may be
entitled to indemnification by us and/or the trusts against certain civil
liabilities under the Securities Act, or to contribution with respect to
payments which the agents or underwriters may be required to make in respect
thereof. Agents, underwriters and such other third parties may be customers of,
engage in transactions with, or perform services for us and/or the trusts in the
ordinary course of business.
WHERE YOU CAN FIND MORE INFORMATION
We 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 any of this information at the SEC's
Public Reference Room at 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549. You may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet world
wide web site that contains reports, proxy statements and other information
about issuers 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 us at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005.
This prospectus is part of a registration statement that we have filed with
the SEC relating to the securities to be offered. This prospectus does not
contain all of the information we have included in the registration statement
and the accompanying exhibits and schedules in accordance with the rules and
regulations of the SEC and we refer you to the omitted information. The
statements this prospectus makes pertaining to the content of any contract,
agreement or other document that is an exhibit to the registration statement
necessarily are summaries of their material provisions and does not describe all
exceptions and qualifications contained in those contracts, agreements or
documents. You should read those contracts, agreements or documents for
information that may be important to you. The registration statement, exhibits
and schedules are available at the SEC's public reference room or through its
web site.
We "incorporate by reference" into this prospectus information we file with
the SEC, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
deemed to be part of this prospectus and later information that we file with the
SEC will automatically update and supercede that information. This prospectus
incorporates by reference the documents set forth below that we have previously
filed with the SEC. These documents contain important information about us and
our financial condition.
The following documents listed below that we have previously filed with the
SEC (Commission File Number: 001-03157) are incorporated by reference:
OUR SEC FILINGS PERIOD
--------------- ------
Annual Report on Form 10-K................... For the year ended December 31, 2002, as
filed on February 28, 2003.
Current Reports on Form 8-K.................. Filed on:
- January 16, 2003,
- January 17, 2003,
- January 31, 2003, and
- February 21, 2003.
Registration Statement on Form 8-A (as Filed on July 20, 1976.
amended)...................................
36
All documents filed by us under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, from the date of this prospectus
and prior to the termination of the offering of the securities shall also be
deemed to be incorporated in this prospectus by reference.
You can obtain any of the filings incorporated by reference in this
prospectus through us or from the SEC through the SEC's web site or at the
addresses listed above. We will provide without charge to each person to whom a
copy of this prospectus has been delivered, upon the written or oral request of
such person, a copy of any or all of the documents which are incorporated in
this prospectus by reference, other than exhibits to such documents (unless such
exhibits are specifically incorporated by reference into such documents).
Requests for such copies should be directed to International Paper Company, 400
Atlantic Street, Stamford, Connecticut 06921, Attention: Investor Relations
Department (Telephone: (203) 541-8625).
VALIDITY OF SECURITIES
Unless otherwise indicated in the applicable prospectus supplement, the
validity of the securities offered by us hereby will be passed upon for us by
Davis Polk & Wardwell, New York, New York. Certain matters of Delaware law
relating to the trust preferred securities will be passed upon by Skadden, Arps,
Slate, Meagher & Flom LLP, special Delaware counsel to the trusts. Unless
otherwise indicated in the applicable prospectus supplement, the validity of the
offered securities will be passed upon for any underwriters or agents by
Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York.
EXPERTS
The financial statements and the related financial statements schedule
incorporated in this prospectus by reference from our Annual Report on Form 10-K
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
Our financial statements as of and for each of the two years in the period
ended December 31, 2001 incorporated by reference in prospectus and elsewhere in
the Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
On April 9, 2002, we announced that we engaged Deloitte & Touche LLP to
replace Arthur Andersen as our independent auditors. During each of the fiscal
years in the two year period ended December 31, 2001 and the subsequent interim
period preceding the change of auditors, we had no disagreements with Arthur
Andersen on any matter of accounting principles or practices, financial
statement disclosures or auditing scope or procedures which, if not resolved to
Arthur Andersen's satisfaction, would have caused it to make reference to the
disagreement in connection with its report.
We have not been able to obtain, after reasonable efforts, the written
consent of Arthur Andersen to our naming it in this prospectus as having
certified our consolidated financial statements for the two years ended December
31, 2001, as required by Section 7 of the Securities Act. Accordingly, we have
dispensed with the requirement to file its consent in reliance upon Rule 437a of
the Securities Act. Because Arthur Andersen has not consented to the inclusion
of its report in this prospectus, you may have no effective remedy against
Arthur Andersen under Section 11 of the Securities Act for any untrue statements
of a material fact contained in the financial statements audited by Arthur
Andersen, or any omissions to state a material fact required to be stated
therein. In addition, the ability of Arthur Andersen to satisfy any claims
(including claims arising from its provision of auditing and other services to
us) may be limited as a practical matter due to recent events regarding Arthur
Andersen.
37
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[International Paper LOGO]
$1,000,000,000
INTERNATIONAL PAPER COMPANY
$600,000,000 4.00% NOTES DUE 2010
$400,000,000 5.25% NOTES DUE 2016
---------------------
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 27, 2003)
MARCH 15, 2004
---------------------
CITIGROUP
MORGAN STANLEY
UBS INVESTMENT BANK
BANC OF AMERICA SECURITIES LLC
JPMORGAN
LEHMAN BROTHERS
ABN AMRO INCORPORATED
BNP PARIBAS
MERRILL LYNCH & CO.
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