Exhibit 4.12
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CAPITAL SECURITIES GUARANTEE AGREEMENT
INTERNATIONAL PAPER COMPANY
Dated as of September 24, 1998
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CAPITAL SECURITIES GUARANTEE AGREEMENT
This CAPITAL SECURITIES GUARANTEE AGREEMENT ("Capital
Securities Guarantee"), dated as of September 24, 1998, is executed and
delivered by International Paper Company, a New York corporation (the
"Guarantor"), and The Bank of New York, a New York banking corporation, as
trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Capital Securities (as defined herein) of
International Paper Capital Trust III, a Delaware statutory business trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of September 24, 1998, among the trustees of
the Issuer named therein, the Guarantor, as Sponsor, and the holders from time
to time of undivided beneficial interests in the assets of the Issuer, the
Issuer is issuing on 28,000,000 Capital Securities (32,200,000 Capital Securi
ties if the underwriters over-allotment option is exer cised in full), having an
aggregate Liquidation Amount of $25 per Capital Security, designated the "77/8%
Capital Securities" (the "Capital Securities");
WHEREAS, as an incentive for the Holders to purchase the
Capital Securities, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth in this Capital Securities Guarantee, to pay to
the Holders of the Capital Securities the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth herein;
and
WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Common Securities Guarantee") in substantially
identical terms to this Capital Securities Guarantee for the benefit of the
holders of the Common Securities (as defined herein) except that if an Event of
Default (as defined in the Indenture (as defined herein)), has occurred and is
continuing, the rights of holders of the Common Securi ties to receive Guarantee
Payments under the Common Securities Guarantee are subordinated to the rights of
Holders of Capital Securities to receive Guarantee Pay ments under this Capital
Securities Guarantee.
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NOW, THEREFORE, in consideration of the pur chase by each
Holder of Capital Securities, which pur chase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Capital
Securities Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Capital Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Capital Securities
Guarantee but not defined in the preamble above have
the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Capital Securities
Guarantee has the same meaning throughout;
(c) all references to "the Capital Securities Guarantee"
or "this Guarantee" are to this Capital Securities
Guarantee as modified, supplemented or amended from
time to time;
(d) all references in this Capital Securities Guarantee
to Articles and Sections are to Articles and Sections
of this Capital Securities Guarantee unless otherwise
specified;
(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Capital Securities
Guarantee unless other wise defined in this Capital
Securities Guarantee or unless the context otherwise
requires; and
(f) a reference to the singular includes the plural and
vice versa.
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"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act of 1933, as amended, or any successor rule thereunder.
"Capital Securities" has the meaning set forth
in the recitals of this Capital Securities Guarantee.
"Common Securities" means the common securities representing
common undivided beneficial interests in the assets of the Issuer.
"Covered Person" means any Holder or beneficial
owner of Capital Securities.
"Debentures" means the series of junior subor dinated debt
securities of the Guarantor designated the 77/8% Junior Subordinated Deferrable
Interest Debentures Due 2038 held by the Property Trustee of the Issuer.
"Distributions" means cumulative cash distribu tions
accumulating from and including September 24, 1998 and payable quarterly in
arrears on March 1, June 1, September 1, and December 1 of each year, commencing
December 1, 1998, at the annual rate of 77/8% of the Liquidation Amount.
"Event of Default" means a default by the
Guarantor on any of its payment or other obligations
under this Capital Securities Guarantee.
"Guarantee Payments" means the following pay ments or
distributions, without duplication, with respect to the Capital Securities, to
the extent not paid or made by the Issuer: (i) any accumulated and unpaid
Distribu tions required to be paid on the Capital Securities, to the extent that
the Issuer Trust has funds on hand avail able therefor at such time, (ii) the
Redemption Price with respect to any Capital Securities called for redemp tion,
to the extent that the Issuer Trust has funds on hand available therefor at such
time, and (iii) upon a voluntary or involuntary dissolution, winding-up or
liquidation of the Issuer Trust (unless the Debentures are distributed to
holders of the Capital Securities), the "Liquidation Distribution" which shall
equal the lesser of (a) the aggregate of the Liquidation Amount of all
outstanding Capital Securities and all accumulated and unpaid Distributions to
the date of payment, and (b)
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the amount of assets of the Issuer Trust remaining avail able for distribution
to the holders of the Capital Securities on liquidation of the Issuer Trust, as
pro vided in the Declaration.
"Guarantee Trustee" means The Bank of New York until a
Successor Guarantee Trustee has been appointed and has accepted such appointment
pursuant to the terms of this Capital Securities Guarantee and thereafter means
each such Successor Guarantee Trustee.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer of any Capital Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Capi tal
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guaran tor or any Affiliate of the Guarantor.
"Indemnified Person" means the Guarantee Trustee, any
Affiliate of the Guarantee Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives or agents of the Guarantee
Trustee.
"Indenture" means the Indenture, dated as of September 15,
1998, as supplemented by the First Supple mental Indenture, dated as of
September 24, 1998, among the Guarantor (the "Debenture Issuer") and The Bank of
New York, as trustee, and any indenture supplemental thereto pursuant to which
the Debentures are to be issued to the Property Trustee of the Issuer.
"Liquidation Amount" means the stated amount of
$25 per Capital Security.
"Majority in Liquidation of Capital Securities" means, except
as provided by the Trust Indenture Act, Holder(s) of Capital Securities, voting
separately as a class, representing more than 50% of the stated Liquida tion
Amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus ac crued and unpaid Distributions to the date
upon which the voting percentages are determined) of all Capital Securi ties.
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"Officers' Certificate" means, with respect to any Person, a
certificate signed by two duly authorized officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Capital Securities Guaran tee shall include:
(a) a statement that each officer signing the certificate has
read the covenant or condition and the definition relating thereto;
(b) a brief statement of the nature and scope
of the examination or investigation undertaken by each
officer in rendering the certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such offi cer's opinion, is necessary to
enable such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited lia bility company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Redemption Price" shall have the meaning
specified in the Declaration.
"Responsible Officer" means, with respect to the Guarantee
Trustee, the chairman of the board of directors, the president, any
vice-president, any assis tant vice-president, the secretary, any assistant
secre tary, the treasurer, any assistant treasurer, any trust officer or
assistant trust officer or any other officer of the Guarantee Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.
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"Successor Guarantee Trustee" means a successor Guarantee
Trustee possessing the qualifications to act as Guarantee Trustee under Section
4.1.
"Trust Indenture Act" means the Trust Indenture
Act of 1939, as amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Capital Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Capital Securities Guar antee, which are incorporated by reference hereto, and
shall, to the extent applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this Capital
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 Lists of Holders of Securities.
(a) The Guarantor shall provide the Guarantee Trustee (i) within 14
days after January 1 and June 30 of each year, a list, in such form as the
Guarantee Trustee may reasonably require, of the names and addresses of the
Holders of the Capital Securities ("List of Holders") as of such date, provided
that the Guarantor shall not be obligated to provide such List of Holders at any
time the List of Holders does not differ from the most recent List of Holders
given to the Guarantee Trustee by the Guaran tor, and (ii) at any other time,
within 30 days of re ceipt by the Guarantor of a written request for a List of
Holders as of a date no more than 14 days before such List of Holders is given
to the Guarantee Trustee. The Guarantee Trustee may destroy any List of Holders
previ ously given to it on receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations
under Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
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SECTION 2.3 Reports by the Guarantee Trustee.
Within 60 days after May 15 of each year, the Guarantee
Trustee shall provide to the Holders of the Capital Securities such reports, if
any, as are required by Section 313 of the Trust Indenture Act in the form and
in the manner provided by Section 313 of the Trust Inden ture Act. The Guarantee
Trustee shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.
SECTION 2.4 Periodic Reports to Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee such
documents, reports and information (if any) as required by Section 314 of the
Trust Indenture Act and the compliance certificate required by Section 314 of
the Trust Indenture Act in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions
Precedent.
The Guarantor shall provide to the Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Capital Securi ties Guarantee which relate to any of the matters set forth
in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given in
the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver.
The Holders of a Majority in Liquidation Amount of Capital
Securities may, by vote, on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Capital Secu rities Guarantee, but no such waiver shall extend to any subsequent
or other default or Event of Default or impair any right consequent thereon.
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SECTION 2.7 Event of Default; Notice.
(a) The Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, trans mit by mail, first class postage
prepaid, to the Holders of the Capital Securities, notices of all Events of
Default known to the Guarantee Trustee, unless such defaults have been cured
before the giving of such no tice, provided, that, the Guarantee Trustee shall
be protected in withholding such notice if and so long as the board of
directors, the executive committee, or a trust committee of directors and/or
Responsible Officers of the Guarantee Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders of the Capital
Securities.
(b) The Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default except any Event of Default as to which the
Guarantee Trustee shall have received written notice or a Responsible Officer
charged with the administration of the Declaration shall have obtained written
notice.
SECTION 2.8 Conflicting Interests.
The Declaration shall be deemed to be specifi cally described
in this Capital Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee
Trustee.
(a) This Capital Securities Guarantee shall be held by the
Guarantee Trustee for the benefit of the Holders of the Capital Securities, and
the Guarantee Trustee shall not transfer this Guarantee Agreement to any Person
except a Holder of Capital Securities exercis ing his or her rights pursuant to
Section 5.4(b) or to a Successor Guarantee Trustee on acceptance by such Succes
sor Guarantee Trustee of its appointment to act as Suc cessor Guarantee Trustee.
The right, title and interest of the Guarantee Trustee shall automatically vest
in any
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Successor Guarantee Trustee, and such vesting and cessa tion of title shall be
effective whether or not conveyancing documents have been executed and delivered
pursuant to the appointment of such Successor Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Capital Securities Guarantee for the
benefit of the Holders of the Capital Securities.
(c) The Guarantee Trustee, before the occur rence of any Event
of Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Capital Securities Guarantee, and no implied covenants shall be read into
this Capital Securities Guarantee against the Guarantee Trustee. In case an
Event of Default has occurred (that has not been cured or waived pursuant to
Section 2.6), the Guarantee Trustee shall exercise such of the rights and powers
vested in it by this Capital Securities Guarantee, and use the same degree of
care and skill in its exercise thereof, as a prudent person would exercise or
use under the circum stances in the conduct of his or her own affairs.
(d) No provision of this Capital Securities Guarantee shall be
construed to relieve the Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful miscon duct, except
that:
(i) prior to the occurrence of any Event of Default
and after the curing or waiv ing of all such Events of Default that may
have occurred:
(A) the duties and obligations
of the Guarantee Trustee shall be determined solely by the express
provisions of this Capi tal Securities Guarantee, and the Guarantee
Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Capital
Securities Guarantee, and no implied covenants or obligations shall be
read into this Capital
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Securities Guarantee against the Guarantee
Trustee; and
(B) in the absence of bad faith
on the part of the Guarantee Trustee, the Guar antee Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any cer tificates
or opinions furnished to the Guaran tee Trustee and conforming to the
requirements of this Capital Securities Guarantee; but in the case of
any such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Guarantee Trustee, the
Guarantee Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Capital Securities Guarantee;
(ii) the Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer of
the Guarantee Trustee, unless it shall be proved that the Guarantee
Trustee was negligent in ascertaining the pertinent facts upon which
such judgment was made;
(iii) the Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of not less than a
Majority in Liquidation Amount of the Capital Securities at the time
outstand ing, relating to the time, method and place of conducting any
proceeding for any remedy avail able to the Guarantee Trustee, or
exercising any trust or power conferred upon the Guarantee Trustee
under this Capital Securities Guaran tee; and
(iv) no provision of this Capital Securities
Guarantee shall require the Guaran tee Trustee to expend or risk its
own funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its
rights or powers, if the Guarantee Trustee shall have reasonable
grounds
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for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Capital Securities
Guarantee or adequate indemnity against such risk or liability is not
reasonably assured to it.
SECTION 3.2 Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may rely and shall be
fully protected in acting or re fraining from acting upon any
resolution, cer tificate, statement, instrument, opinion, re port,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document be lieved by
it to be genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) any direction or act of the Capital Securities
Guarantor contemplated by this Capital Securities Guarantee shall be
sufficiently evidenced by an Officers' Certifi cate;
(iii) whenever, in the administration of this Capital
Securities Guarantee, the Guar antee Trustee shall deem it desirable
that a matter be proved or established before taking, suffering or
omitting any action hereunder, the Guarantee Trustee (unless other
evidence is herein specifically prescribed) may, in the absence of bad
faith on its part, request and rely upon an Officers' Certificate
which, upon receipt of such request, shall be promptly delivered by the
Guarantor;
(iv) the Guarantee Trustee shall have no duty to see
to any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof);
(v) the Guarantee Trustee may con
sult with counsel, and the written advice or
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opinion of such counsel with respect to legal matters shall be full and
complete authoriza tion and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance
with such advice or opinion. Such counsel may be counsel to the
Guarantor or any of its Affiliates and may include any of the
Guarantor's employees. The Guarantee Trustee shall have the right at
any time to seek instructions concerning the admin istration of this
Guarantee Agreement from any court of competent jurisdiction.
(vi) the Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Capital Securities Guarantee at the request or direc tion of any
Holder, unless such Holder shall have provided to the Guarantee Trustee
such adequate security and indemnity as would sat isfy a reasonable
person in the position of the Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses) and liabilities that
might be incurred by it in complying with such request or direction, in
cluding such reasonable advances as may be requested by the Guarantee
Trustee; provided that nothing contained in this Section 3.2(a)(vi)
shall be taken to relieve the Guar antee Trustee, upon the occurrence
of an Event of Default, of its obligation to exercise the rights and
powers vested in it by this Capital Securities Guarantee;
(vii) the Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document, but the
Guarantee Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit;
(viii) the Guarantee Trustee may exe cute any of the
trusts or powers hereunder or
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perform any duties hereunder either directly or by or through agents or
attorneys, and the Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder;
(ix) any action taken by the Guaran tee Trustee or
its agents hereunder shall bind the Holders of the Capital Securities,
and the signature of the Guarantee Trustee or its agents alone shall be
sufficient and effective to perform any such action. No third party
shall be required to inquire as to the author ity of the Guarantee
Trustee to so act or as to its compliance with any of the terms and
provi sions of this Capital Securities Guarantee, both of which shall
be conclusively evidenced by the Guarantee Trustee's or its agent's tak
ing such action; and
(x) whenever in the administration of this Capital
Securities Guarantee the Guar antee Trustee shall deem it desirable to
re ceive instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Guarantee Trustee (i) may re
quest instructions from the Holders of the Capital Securities or the
Guarantor, (ii) may refrain from enforcing such remedy or right or
taking such other action until such instruc tions are received, and
(iii) shall be pro tected in acting in accordance with such in
structions.
(b) No provision of this Capital Securities Guarantee shall be
deemed to impose any duty or obliga tion on the Guarantee Trustee to perform any
act or acts or exercise any right, power, duty or obligation con ferred or
imposed on it, in any jurisdiction in which it shall be illegal, or in which the
Guarantee Trustee shall be unqualified or incompetent in accordance with applica
ble law, to perform any such act or acts or to exercise any such right, power,
duty or obligation. No permissive power or authority available to the Guarantee
Trustee shall be construed to be a duty.
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SECTION 3.3. Not Responsible for Recitals or Issuance
of Guarantee.
The recitals contained in this Capital Securi ties Guarantee
shall be taken as the statements of the Guarantor, and the Guarantee Trustee
does not assume any responsibility for their correctness. The Guarantee Trustee
makes no representations as to the validity or sufficiency of this Capital
Securities Guarantee.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee
Trustee which shall:
(i) not be an Affiliate of the Guar
antor; and
(ii) be a corporation organized and doing business
under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a corporation or
Person permitted by the Securi ties and Exchange Commission to act as
an in stitutional trustee under the Trust Indenture Act, authorized
under such laws to exercise corporate trust powers, having a combined
capi tal and surplus of at least 50 million U.S. dollars ($50,000,000),
and subject to supervi sion or examination by Federal, State, Territo
rial or District of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred to
above, then, for the purposes of this Section 4.1(a)(ii), the com bined
capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published.
(b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the
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Guarantee Trustee shall immediately resign in the manner and with the effect set
out in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 Appointment, Removal and Resignation
of Guarantee Trustee.
(a) Subject to Section 4.2(b), the Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed in accordance
with Section 4.2(a) until a Successor Guarantee Trustee has been appointed and
has accepted such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guaran tor.
(c) The Guarantee Trustee appointed to office shall hold
office until a Successor Guarantee Trustee shall have been appointed or until
its removal or resig nation. The Guarantee Trustee may resign from office
(without need for prior or subsequent accounting) by an instrument in writing
executed by the Guarantee Trustee and delivered to the Guarantor, which
resignation shall not take effect until a Successor Guarantee Trustee has been
appointed and has accepted such appointment by instrument in writing executed by
such Successor Guaran tee Trustee and delivered to the Guarantor and the re
signing Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery to the Guarantor of an instrument of resignation, the
resigning Guarantee Trustee may petition any court of competent jurisdiction for
appointment of a Successor Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Guarantee Trustee.
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ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Pay ments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guaran tee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.2 Subordination
If an Event of Default (as defined in the Indenture), has
occurred and is continuing, the rights of Holders of the Common Securities to
receive Guarantee Payments under the Common Securities Guarantee are subor
dinated to the rights of Holders of Capital Securities to receive Guarantee
Payments under this Capital Securities Guarantee.
SECTION 5.3 Waiver of Notice and Demand.
The Guarantor hereby waives notice of accep tance of this
Capital Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 5.4 Obligations Not Affected.
The obligations, covenants, agreements and duties of the
Guarantor under this Capital Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law
or otherwise, of the performance or observance by the
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Issuer of any express or implied agreement, covenant, term or condition relating
to the Capital Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all
or any portion of the Distributions, the amount payable upon redemption,
Liquidation Distribu tion or any other sums payable under the terms of the
Capital Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Capital Securities
(other than an extension of time for payment of Distributions, the amount
payable upon redemption, Liquidation Distribu tion or other sum payable that
results from the extension of any interest payment period on the Debentures or
any extension of the maturity date of the Debentures permit ted by the
Indenture);
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right, privilege, power
or remedy con ferred on the Holders pursuant to the terms of the Capi tal
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insol vency, bankruptcy, assignment for
the benefit of credi tors, reorganization, arrangement, composition or read
justment of debt of, or other similar proceedings affect ing, the Issuer or any
of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency
in the Capital Securities;
(f) the settlement or compromise of any obli
gation guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.4 that the obligations of the Guarantor hereun der
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders or
any other Person to give notice to, or obtain consent of,
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the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.5 Rights of Holders.
(a) The Holders of a Majority in Liquidation Amount of the
Capital Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of this Capital Securities Guarantee or exercis ing any trust or power
conferred upon the Guarantee Trustee under this Capital Securities Guarantee.
(b) If the Guarantee Trustee fails to enforce this Capital
Securities Guarantee, any Holder of Capital Securities may, after such Holder
makes a written request to the Guarantee Trustee to enforce this Capital Securi
ties Guarantee, institute a legal proceeding directly against the Guarantor to
enforce its rights under this Capital Securities Guarantee, without first
instituting a legal proceeding against the Issuer, the Guarantee Trustee or any
other Person.
SECTION 5.6 Guarantee of Payment.
This Capital Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.7 Subrogation.
The Guarantor shall be subrogated to all (if any) rights of
the Holders of Capital Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Capital Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reim bursement or
other agreement, in all cases as a result of payment under this Capital
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Capital Securities Guarantee. If any amount shall be paid
to the Guarantor in violation of the preceding sentence, the Guarantor agrees to
hold such amount in trust for the Holders and to pay over such amount to the
Holders.
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SECTION 5.8 Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Capital
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Capital
Securities Guarantee notwithstand ing the occurrence of any event referred to in
subsec tions (a) through (g), inclusive, of Section 5.4 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions.
So long as any Capital Securities remain out standing, if
there shall have occurred an Event of De fault, an event that, with the giving
of notice or the lapse of time or both, would constitute an Event of Default
under the Indenture or a selection by the Guaran tor of an Extension Period (as
defined in the Indenture) and such period, or any extension thereof, shall be
continuing, then (a) the Guarantor shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase or acquire or make a
liquidation payment with respect to, any of its capital stock (other than stock
dividends paid by the Guarantor which consist of the stock of the same class as
that on which the dividend is being paid), (b) the Guarantor shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities issued by the Guarantor which rank pari passu with or
junior to the Debentures, and (c) the Guarantor shall not make any guarantee
payments with respect to the foregoing (other than pursuant to the Capital
Securities Guarantee).
SECTION 6.2 Ranking.
This Capital Securities Guarantee will consti tute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to all Senior Indebtedness (as defined in the Indenture) of
the Guarantor, (ii) pari passu with the most senior preferred or preference
stock now or hereafter issued by the Guarantor and with any guarantee now or
hereafter entered into by the Guarantor in respect of any preferred
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or preference stock or Capital Security of any Affiliate of the Guarantor, and
(iii) senior to the Guarantor's common stock.
In the event that payment is made on the Debentures or under this
Capital Securities Guarantee in contraven tion of the provisions contained in
this Section 6.2, such payments will be paid over to the holders of Senior
Indebtedness of the Guarantor.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.
This Capital Securities Guarantee shall termi nate (i) upon
full payment of the redemption price of all Capital Securities, (ii) upon
distribution of the Deben tures to the Holders of all of the Capital Securities
or (iii) full payment of the amounts payable in accordance with the Declaration
upon liquidation of the Issuer. Notwithstanding the foregoing, this Capital
Securities Guarantee will continue to be effective or will be rein stated, as
the case may be, if at any time any Holder of Capital Securities must restore
payment of any sums paid under the Capital Securities or under this Capital Secu
rities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith in accordance with this Capital
Securities Guarantee and in a manner that such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified
Person by this Capital Securities Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions.
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(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions, re
ports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reason able
care by or on behalf of the Guarantor, including information, opinions, reports
or statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Capital Securities might properly be paid.
SECTION 8.2 Indemnification.
(a) To the fullest extent permitted by appli cable law, the
Guarantor shall indemnify and hold harm less each Indemnified Person from and
against any loss, damage or claim incurred by such Indemnified Person by reason
of any act or omission performed or omitted by such Indemnified Person in good
faith in accordance with this Capital Securities Guarantee and in a manner such
Indemnified Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person in accordance with this Capital Securities
Guarantee, except that no Indemnified Person shall be entitled to be indemnified
in respect of any loss, damage or claim incurred by such Indemnified Person by
reason of negli gence or willful misconduct with respect to such acts or
omissions.
(b) To the fullest extent permitted by appli cable law,
expenses (including legal fees and expenses) incurred by an Indemnified Person
in defending any claim, demand, action, suit or proceeding shall, from time to
time, be advanced by the Guarantor prior to the final disposition of such claim,
demand, action, suit or pro ceeding upon receipt by the Guarantor of an
undertaking by or on behalf of the Indemnified Person to repay such amount if it
shall be determined that the Indemnified Person is not entitled to be
indemnified as authorized in Section 8.2(a).
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ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns.
All guarantees and agreements contained in this Capital
Securities Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Capital Securities then outstanding. Except in connection with any
permitted merger or consolidation of the Guarantor with or into another entity
or any permit ted sale, transfer or lease of the Guarantor's assets to another
entity, the Guarantor may not assign its rights or delegate its obligations
under the Capital Securities Guarantee without the prior approval of the Holders
of at least 66-2/3% of the aggregate stated Liquidation Amount of the Capital
Securities then outstanding.
SECTION 9.2 Amendments.
Except with respect to any changes that do not adversely
affect the rights of Holders (in which case no vote will be required), this
Capital Securities Guarantee may only be amended with the prior approval of the
Hold ers of at least 66-2/3% in Liquidation Amount of all the outstanding
Capital Securities. The provisions of Sec tion 12.2 of the Declaration with
respect to meetings of Holders of the Securities apply to the giving of such
approval.
SECTION 9.3 Notices.
All notices provided for in this Capital Secu rities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by registered or certified mail, as follows:
(a) If given to the Guarantee Trustee, at the Guarantee Trustee's
mailing address set forth below (or such other address as the Guarantee Trustee
may give notice of to the Holders of the Capital Securities):
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The Bank of New York
101 Barclay Street
21 West
Attn: Corporate Trust
Trustee Administration
New York, New York 10286
(b) If given to the Guarantor, at the Guaran tor's mailing
address set forth below (or such other address as the Guarantor may give notice
of to the Hold ers of the Capital Securities):
International Paper Company
Two Manhattanville Road
Purchase, New York 10577
(c) If given to any Holder of Capital Securi ties, at the
address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 9.4 Benefit.
This Capital Securities Guarantee is solely for the benefit of
the Holders of the Capital Securities and, subject to Section 3.1(a), is not
separately transferable from the Capital Securities.
SECTION 9.5 Governing Law.
THIS CAPITAL SECURITIES GUARANTEE SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.
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THIS CAPITAL SECURITIES GUARANTEE is executed as of the day
and year first above written.
INTERNATIONAL PAPER
COMPANY, as Guarantor
By:/s/ E. William Boehmler
-------------------------------
Name: E. William Boehmler
Title: Vice President and
Treasurer
THE BANK OF NEW YORK, as
Guarantee Trustee
By:/s/ Mary LaGumina
-------------------------------
Name: Mary LaGumina
Title: Assistant Vice
President
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