10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2005

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From              to             

Commission File Number 1-3157

INTERNATIONAL PAPER COMPANY

(Exact name of registrant as specified in its charter)

New York	13-0872805
(State or other jurisdiction of incorporation of organization)	(I.R.S. Employer Identification No.)
400 Atlantic Street, Stamford, CT	06921
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (203) 541-8000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of shares outstanding of the registrant’s common stock as of October 31, 2005 was 490,498,543.

INTERNATIONAL PAPER COMPANY

INDEX

		PAGE NO.
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statement of Operations - Three Months and Nine Months Ended September 30, 2005 and 2004	1
	Consolidated Balance Sheet - September 30, 2005 and December 31, 2004	2
	Consolidated Statement of Cash Flows - Nine Months Ended September 30, 2005 and 2004	3
	Consolidated Statement of Changes in Common Shareholders’ Equity - Nine Months Ended September 30, 2005 and 2004	4
	Condensed Notes to Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
	Financial Information by Industry Segment	38
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	42
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	43
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	*
Item 3.	Defaults Upon Senior Securities	*
Item 4.	Submission of Matters to a Vote of Security Holders	*
Item 5.	Other Information	*
Item 6.	Exhibits	44
Signatures		45

* Omitted since no answer is called for, answer is in the negative or inapplicable.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INTERNATIONAL PAPER COMPANY

Consolidated Statement of Operations

(Unaudited)

(In millions, except per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2005			2004			2005			2004
Net Sales	$	6,036		$	6,016		$	17,963		$	17,342
Costs and Expenses
Cost of products sold		4,532			4,412			13,413			12,811
Selling and administrative expenses		463			471			1,420			1,423
Depreciation, amortization and cost of timber harvested		342			346			1,015			1,003
Distribution expenses		264			260			782			764
Taxes other than payroll and income taxes		59			59			176			179
Restructuring and other charges		70			26			125			153
Insurance recoveries		(188	)		(103	)		(223	)		(103	)
Net losses on sales and impairments of businesses held for sale		5			38			65			60
Reversal of reserves no longer required, net		(3	)		(6	)		(3	)		(19	)
Interest expense, net		120			180			442			541
Earnings From Continuing Operations Before Income Taxes and Minority Interest		372			333			751			530
Income tax (benefit) provision		(373	)		113			(198	)		209
Minority interest expense, net of taxes		3			5			8			21
Earnings From Continuing Operations		742			215			941			300
Discontinued operations, net of taxes and minority interest		281			(685	)		236			(504	)
Net Earnings (Loss)	$	1,023		$	(470	)	$	1,177		$	(204	)
Basic Earnings Per Common Share
Earnings from continuing operations	$	1.53		$	0.44		$	1.94		$	0.62
Discontinued operations		0.58			(1.41	)		0.48			(1.04	)
Net earnings (loss)	$	2.11		$	(0.97	)	$	2.42		$	(0.42	)
Diluted Earnings Per Common Share
Earnings from continuing operations	$	1.48		$	0.44		$	1.90		$	0.61
Discontinued operations		0.55			(1.35	)		0.46			(1.03	)
Net earnings (loss)	$	2.03		$	(0.91	)	$	2.36		$	(0.42	)
Average Shares of Common Stock Outstanding - Assuming dilution		507.1			509.0			507.5			488.2
Cash Dividends Per Common Share	$	0.25		$	0.25		$	0.75		$	0.75

The accompanying notes are an integral part of these financial statements.

1

INTERNATIONAL PAPER COMPANY

Consolidated Balance Sheet

(Unaudited)

(In millions)

	September 30, 2005			December 31, 2004
Assets
Current Assets
Cash and temporary investments	$	1,092		$	2,180
Accounts and notes receivable, net		2,918			2,743
Inventories		2,427			2,371
Assets of businesses held for sale		57			4,729
Deferred income tax assets		389			410
Other current assets		180			153
Total Current Assets		7,063			12,586
Plants, Properties and Equipment, net		11,850			12,216
Forestlands		2,207			2,157
Investments		597			655
Goodwill		5,043			4,994
Deferred Charges and Other Assets		1,691			1,609
Total Assets	$	28,451		$	34,217
Liabilities and Common Shareholders’ Equity
Current Liabilities
Notes payable and current maturities of long-term debt	$	796		$	222
Accounts payable		2,038			2,026
Accrued payroll and benefits		387			425
Liabilities of businesses held for sale		51			3,165
Other accrued liabilities		1,091			1,496
Total Current Liabilities		4,363			7,334
Long-Term Debt		10,772			13,632
Deferred Income Taxes		1,287			1,118
Other Liabilities		2,959			3,691
Minority Interest		203			188
Common Shareholders’ Equity
Common stock, $1 par value, 490.5 shares in 2005 and 487.5 shares in 2004		490			487
Paid-in capital		6,604			6,562
Retained earnings		3,371			2,562
Accumulated other comprehensive loss		(1,595	)		(1,357	)
		8,870			8,254
Less: Common stock held in treasury, at cost, 2005 - 0.1 shares		3			—
Total Common Shareholders’ Equity		8,867			8,254
Total Liabilities and Common Shareholders’ Equity	$	28,451		$	34,217

The accompanying notes are an integral part of these financial statements.

2

INTERNATIONAL PAPER COMPANY

Consolidated Statement of Cash Flows

(Unaudited)

(In millions)

	Nine Months Ended September 30,
	2005			2004
Operating Activities
Net earnings (loss)	$	1,177		$	(204	)
Discontinued operations, net of taxes and minority interest		(236	)		504
Earnings from continuing operations		941			300
Depreciation and amortization		1,015			1,003
Deferred income tax expense (benefit), net		143			(2	)
Tax benefit - non-cash settlement of IRS audits		(553	)		—
Restructuring and other charges		125			153
Payments related to restructuring and legal reserves		(133	)		(179	)
Insurance recoveries		(223	)		(103	)
Reversal of reserves no longer required, net		(3	)		(19	)
Net losses on sales and impairments of businesses held for sale		65			60
Other, net		277			225
Changes in current assets and liabilities
Accounts and notes receivable		(106	)		(378	)
Inventories		(44	)		(28	)
Accounts payable and accrued liabilities		(609	)		(72	)
Other		320			106
Cash provided by operations - continuing operations		1,215			1,066
Cash provided by (used for) operations - discontinued operations		157			(129	)
Cash Provided by Operations		1,372			937
Investment Activities
Invested in capital projects		(771	)		(743	)
Acquisitions, net of cash acquired		(39	)		(186	)
Proceeds from divestitures		1,440			44
Other		77			261
Cash provided by (used for) investment activities - continuing operations		707			(624	)
Cash (used for) provided by investment activities - discontinued operations		(218	)		427
Cash Provided by (Used for) Investment Activities		489			(197	)
Financing Activities
Issuance of common stock		20			132
Issuance of debt		278			2,136
Reduction of debt		(2,543	)		(3,104	)
Change in book overdrafts		(30	)		(122	)
Dividends paid		(368	)		(364	)
Other		(44	)		(121	)
Cash used for financing activities - continuing operations		(2,687	)		(1,443	)
Cash used for financing activities - discontinued operations		(172	)		(166	)
Cash Used for Financing Activities		(2,859	)		(1,609	)
Effect of Exchange Rate Changes on Cash - Continuing Operations		(85	)		(10	)
Effect of Exchange Rate Changes on Cash - Discontinued Operations		(5	)		73
Change in Cash and Temporary Investments		(1,088	)		(806	)
Cash and Temporary Investments
Beginning of the period		2,180			2,258
End of the period	$	1,092		$	1,452

The accompanying notes are an integral part of these financial statements.

3

INTERNATIONAL PAPER COMPANY

Consolidated Statement of Changes in Common Shareholders’ Equity

(Unaudited)

(In millions, except share amounts in thousands)

Nine Months Ended September 30, 2005

	Common Stock Issued			Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock					Total Common Shareholders’ Equity
	Shares	Amount										Shares		Amount
Balance, December 31, 2004	487,495	$	487	$	6,562	$	2,562		$	(1,357	)	16		$	—		$	8,254
Net issuance of stock for various plans	3,004		3		42		—			—		78			3			42
Cash dividends - Common stock ($0.75 per share)	—		—		—		(368	)		—		—			—			(368	)
Comprehensive income (loss):
Net earnings	—		—		—		1,177			—		—			—			1,177
Minimum pension liability adjustment (less tax of $1)										3								3
Change in cumulative foreign currency translation adjustment (less tax of $1)	—		—		—		—			(215	)	—			—			(215	)
Net gains (losses) on cash flow hedging derivatives:
Net gain arising during the period (less tax of $13)	—		—		—		—			38		—			—			38
Less: Reclassification adjustment for gains included in net income (less tax of $29)	—		—		—		—			(64	)	—			—			(64	)
Total comprehensive income																		939
Balance, September 30, 2005	490,499	$	490	$	6,604	$	3,371		$	(1,595	)	94		$	3		$	8,867
Nine Months Ended September 30, 2004
	Common Stock Issued			Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock					Total Common Shareholders’ Equity
	Shares	Amount										Shares		Amount
Balance, December 31, 2003	485,162	$	485	$	6,500	$	3,082		$	(1,690	)	3,668		$	140		$	8,237
Net issuance of stock for various plans	1,331		1		1		—			—		(3,634	)		(140	)		142
Cash dividends - Common stock ($0.75 per share)	—		—		—		(364	)		—		—			—			(364	)
Comprehensive income (loss):
Net loss	—		—		—		(204	)		—		—			—			(204	)
Change in cumulative foreign currency translation adjustment (less tax of $0)	—		—		—		—			44		—			—			44
Net gains (losses) on cash flow hedging derivatives:
Net gain arising during the period (less tax of $6)	—		—		—		—			18		—			—			18
Less: Reclassification adjustment for gains included in net loss (less tax of $10)	—		—		—		—			(20	)	—			—			(20	)
Total comprehensive loss																		(162	)
Balance, September 30, 2004	486,493	$	486	$	6,501	$	2,514		$	(1,648	)	34		$	—		$	7,853

The accompanying notes are an integral part of these financial statements.

4

INTERNATIONAL PAPER COMPANY

Condensed Notes to Consolidated Financial Statements

(Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, in the opinion of Management, include all adjustments (consisting only of normal recurring accruals) that are necessary for the fair presentation of results for the interim periods. Results for the first nine months of the year may not necessarily be indicative of full year results. It is suggested that these consolidated financial statements be read in conjunction with the audited financial statements and the notes thereto included in International Paper’s (the Company) Annual Report on Form 10-K for the year ended December 31, 2004, which has previously been filed with the Securities and Exchange Commission.

Financial information by industry segment is presented on page 38. Beginning with the 2005 first quarter, Industrial Packaging and Consumer Packaging are reported as separate industry segments. Prior period segment information has been restated to reflect this presentation.

See Note 13 for required pro forma and additional disclosures related to stock-based compensation awards.

Prior year amounts have been restated to present Carter Holt Harvey Limited (CHH) as a discontinued operation. See Note 5 for additional disclosures.

NOTE 2 - EARNINGS PER COMMON SHARE

Earnings per common share from continuing operations are computed by dividing earnings from continuing operations by the weighted average number of common shares outstanding. Earnings per common share from continuing operations, assuming dilution, are computed assuming that all potentially dilutive securities, including “in-the-money” stock options, are converted into common shares at the beginning of each period. In addition, the computation of diluted earnings per share reflects the inclusion of contingently convertible securities in periods when dilutive. Furthermore, as required by the Emerging Issues Task Force of the Financial Accounting Standards Board (FASB), the computations of diluted earnings per share for all prior periods have been restated on this basis. A reconciliation of the amounts included in the computation of earnings per common share from continuing operations, and earnings per common share from continuing operations, assuming dilution, is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
In millions, except per share amounts	2005		2004		2005		2004
Earnings from continuing operations	$	742	$	215	$	941	$	300
Effect of dilutive securities		7		7		20		—
Earnings from continuing operations - assuming dilution	$	749	$	222	$	961	$	300
Average common shares outstanding		486.0		486.4		486.0		485.5
Effect of dilutive securities
Performance share plan		1.0		—		1.1		—
Stock options		0.1		2.6		0.4		2.7
Zero coupon convertible debentures		20.0		20.0		20.0		—
Average common shares outstanding - assuming dilution		507.1		509.0		507.5		488.2
Earnings per common share from continuing operations	$	1.53	$	0.44	$	1.94	$	0.62
Earnings per common share from continuing operations - assuming dilution	$	1.48	$	0.44	$	1.90	$	0.61

Note: If an amount does not appear in the above table, the security was antidilutive for the period presented.

5

NOTE 3 - RESTRUCTURING AND OTHER CHARGES

During the third quarter of 2005, restructuring and other charges totaling $70 million before taxes ($48 million after taxes) were recorded. Included in this charge were a pre-tax charge of $44 million ($32 million after taxes) for organizational restructuring charges and a pre-tax charge of $26 million ($16 million after taxes) for losses on early extinguishment of debt. Also recorded in the third quarter were a pre-tax credit of $188 million ($109 million after taxes) for insurance recoveries related to the hardboard siding and roofing litigation (see Note 9) and a $3 million pre-tax credit ($2 million after taxes) for the net adjustment of previously provided reserves. In addition, a $517 million net reduction of the income tax provision was recorded, including a credit from an agreement reached with the U.S. Internal Revenue Service concerning the 1997 through 2000 U.S. federal income tax audits, a charge related to cash repatriations from non-U.S. subsidiaries, and a charge relating to a change in Ohio state tax laws (see Note 8). Interest expense, net, also includes a $43 million pre-tax credit ($26 million after taxes) relating to this agreement.

During the second quarter of 2005, a pre-tax charge of $31 million ($19 million after taxes) for organizational restructuring charges, and a pre-tax credit of $35 million ($21 million after taxes) for insurance recoveries related to the hardboard siding and roofing litigation were recorded. Additionally, an $82 million increase in the income tax provision was recorded, including approximately $79 million for deferred taxes related to earnings repatriated during the quarter under the American Jobs Creation Act of 2004.

During the first quarter of 2005, charges totaling $24 million before taxes ($15 million after taxes) were recorded for losses on early extinguishment of high-coupon-rate debt. Also during the 2005 first quarter, a $19 million reduction in the income tax provision was recorded reflecting the favorable settlement of a tax matter.

During the third quarter of 2004, restructuring and other charges totaling $26 million before taxes ($16 million after taxes) were recorded. Included in this charge were $18 million before taxes ($11 million after taxes) for organizational restructuring programs, and $8 million before taxes ($5 million after taxes) for losses on early extinguishment of debt. The $18 million restructuring charge included $17 million of severance costs covering the termination of 351 employees and other cash costs of $1 million. In addition, a pre-tax credit of $103 million ($64 million after taxes) was recorded for insurance recoveries related to the hardboard siding and roofing litigation, and a $6 million credit before taxes ($4 million after taxes) was recorded for the net reversal of restructuring and realignment reserves no longer required.

During the first two quarters of 2004, restructuring and other charges totaling $127 million before taxes ($79 million after taxes) were recorded. Included in this charge were $46 million before taxes ($29 million after taxes) for a corporate-wide organizational restructuring program and $81 million before taxes ($50 million after taxes) for losses on early extinguishment of debt. In addition, a $13 million credit before taxes ($7 million after taxes) was recorded for the net reversal of restructuring and realignment reserves no longer required. Also, a $32 million increase in the tax provision was recorded reflecting an adjustment of deferred tax balances.

During the last quarter of 2004, restructuring and other charges totaling $13 million before taxes ($8 million after taxes) were recorded. These charges included a $10 million charge before taxes ($6 million after taxes) for legal settlements and a $3 million charge before taxes ($2 million after taxes) for losses on early extinguishment of debt. In addition, credits of $20 million before taxes ($12 million after taxes) for net insurance recoveries related to the hardboard siding and roofing litigation and $17 million before taxes and ($11 million after taxes) for the net reversal of reserves no longer needed were recorded.

6

NOTE 4 – ACQUISITIONS

In 2001, International Paper and Carter Holt Harvey Limited had each acquired a 25% interest in International Paper Pacific Millennium Limited (IPPM). International Paper recorded goodwill of $25 million in connection with its portion of this acquisition. IPPM is a Hong Kong-based distribution and packaging company with operations in China and other Asian countries. On August 1, 2005, pursuant to an existing agreement, International Paper purchased the 50% outside interest of IPPM for $46.1 million to facilitate possible further growth in Asian markets. Beginning in August 2005, the financial position and results of operations of IPPM have been included in International Paper’s consolidated financial statements. The accompanying unaudited consolidated balance sheet as of September 30, 2005 includes preliminary estimates of the fair values of the assets and liabilities acquired, including approximately $46 million of goodwill. It is anticipated that the allocation of the purchase price to the assets and liabilities acquired will be completed by December 31, 2005, and could result in a goodwill impairment charge when completed.

On July 1, 2004, International Paper completed the acquisition of Box USA Holdings, Inc. (Box USA). The operating results of Box USA are included in the accompanying consolidated financial statements from that date. International Paper acquired all of the outstanding common and preferred stock of Box USA for approximately $189 million in cash and a $15 million 6% note payable issued to Box USA’s controlling shareholders. In addition, International Paper assumed approximately $197 million of debt, of which approximately $193 million was repaid by July 31, 2004. The note payable represents contingent consideration to be paid if no claims for indemnification were offset against the notes. Subsequent claims for indemnification totaling $5.5 million reduced the note payable to $9.5 million plus interest payable. The first installment of $3 million plus interest was paid in the third quarter of 2005. The remaining installments to be paid are $2 million in 2006 and $4.5 million in 2009, subject to any additional claims for indemnification.

The following unaudited pro forma information for the nine months ended September 30, 2004 presents the combined results of the continuing operations of International Paper and Box USA as if the acquisition had occurred as of January 1, 2004. This pro forma information does not purport to represent International Paper’s actual results of operations if the transaction described above would have occurred on January 1, 2004, nor is it necessarily indicative of future results.

In millions, except per share amounts	Nine Months Ended September 30, 2004
Net sales	$17,595
Earnings from continuing operations	297
Net loss	(207)
Earnings from continuing operations per common share – assuming dilution	0.61
Net loss per common share – assuming dilution	(0.42)

NOTE 5 - BUSINESSES HELD FOR SALE AND DIVESTITURES

Discontinued Operations:

On September 21, 2005, International Paper completed the sale of its 50.5% interest in Carter Holt Harvey Limited to Rank Group Investments Ltd. for approximately U.S. $1.14 billion that will be used primarily to reduce debt. The pre-tax gain on the sale of $29 million ($361 million after taxes), including a $186 million pre-tax credit from cumulative translation adjustments, was included in Discontinued operations, together with CHH’s operating results prior to the sale. Additionally, in May 2004, CHH sold its Tissue business. In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,”

7

International Paper has restated all prior periods to present the operating results of CHH as a discontinued operation. Revenues associated with this discontinued operation were $541 million and $1.7 billion, respectively, for the three-month and nine-month periods ended September 30, 2005. Revenues for the comparable 2004 periods were $562 million and $1.8 billion, respectively. Earnings and earnings per share related to this operation were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
In millions, except per share amounts	2005			2004			2005			2004
Earnings (loss) from discontinued operation
Earnings (loss) from operation	$	(11	)	$	(1	)	$	(43	)	$	21
Income tax (expense) benefit		(67	)		(9	)		(90	)		38
Minority interest (expense) benefit, net of taxes		(2	)		3			8			(33	)
Earnings (loss) from discontinued operation, net of taxes		(80	)		(7	)		(125	)		26
Gain on sale of CHH		29			—			29			—
Gain on sale of CHH Tissue business		—			—			—			268
Income tax benefit (expense)		332			—			332			(69	)
Minority interest expense, net of taxes		—			—			—			(109	)
Gain on sale, net of taxes and minority interest		361			—			361			90
Earnings (loss) from discontinued operation, net of taxes and minority interest	$	281		$	(7	)	$	236		$	116
Earnings (loss) per common share from discontinued operation - assuming dilution
Earnings (loss) from operation, net of taxes	$	(0.16	)	$	(0.02	)	$	(0.25	)	$	0.05
Gain on sale, net of taxes and minority interest		0.71			—			0.71			0.19
Earnings (loss) per common share from discontinued operation, net of taxes and minority interest - assuming dilution	$	0.55		$	(0.02	)	$	0.46		$	0.24

Assets and liabilities of CHH, included in International Paper’s consolidated balance sheet at December 31, 2004, as Assets and Liabilities of businesses held for sale, were as follows:

8

In millions	December 31, 2004
Cash and temporary investments	$	416
Accounts receivable, net		251
Inventories		347
Plants, properties and equipment, net		1,216
Forestlands		1,779
Other assets		491
Assets of business held for sale	$	4,500
Notes payable and current maturities of long-term debt	$	284
Accounts payable		253
Accrued payroll and benefits		67
Other accrued liabilities		17
Long-term debt		500
Other liabilities		602
Minority interest		1,360
Liabilities of business held for sale	$	3,083

In July 2004, International Paper reached an agreement to sell its Weldwood of Canada, Ltd. business. This transaction was completed in December 2004. All periods presented have been restated to present the operating results of Weldwood as a discontinued operation.

Revenues associated with this discontinued operation were $282 million and $765 million, respectively, for the three-month and nine-month periods ended September 30, 2004. Earnings and earnings per share related to the discontinued operation were as follows:

In millions, except per share amounts	Three Months Ended September 30, 2004			Nine Months Ended September 30, 2004
Earnings (loss) from discontinued operation
Earnings from operation	$	59		$	140
Income tax expense		(21	)		(44	)
Earnings from discontinued operation, net of taxes		38			96
Asset impairment		(306	)		(306	)
Income tax expense (a)		(410	)		(410	)
Asset impairment, net of taxes		(716	)		(716	)
Loss from discontinued operation, net of taxes	$	(678	)	$	(620	)
Earnings (loss) per common share from discontinued operation - assuming dilution
Earnings from operation, net of taxes	$	0.08		$	0.20
Asset impairment, net of taxes		(1.41	)		(1.47	)
Loss per common share from discontinued operation, net of taxes - assuming dilution	$	(1.33	)	$	(1.27	)

(a) Reflects the low historic tax basis in Weldwood that was carried over in connection with the acquisition of Champion in June 2000.

9

Other Divestitures:

2005:

In the third quarter of 2005, charges totaling $5 million before taxes ($3 million after taxes) were recorded for adjustments of losses on businesses previously sold.

During the second quarter of 2005, the Company completed the sales of its Fine Papers and Industrial Papers businesses and Papeteries de France for approximately $61 million, $180 million and $14 million, respectively.

The accompanying consolidated statement of operations includes a net $19 million pre-tax credit ($12 million after taxes), including a $25 million credit before taxes ($15 million after taxes) from the collection of a note receivable from the 2001 sale of the Flexible Packaging business, final charges related to the sale of Fine Papers and Industrial Papers, as well as net adjustments of losses from businesses previously sold. In addition, interest income of $11 million before taxes ($7 million after taxes) was collected on the Flexible Packaging business note, which is included in Interest expense, net.

In March 2005, International Paper announced an agreement to sell its Fine Papers business to Mohawk Paper Mills, Inc. of Cohoes, New York. A $24 million pre-tax loss ($13 million after taxes) was recorded in the first quarter to write down the net assets of the Fine Papers business to their estimated net realizable value. Included in the sale were the Hamilton, Ohio paper mill with an annual production capacity of approximately 65,000 tons; the Saybrook, Ohio converting center; and the Westfield, Massachusetts artist papers converting operation. The sale also included the Strathmore^®, Brite Hue^®, VIA ^® and Beckett^® brands.

Also in March 2005, International Paper announced that it had signed an agreement to sell its Industrial Papers business to an affiliate of Kohlberg and Company, LLC. A $49 million pre-tax loss ($35 million after taxes) was recorded in the first quarter to write down the net assets of the Industrial Papers business and related corporate assets to their estimated net realizable value. The Industrial Papers business included packaging and pressure sensitive papers and related converting assets.

Also in the first quarter of 2005, charges totaling $6 million before taxes ($4 million after taxes) were recorded for adjustments to estimated losses on sales of certain smaller operations.

2004:

In July 2004, International Paper signed an agreement to sell Scaldia Papier B.V., and its subsidiary, Recom B.V., to Stora Enso for approximately $36 million in cash. This sale was completed in the third quarter and resulted in a loss of $34 million (no impact from taxes). In addition, a $4 million loss, (no impact from taxes) was recorded to adjust the estimated loss on sale of Papeteries de Souche L.C.

In the second quarter of 2004, a $27 million pre-tax loss ($27 million after taxes) was recorded to write down the assets of the Company’s Anould mill to their estimated net realizable value. In addition, a $4 million loss before taxes ($2 million after taxes) was recorded to write down the assets of Food Pack S.A. in Chile to their estimated net realizable value.

In the first quarter of 2004, a $9 million pre-tax gain ($6 million after taxes) was recorded to adjust estimated gains/losses of businesses previously sold.

At September 30, 2005, assets and liabilities of businesses held for sale totaled $57 million and $51 million, respectively, consisting of certain smaller businesses held for sale. Assets and liabilities of businesses held for sale at December 31, 2004 totaled $4.7 billion and $3.2 billion, respectively, and included CHH and the Fine Papers business as well as certain smaller businesses.

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NOTE 6 - SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION

Inventories by major category were:

In millions	September 30, 2005		December 31, 2004
Raw materials	$	359	$	321
Finished pulp, paper and packaging products		1,639		1,650
Finished lumber and panel products		28		38
Operating supplies		328		298
Other		73		64
Total	$	2,427	$	2,371

Temporary investments with an original maturity of three months or less are treated as cash equivalents and are stated at cost. Temporary investments totaled $807 million and $1.7 billion at September 30, 2005 and December 31, 2004, respectively.

Interest payments made during the nine-month periods ended September 30, 2005 and 2004 were $630 million and $601 million, respectively. The 2005 interest payments include a $52 million payment to the U.S. Internal Revenue Service related to the settlement of the 1997-2000 U.S. federal income tax audits. Capitalized net interest costs were $8 million and $6 million for the nine months ended September 30, 2005 and 2004, respectively. Total interest expense was $507 million for the first nine months of 2005, net of a $43 million credit related to the settlement of the tax audits described above, and $592 million for the first nine months of 2004. Distributions paid under all of International Paper’s preferred securities of subsidiaries were $11 million and $38 million during the first nine months of 2005 and 2004, respectively. The decrease in 2005 was due to preferred securities redeemed in February 2005 and in 2004. The expense related to these preferred securities was included in minority interest expense in the consolidated statement of operations, except for $3 million in 2005 and $25 million in 2004 related to the Trust preferred securities that were deconsolidated in the last half of 2003 and redeemed in February 2005. Income tax payments of $374 million and $173 million were made during the first nine months of 2005 and 2004, respectively.

Accumulated depreciation was $17.5 billion at September 30, 2005 and $17.3 billion at December 31, 2004. The allowance for doubtful accounts was $110 million at September 30, 2005 and $124 million at December 31, 2004.

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The following tables present changes in the goodwill balances as allocated to each business segment for the nine-month periods ended September 30, 2005 and 2004:

In millions	Balance December 31, 2004		Reclassifications and Other			Additions/ (Reductions)			Balance September 30, 2005
Printing Papers	$	2,876	$	3		$	—		$	2,879
Industrial Packaging		591		(5	)		16	(a)		602
Consumer Packaging		1,014		(4	)		51	(b)		1,061
Distribution		299		—			—			299
Forest Products		190		1			—			191
Corporate and Other Businesses		24		—			(13	)(c)		11
Total	$	4,994	$	(5	)	$	54		$	5,043

(a) Completion of the accounting for the acquisition of Box USA, $22 million, and the sale of the Industrial Papers business, $(6) million

(b) Acquisition of minority interest in Shorewood EPC Europe Ltd, $5 million. Acquisition of 50% interest in International Paper Pacific Millennium, $46 million

(c) Sale of Fine Papers business

In millions	Balance December 31, 2003		Reclassifications and Other			Additions/ (Reductions)			Balance September 30, 2004
Printing Papers	$	2,878	$	(1	)	$	—		$	2,877
Industrial Packaging		345		5			263	(a)		613
Consumer Packaging		1,016		—			(3	)(b)		1,013
Distribution		334		—			(23	)(c)		311
Forest Products		190		1			—			191
Corporate and Other Businesses		30		(6	)		1			25
Total	$	4,793	$	(1	)	$	238		$	5,030

(a) Acquisition of Box USA, $264 million, and the sale of Asian box plants, $(1) million

(b) Food Pack S.A. reclassified to assets held for sale

(c) Sale of Scaldia Papier B.V.

The following table presents an analysis of activity related to asset retirement obligations:

	Nine Months Ended September 30,
In millions	2005			2004
Asset retirement obligations, January 1	$	41		$	48
New liabilities		10			3
Liabilities settled		(5	)		(6	)
Net adjustments to existing liabilities		(4	)		(2	)
Accretion expense		1			1
Asset retirement obligations, September 30	$	43		$	44

This obligation is included in Other liabilities in the accompanying consolidated balance sheet.

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The following table presents changes in minority interest balances:

	Nine Months Ended September 30,
In millions	2005			2004
Balance, January 1	$	188		$	528
Reclassification of limited partnership interests to debt		—			(168	)
Interest of CHH in an IP consolidated subsidiary		15			—
Dividends paid		(8	)		(23	)
Minority interest expense		9			22
Other, net		(1	)		2
Balance, September 30	$	203		$	361

NOTE 7 – RECENT ACCOUNTING DEVELOPMENTS

In May 2005, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 154, “Accounting Changes and Error Corrections,” which changes the requirements for the accounting and reporting of a change in accounting principle. SFAS No. 154 will be effective for accounting changes made in fiscal years beginning after December 15, 2005. This Statement does not change the transition provisions of any existing accounting pronouncements, including those that are in a transition phase as of the effective date of the Statement.

In March 2005, the FASB issued Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations.” This Interpretation clarifies that the term “conditional asset retirement obligation” as used in FASB Statement No. 143, “Accounting for Asset Retirement Obligations,” refers to the fact that a legal obligation to perform an asset retirement activity is unconditional even though uncertainty exists about the timing and (or) method of settlement. Uncertainty about the timing and (or) method of settlement of a conditional asset retirement obligation should be factored into the measurement of the liability when sufficient information exists to make a reasonable estimate of the fair value of the obligation. Interpretation 47 must be adopted no later than the fourth quarter of 2005. International Paper is currently evaluating the effects of this Interpretation but believes that it will not have a material impact on its consolidated financial statements.

In March 2005, the FASB also issued FASB Staff Position (FSP) FIN 46(R)-5 (FSP FIN 46(R)-5), “Implicit Variable Interests Under FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities.” This FSP states that implicit variable interests are implied financial interests in an entity that change with changes in the fair value of the entity’s net assets exclusive of variable interests. An implicit variable interest acts the same as an explicit variable interest except it involves the absorbing and (or) receiving of variability indirectly from the entity (rather than directly). The identification of an implicit variable interest is a matter of judgment that depends on the relevant facts and circumstances. International Paper has already adopted FIN 46(R) and applied the provisions of FSP FIN 46(R)-5 in the second quarter of 2005, with no material impact on its consolidated financial statements.

In December 2004, the FASB issued FASB Staff Position Financial Accounting Standards 109-1 and 109-2 relating to the American Jobs Creation Act of 2004 (the Act). The Act provides for a special one-time deduction of 85% of certain foreign earnings that are repatriated. In the second quarter of 2005, International Paper repatriated approximately $1.2 billion in cash from certain of its foreign subsidiaries, including amounts eligible for this special deduction. The Company recorded income tax expenses associated with these cash repatriations totaling approximately $100 million through September 30, 2005.

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In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment,” which will require compensation costs related to share-based payment transactions to be recognized in the financial statements. The amount of the compensation cost will be measured based on the grant-date fair value of the equity or liability instruments issued. In addition, liability awards will be remeasured each reporting period. Compensation cost will be recognized over the period that an employee provides service in exchange for the award. This Statement will apply to all awards outstanding on its effective date, or awards granted, modified, repurchased, or cancelled after that date. In April 2005, the Securities and Exchange Commission (SEC) deferred the effective date of this Statement until the first fiscal year beginning after June 15, 2005. International Paper believes that the adoption of SFAS No. 123(R) will not have a material impact on its consolidated financial statements. See Note 13 for a further discussion of stock options.

In November 2004, the FASB issued SFAS No. 151, “Inventory Costs, an amendment of ARB No. 43, Chapter 4,” which requires that abnormal amounts of idle facility expense, freight, handling costs and wasted material be recognized as current-period charges. This Statement also introduces the concept of “normal capacity” and requires the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities. Unallocated overheads must be recognized as an expense in the period in which they are incurred. This Statement will be effective for inventory costs incurred during fiscal years beginning after June 15, 2005. International Paper believes that the adoption of SFAS No. 151 will not have a material impact on its consolidated financial statements.

NOTE 8 - INCOME TAXES

During the 2005 third quarter, the Company reached an agreement with the U.S. Internal Revenue Service concerning the 1997 through 2000 U.S. federal income tax audits. This agreement resulted in a $160 million cash payment of tax and interest. As a result of this agreement, a net $470 million non-cash reduction of the provision was recorded, including a $553 million credit included in the consolidated income tax provision for the quarter and an $83 million charge relating to CHH that was included in Discontinued operations for the quarter. In addition, accrued interest of $43 million related to this agreement was reversed as a reduction of Interest expense, net.

Also in the 2005 third quarter, tax provisions of $21 million related to cash repatriated from non-U.S. subsidiaries under the American Jobs Creation Act of 2004 and $15 million related to a change in Ohio state income tax laws were recorded. Together with the tax provision of $144 million on earnings from continuing operations and the $553 million credit discussed above, these resulted in a total net tax benefit of $373 million for the quarter.

The Internal Revenue Service is currently examining the Company’s federal income tax returns for the years 2001 through 2003. The Company is routinely audited by the various federal, state and non-U.S. jurisdictions in which it operates. The Company believes that its income tax positions comply with applicable tax laws and regulations, and that it has adequately provided for all income tax matters.

NOTE 9 - COMMITMENTS AND CONTINGENCIES

International Paper has established reserves relating to certain liabilities associated with exterior siding and roofing products manufactured by its former Masonite subsidiary, which were the subject of settlements in three nationwide class action lawsuits. These lawsuits, which were settled during 1998 and 1999, are discussed in detail in Note 10 to the Financial Statements included in International Paper’s Annual Report on Form 10-K for the year ended December 31, 2004.

The following table presents an analysis of the net reserve activity related to these lawsuits for the nine months ended September 30, 2005.

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RESERVE ANALYSIS

In millions	Hard- board			Omni- wood			Woodruf			Total
Balance, December 31, 2004	$	158		$	97		$	4		$	259
Reclassification		(5	)		—			5			—
Payments		(99	)		(18	)		(4	)		(121	)
Balance, September 30, 2005	$	54		$	79		$	5		$	138

In August 2005, in order to provide for future payments under the Woodruf Lawsuit, $5 million of the aggregate reserve was reclassified from Hardboard to Woodruf.

Aggregate year-to-date payments for the Hardboard Lawsuit are still in line with overall forecasted payments through the end of the claims period in January 2008. Almost all of the claims from the period immediately preceding the January 2005 deadline for filing claims in the Hardboard Lawsuit for siding installed during the 1980’s have now been processed and paid. Since the January 2005 deadline, the number of claims filed and the average payment per claim have been lower than projected. Based on the Company’s current review and analysis, and assuming that future claim-filing trends and average claim payments continue as anticipated, the Company believes that the aggregate reserve balance for future claims arising in connection with exterior siding and roofing products described above is adequate.

The following table shows an analysis of claims statistics related to these lawsuits for the nine months ended September 30, 2005.

CLAIMS STATISTICS

In thousands No. of Claims Pending	Hardboard				Omniwood				Woodruf			Total				Total
	Single Family		Multi- Family		Single Family		Multi- Family		Single Family		Multi- Family	Single Family		Multi- Family
December 31, 2004	38.9		5.0		2.4		0.4		0.9		0.3	42.2		5.7		47.9
No. of Claims Filed	23.9		5.5		3.3		0.4		0.4		—	27.6		5.9		33.5
No. of Claims Paid	(25.6	)	(3.8	)	(3.1	)	(0.2	)	(0.3	)	—	(29.0	)	(4.0	)	(33.0	)
No. of Claims Dismissed	(13.6	)	(2.1	)	(0.3	)	—		(0.1	)	—	(14.0	)	(2.1	)	(16.1	)
September 30, 2005	23.6		4.6		2.3		0.6		0.9		0.3	26.8		5.5		32.3

The lawsuit commenced by International Paper and Masonite in a state court in California against certain of their insurance carriers (the Indemnification Lawsuit) for recovery of amounts paid by International Paper and Masonite to property owners and others in connection with the settlement of the hardboard siding class action lawsuit is discussed in Note 10 to the Financial Statements included in International Paper’s Annual Report on Form 10-K for the year ended December 31, 2004.

In the third quarter of 2005, International Paper entered into two agreements with certain insurance carriers to settle International Paper’s claims against those carriers in the Indemnification Lawsuit. Under one of the settlement agreements, the carriers agreed to pay International Paper $242 million, including $25 million within 90 days of execution of the agreement and the balance thereafter in 47 equal monthly installments. In connection with this settlement, the Company recognized income of approximately $184 million in the 2005 third quarter, reflecting the present value of these payments. Under the other settlement agreement, the carrier agreed to pay International Paper $4 million, for a total of $188 million of income for the 2005 third quarter. For the nine-month period ended September 30, 2005, International Paper recognized approximately $223 million for such settlements.

15

In addition to the Indemnification Lawsuit, the Company is seeking indemnification from two other insurance carriers in arbitration proceedings as required by the applicable policies.

An alternative risk-transfer agreement with a third party under which International Paper had received $100 million at December 31, 2001, and a settlement of the parties’ rights and obligations with respect to that agreement, are discussed in Note 10 to the Financial Statements included in International Paper’s Annual Report on Form 10-K for the year ended December 31, 2004. For the nine months ended September 30, 2005, International Paper had paid approximately $13 million to the third party under the settlement, for total payments to date of approximately $46 million.

International Paper is also involved in various other inquiries, administrative proceedings and litigation relating to contracts, sales of property, environmental protection, tax, antitrust, personal injury and other matters, some of which allege substantial monetary damages. While any proceeding or litigation has the element of uncertainty, International Paper believes that the outcome of any of the lawsuits or claims that are pending or threatened, or all of them combined, will not have a material adverse effect on its consolidated financial statements.

NOTE 10 - DEBT

2005:

In September 2005, International Paper used proceeds from the CHH sale to repay a subsidiary’s $250 million long-term debt with an interest rate of LIBOR plus 62.5 basis points and a maturity date of June 2007, and $312 million of commercial paper. The Company intends to use most of the remaining $580 million of CHH sale proceeds for additional debt reduction. Other reductions in the 2005 third quarter included repayment of $662 million of notes with coupon rates ranging from 4% to 7.35% and original maturities from 2009 to 2029, and the repayment of $150 million of 7.10% notes with a maturity date of September 2005.

Pre-tax early debt retirement costs of $26 million related to 2005 third quarter debt reductions are included in Restructuring and other charges in the accompanying consolidated statement of operations.

In June 2005, International Paper used approximately $400 million of cash to repay a portion of a subsidiary’s long-term debt with an interest rate of LIBOR plus 62.5 basis points and a maturity date of June 2007.

In February 2005, International Paper redeemed the outstanding $464 million aggregate principal amount of International Paper Capital Trust 5.25% convertible subordinated debentures originally due in July 2025 at 100.5% of par plus accrued interest. Other debt reductions in the first quarter of 2005 included early payment of approximately $295 million of principal on notes with coupon rates ranging from 4% to 7.875% and original maturities from 2006 to 2015.

Pre-tax early debt retirement costs of $24 million related to first quarter 2005 debt reductions are included in Restructuring and other charges in the accompanying consolidated statement of operations.

2004:

In August 2004, an International Paper wholly-owned subsidiary issued 500 million of euro-denominated long-term debt (equivalent to approximately $619 million at issuance) with an initial interest rate of EURIBOR plus 55 basis points and a maturity in August 2009.

Also in August 2004, International Paper repurchased $168 million of limited partnership interests in Georgetown Equipment Leasing Associates, L.P. and Trout Creek Equipment Leasing, L.P.

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Additionally, during the third quarter of 2004, approximately $500 million of debt was redeemed. These redemptions included $150 million of 8.125% notes with a scheduled maturity date of June 2024 and $193 million of debt assumed in connection with the Box USA acquisition.

Pre-tax early debt retirement costs of $8 million related to third quarter 2004 debt reductions are included in Restructuring and other charges in the accompanying consolidated statement of operations.

In June 2004, an International Paper wholly-owned subsidiary issued $650 million of long-term debt with an interest rate of LIBOR plus 62.5 basis points that can vary depending upon the credit rating of the Company, with a maturity in June 2007, which refinanced $650 million of long-term debt with an interest rate of LIBOR plus 100 basis points with a scheduled maturity date in August 2004.

In March 2004, International Paper issued $600 million of 4.00% notes due in April 2010 and $400 million of 5.25% notes due in April 2016. The proceeds from these issuances were used in April 2004 to retire approximately $1.0 billion of 8.125% coupon rate debt with an original maturity date in July 2005. Pre-tax early debt retirement costs of $65 million related to the retired debt were included in Restructuring and other charges in the accompanying consolidated statement of operations. In January 2004, approximately $1.0 billion of debt with an 8.05% blended coupon rate was retired using $1.0 billion of proceeds from 4.875% coupon rate debt issued in December 2003. Pre-tax early debt retirement costs of $16 million related to the retired debt were included in Restructuring and other charges in the accompanying consolidated statement of operations.

Also in March 2004, International Paper replaced its maturing $750 million bank credit agreement with a five-year, $1.25 billion bank credit facility maturing in March 2009. Concurrently, an existing three-year bank credit agreement maturing in March 2006 was reduced from $1.5 billion to $750 million.

The holders of International Paper’s zero-coupon convertible debt have the option to require the Company to repurchase these securities on June 20, 2006, at a price equal to the accreted principal amount of $1.2 billion plus interest. The repurchase may be settled in International Paper common stock or cash, or a combination of both, at the Company’s option, in an amount equal to the accreted principal amount through the repurchase date. The Company anticipates using a combination of cash from operations, from divestitures and from new debt issuances if this repurchase in 2006 is required.

At September 30, 2005 and December 31, 2004, International Paper classified $1.25 billion and $87 million, respectively, of tenderable bonds, commercial paper and bank notes and current maturities of long-term debt as Long-term debt. International Paper has the intent and ability to renew or convert these obligations, as evidenced by the credit facilities described above.

Maintaining an investment-grade credit rating is an important element of International Paper’s finance strategy. In July 2005, Standard & Poor’s (S&P) reaffirmed the Company’s current long-term credit rating of BBB (negative outlook). On July 20, 2005, Moody’s Investor Services (Moody’s) announced that it had placed the Company’s debt ratings (currently Baa2 for long-term credit) on review for possible downgrade. Moody’s expects this review to be completed in November 2005. The Company currently has short-term credit ratings by S&P and Moody’s of A-3 and P-2, respectively.

NOTE 11 – RETIREMENT PLANS

International Paper maintains pension plans that provide retirement benefits to substantially all domestic employees hired prior to July 1, 2004. These employees generally are eligible to participate in the plans upon completion of one year of service and attainment of age 21. Employees hired after June 30, 2004, who are not eligible for this pension plan, will receive an additional company contribution to their savings plan.

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The plans provide defined benefits based on years of credited service and either final average earnings (salaried employees), hourly job rates or specified benefit rates (hourly and union employees). A detailed discussion of these plans is presented in Note 15 to the Financial Statements included in International Paper’s Annual Report on Form 10-K for the year ended December 31, 2004.

Net periodic pension cost for our qualified and nonqualified U.S. defined benefit plans comprised the following:

	Three Months Ended September 30,						Nine Months Ended September 30,
In millions	2005			2004			2005			2004
Service cost	$	32		$	28		$	97		$	86
Interest cost		118			116			355			350
Expected return on plan assets		(139	)		(148	)		(417	)		(444	)
Actuarial loss		41			24			125			71
Amortization of prior service cost		8			8			22			20
Net periodic pension expense (a)	$	60		$	28		$	182		$	83

(a) Excludes a $30 million charge in 2005 for curtailments and special termination benefits related to Fine Papers, Industrial Papers and the Jackson Foodservice plant divestitures and organizational restructuring recorded in Net losses on sales and impairments of businesses held for sale and Restructuring and other charges, and a $1 million charge in 2004 for curtailments and special termination benefits related to a company cost reduction initiative recorded in Restructuring and other charges.

While International Paper may elect to make voluntary contributions to its U.S. qualified plan up to the maximum deductible amount per Internal Revenue Service tax regulations in the coming years, it is unlikely that any contributions to the plan will be required before 2007 unless International Paper changes its funding policy to make contributions above the minimum requirements. The nonqualified plan is funded to the extent of benefit payments which equaled $16.6 million through September 30, 2005.

NOTE 12 – POSTRETIREMENT BENEFITS

International Paper provides certain retiree health care and life insurance benefits covering a majority of U.S. salaried and certain hourly employees. These employees are generally eligible for benefits upon retirement and completion of a specified number of years of creditable service. Excluded from the company-provided medical benefits are salaried employees whose age plus years of employment with the Company total less than 60 as of January 1, 2004. International Paper does not fund these benefits prior to payment and has the right to modify or terminate certain of these plans in the future. A detailed discussion of these benefits is presented in Note 16 to the Financial Statements included in International Paper’s Annual Report on Form 10-K for the year ended December 31, 2004.

On January 21, 2005, final regulations for the implementation of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 were released resulting in a remeasurement of the plan as of the release date. The remeasurement and final subsidy calculations reduced the accumulated postretirement benefit obligation by $59 million, and reduced the 2005 periodic benefit cost for the first nine months by $10 million. The components of postretirement benefit expense were as follows:

18

	Three Months Ended September 30,						Nine Months Ended September 30,
In millions	2005			2004			2005			2004
Service cost	$	1		$	1		$	2		$	4
Interest cost		10			12			29			40
Actuarial loss		5			8			15			28
Amortization of prior service cost		(10	)		(9	)		(30	)		(29	)
Net postretirement benefit cost (a)	$	6		$	12		$	16		$	43

(a) Excludes a $3 million credit in 2005 for curtailments and special termination benefits related to Fine Papers, Industrial Papers and the Jackson Foodservice plant divestures and organizational restructuring recorded in Net losses on sales and impairments of businesses held for sale and Restructuring and other charges, and a $1 million credit in 2004 for curtailments and special termination benefits related to a company cost reduction initiative recorded in Restructuring and other charges.

NOTE 13 - STOCK OPTIONS

International Paper has a Long-Term Incentive Compensation Plan (LTICP) that includes a Stock Option Program, a Restricted Performance Share Program and a Continuity Award Program, administered by a committee of independent members of the Board of Directors who are not eligible for awards. The Company accounts for stock options granted under the plan using the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations and the disclosure provisions of SFAS No. 123, “Accounting for Stock-Based Compensation.” A detailed discussion of these plans is presented in Note 18 to the Financial Statements included in International Paper’s Annual Report on Form 10-K for the year ended December 31, 2004. No stock option-based employee compensation cost is reflected in net earnings, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant.

During 2003, the Company decided to eliminate its stock option program for all U.S. employees with the intent of minimizing the use of stock options globally in 2006. In the United States, the stock option program was replaced with performance-based restricted shares for approximately 1,250 employees to more closely tie long-term incentive compensation to Company performance on two key performance drivers: return on investment (ROI) and total shareholder return (TSR). As part of this shift in focus away from stock options to performance-based restricted stock, the Company accelerated the vesting of all 14 million unvested stock options to July 12, 2005. The Company also considered the benefit to employees and the income statement impact in making its decision to accelerate the vesting of these options. Based on the current market value of the Company’s common stock on July 12, 2005, the exercise prices of all such stock options were above the current market value and, accordingly, the Company recorded no expense as a result of this action.

19

The following table illustrates the effect on net earnings and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation and reflects the accelerated vesting of all outstanding options as of July 12, 2005.

	Three Months Ended September 30,						Nine Months Ended September 30,
In millions, except per share amounts	2005			2004			2005			2004
Net earnings (loss), as reported	$	1,023		$	(470	)	$	1,177		$	(204	)
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(27	)		(9	)		(55	)		(30	)
Pro forma net earnings (loss)	$	996		$	(479	)	$	1,122		$	(234	)
Net earnings (loss) per common share
Basic - as reported	$	2.11		$	(0.97	)	$	2.42		$	(0.42	)
Basic - pro forma	$	2.05		$	(0.99	)	$	2.31		$	(0.48	)
Diluted - as reported	$	2.03		$	(0.91	)	$	2.36		$	(0.42	)
Diluted - pro forma	$	1.98		$	(0.93	)	$	2.25		$	(0.48	)

NOTE 14 – SUBSEQUENT EVENT

On October 4, 2005, International Paper announced the completion of its acquisition of approximately 65% of Compagnie Marocaine des Cartons et des Papiers (CMCP), a leading Moroccan corrugated packaging company, for approximately $80 million cash plus assumed debt of approximately $40 million.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Item 2 contains forward-looking statements with respect to possible events, outcomes or results that are, and are expected to continue to be, subject to risks, uncertainties and contingencies, including those identified in this Item. See “Forward-Looking Statements” on pages 36 and 37.

Executive Summary

Sales volume changes in the third quarter were mixed and, overall, slightly improved from the second quarter. However, while overall pricing was anticipated to be flat, pressures on containerboard, corrugated boxes, uncoated papers and pulp prices were greater than expected and more than offset higher coated paper prices. Additionally, although facility cost performance continued to improve and we benefited from higher forestland and real estate sales, pressures on margins as a result of rising energy and transportation costs resulting from the hurricanes in the southern United States were greater than anticipated.

Entering the fourth quarter, we estimate that business segment operating profits will be lower than in the third quarter. Raw material costs are expected to be much higher in the fourth quarter as the impacts of the recent hurricanes on energy and transportation costs continue to be felt. Overall sales volumes are likely to be flat as we enter the seasonally weaker holiday period toward year end. Average price realizations are expected to be flat to down since prices for many products began the quarter below levels at the beginning of the third quarter. Price increases have been announced in containerboard, bleached board, pulp and coated papers, but the impact of the increases will not be realized until early 2006. Finally, we currently anticipate a lower level of forestland and real estate sales in the fourth quarter.

Results of Operations

For the third quarter of 2005, International Paper reported net sales of $6.0 billion, compared with $6.0 billion in the third quarter of 2004 and $5.9 billion in the second quarter of 2005.

Net earnings totaled $1.02 billion, or $2.03 per share, in the 2005 third quarter. This compared with net losses of $470 million, or ($.91) per share, in the third quarter of 2004 and net earnings of $77 million, or $.16 per share, in the second quarter of 2005. Amounts include the effects of special items in all periods.

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Earnings from continuing operations were $742 million, or $1.48 per share, compared with $215 million, or $.44 per share, in the 2004 third quarter and $91 million, or $.19 per share, in the 2005 second quarter. Earnings in the 2005 third quarter benefited from higher average price realizations ($44 million), cost reduction initiatives and improved mill operations ($39 million), and higher gains from forestland and real estate sales ($61 million) compared with the 2004 third quarter. These benefits were partially offset by higher energy, wood and caustic soda costs ($104 million), and the impact of lower sales volumes and increased lack-of-order downtime
($64 million). In addition, corporate items and other costs increased ($34 million) primarily due to higher pension and supply chain initiative costs, and income tax expense increased ($14 million), although these effects were partially offset by lower net interest expense ($10 million). Income from special items ($589 million) was higher than in the 2004 third quarter.

Compared with the second quarter of 2005, while earnings from continuing operations in the third quarter benefited from cost reduction initiatives and improved mill operations ($3 million), higher sales volumes and decreased lack-of-order downtime ($9 million) and higher gains from forestland and real estate sales ($56 million), these benefits were offset by lower average price realizations ($29 million) and higher energy and other raw material costs ($20 million). Additionally, the 2005 third quarter benefited from the impact of a lower net interest expense ($2 million), offset by higher workers’ compensation and inventory related costs ($29 million) and a higher effective tax rate ($5 million). Finally, special items resulted in income in the 2005 third quarter versus expense in the 2005 second quarter ($664 million).

To measure the performance of the Company’s business segments from period to period without variations caused by special or unusual items, International Paper’s management focuses on business segment operating profit. This is defined as earnings before taxes and minority interest, excluding interest expense, corporate charges and special items that include restructuring charges, early debt extinguishment costs, legal reserves, insurance recoveries, gains (losses) on sales and impairments of businesses held for sale, and the reversal of reserves no longer required. Prior year industry segment information has been restated to conform to minor changes in the 2005 operational structure and to reflect the reclassification of Carter Holt Harvey Limited (CHH) as a discontinued operation.

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The following table presents a reconciliation of International Paper’s net earnings to its operating profit:

	Three Months Ended
In millions	September 30,						June 30, 2005
	2005			2004
Net Earnings (Loss)	$	1,023		$	(470	)	$	77
Deduct - Discontinued operations:
(Earnings) loss from operations		80			(31	)		14
(Gain) loss on sales or impairment		(361	)		716			—
Earnings From Continuing Operations		742			215			91
Add back (deduct):
Income tax (benefit) provision		(373	)		113			165
Minority interest expense, net of taxes		3			5			3
Earnings From Continuing Operations Before Income Taxes and Minority Interest		372			333			259
Interest expense, net		120			180			155
Minority interest included in operations		—			(1	)		(2	)
Corporate items		142			101			133
Special items:
Restructuring and other charges		41			26			—
Insurance recoveries		(188	)		(103	)		(35	)
Net losses (gains) on sales and impairments of businesses held for sale		5			38			(19	)
Reversal of reserves no longer required, net		(3	)		(6	)		—
	$	489		$	568		$	491
Industry Segment Operating Profit
Printing Papers	$	132		$	160		$	149
Industrial Packaging		33			133			85
Consumer Packaging		37			50			41
Distribution		23			27			18
Forest Products		272			191			191
Specialty Businesses and Other		(8	)		7			7
Total Industry Segment Operating Profit	$	489		$	568		$	491

Discontinued Operations

During the 2005 third quarter, the sale of the Company’s majority share of Carter Holt Harvey Limited (CHH) was completed resulting in a $361 million after-tax gain. This amount, together with an $80 million net charge principally reflecting that portion of a third quarter agreement reached with the U.S. Internal Revenue Service that relates to CHH (see “Income Taxes” below), is included in the accompanying consolidated statement of operations as earnings from discontinued operations. During the third quarter of 2004, International Paper reached an agreement to sell its Weldwood of Canada Limited business resulting in a loss from discontinued operations of $684

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million after taxes. All periods presented reflect the operating results of these businesses as discontinued operations.

Income Taxes

The income tax benefit of $373 million for the 2005 third quarter included a $553 million non-cash income tax benefit resulting from an agreement reached with the U.S. Internal Revenue Service concerning the Company’s 1997 through 2000 federal income tax audits, a $21 million provision related to cash repatriated from non-U.S. subsidiaries under the American Jobs Creation Act of 2004, and a $15 million provision related to a change in Ohio state tax laws. Excluding these items, and a $73 million charge relating to the tax effects of special items, the effective income tax rate for continuing operations was 33% for the quarter, bringing the effective tax rate for the 2005 nine-month period to 28%, the projected 2005 full-year tax rate.

In the third quarter of 2004, the income tax provision was $113 million, including a $31 million charge relating to special items. Excluding these items, the effective tax rate for the 2004 third quarter was 28%. For the nine months ended September 30, 2004, an income tax provision of $209 million was recorded. Excluding the year-to-date tax effects of restructuring and other charges, the effective tax rate for the nine-month period was 30%.

The income tax provision for the 2005 second quarter was $165 million, which included an $82 million charge principally related to earnings repatriated during the quarter under the American Jobs Creation Act of 2004 as well as a $13 million charge related to other special items. Excluding these items, the effective tax rate for the quarter was 31%.

Interest Expense and Corporate Items

Net interest expense for the 2005 third quarter of $120 million included a pre-tax credit of $43 million for a reduction of accrued interest related to the agreement with the U.S. Internal Revenue Service discussed above. Net interest expense for the 2005 second quarter of $155 million included interest income of $11 million related to the collection of a note receivable from the 2001 sale of the Flexible Packaging business. Excluding these items, net interest expense of $163 million was lower than $180 million in the third quarter of 2004 and $166 million in the 2005 second quarter, reflecting lower average debt balances and interest rates due to debt refinancings and repayments in 2004 and 2005.

Corporate expenses, net, of $142 million in the 2005 third quarter were higher than 2004 third-quarter net expenses of $101 million, and were also higher than the net expenses of $133 million in the second quarter of 2005. The increase compared with the 2004 third quarter was principally due to higher pension, supply chain initiative and LIFO inventory costs. Compared with the 2005 second quarter, the increase was primarily due to higher LIFO inventory related costs.

Special Items

Restructuring and Other Charges

International Paper continually evaluates its operations for improvement opportunities targeted to (a) focus our portfolio on our core businesses, (b) rationalize and realign capacity to operate fewer facilities with the same revenue capability and close high cost facilities, and (c) reduce costs. Annually, strategic operating plans are developed by each of our businesses to demonstrate that they will achieve a return at least equal to their cost of capital over an economic cycle. If it subsequently becomes apparent that a facility’s plan will not be achieved, a decision is then made to (a) invest additional capital to upgrade the facility, (b) shut down the facility and record the corresponding charge, or (c) evaluate the expected recovery of the carrying value of

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the facility to determine if an impairment of the asset value of the facility has occurred under SFAS No. 144. In recent years, this policy has led to the shutdown of a number of facilities and the recording of significant asset impairment charges and severance costs. It is possible that additional charges and costs will be incurred in future periods in our core businesses should such triggering events occur.

The third quarter of 2005 included a pre-tax charge of $41 million ($25 million after taxes) for restructuring and other charges including $15 million before taxes ($9 million after taxes) for organizational restructuring programs and other charges and $26 million before taxes ($16 million after taxes) for debt extinguishment. The third quarter of 2005 also included a pre-tax credit of $188 million ($109 million after taxes) for insurance recoveries related to the hardboard siding and roofing litigation. The 2004 third quarter included a charge of $26 million before taxes ($16 million after taxes) for restructuring and other costs, including $18 million before taxes ($11 million after taxes) for organizational restructuring programs and $8 million before taxes ($5 million after taxes) for losses on early extinguishment of debt, and a pre-tax credit of $103 million ($64 million after taxes) for insurance recoveries. The second quarter of 2005 included a pre-tax credit of $35 million ($21 million after taxes) for insurance recoveries.

Net (Gains) Losses on Sales and Impairments of Businesses Held for Sale

The third quarter of 2005 included a net loss on sales and impairments of businesses held for sale of $5 million before taxes ($3 million after taxes) for net adjustments of losses on businesses previously sold. Included in the 2004 third quarter was a pre-tax and after-tax charge of $38 million for losses associated with the sale of Scaldia Paper B.V. and its subsidiary Recom B.V. ($34 million) and a charge to adjust the estimated loss on sale of Papeteries de Souche L.C. ($4 million). The second quarter of 2005 included a net gain on sales and impairments of businesses held for sale of $19 million before taxes ($12 million after taxes) for net adjustments of losses on businesses previously sold, including a $25 million pre-tax credit ($15 million after taxes) from the collection of a note receivable from the 2001 sale of the Flexible Packaging business.

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Industry Segment Operating Profit

Industry segment operating profit of $489 million in the 2005 third quarter decreased from $568 million in the 2004 third quarter and from $491 million in the 2005 second quarter. Compared with the third quarter of 2004, earnings in the current quarter benefited from higher average paper and packaging prices ($66 million), strong mill operating performance, an improved mix of products sold and lower overhead costs from cost reduction efforts ($58 million), and higher gains from forestland and real estate sales ($91 million). These benefits were more than offset by the effects of higher raw material costs, particularly energy and caustic soda ($156 million), lower sales volumes and the impact of lack-of-order mill downtime ($96 million), higher special charges ($29 million), and other items ($13 million). Special charges of $29 million before taxes were included in the 2005 third quarter results, consisting of an organizational restructuring charge of $6 million in the Printing Papers segment for severance and other charges associated with the indefinite shutdown of three paper machines, a charge of $2 million in the Forest Products segment for costs associated with relocating the business headquarters to Memphis, TN from Savannah, GA, a charge of $13 million in the Specialty and Other Business segment for a plant shutdown in Norway, and a restructuring and other charge of $8 million, of which $3 million is in the Printing Papers segment, $1 million is in the Consumer Packaging segment and $4 million is in the Industrial Packaging segment.

Compared with the 2005 second quarter, improved mill operating performance and the impact of cost reduction efforts ($4 million), higher sales volumes particularly in uncoated and coated papers, pulp and containerboard ($14 million) and higher gains from forestland and real estate sales ($84 million) were all positive earning factors. However, these effects were more than offset by the impact of lower average sales prices ($44 million), continued high raw material costs including energy and caustic soda ($30 million) and other costs ($32 million), including higher workers’ compensation costs and various other items. Additionally, the $29 million of special charges included in segment operating profit in the third quarter of 2005 was $2 million lower than the $31 million included in the segment operating profit in the second quarter of 2005.

During the 2005 third quarter, International Paper took approximately 400,000 tons of downtime, including 270,000 tons for lack-of-order downtime, compared with approximately 180,000 tons of downtime in the third quarter of 2004, which included essentially no lack-of-order downtime. During the 2005 second quarter, International Paper took approximately 500,000 tons of downtime, including 275,000 tons for lack-of-order

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downtime. Lack-of-order downtime is taken to balance internal supply with our customer demand to help manage inventory levels, while maintenance downtime, which makes up the majority of the difference between total downtime and lack-of-order downtime, is taken periodically during the year. The costs for annual planned maintenance downtime are charged to expense evenly in each quarter. Downtime costs due to lack of orders are expensed in the periods in which the downtime is taken.

BUSINESS SEGMENT OPERATING RESULTS

The following presents segment discussions for the third quarter of 2005.

Printing Papers

	2005						2004
In millions	3rd Quarter		2nd Quarter		Nine Months		3rd Quarter		2nd Quarter		Nine Months
Sales	$	1,970	$	1,895	$	5,850	$	1,930	$	1,855	$	5,685
Operating Profit *		132		149		464		160		141		385

* Includes 2005 third quarter special charges of $6 million before taxes for severance charges related to the indefinite shutdown of three U.S. paper machines, $3 million before taxes for environmental reserves; 2005 second quarter special charges of $17 million before taxes for severance and other charges related to the indefinite shutdown of three U.S. paper machines.

Printing Papers net sales for the third quarter of 2005 were 4% higher than the second quarter of 2005 and 2% higher than the third quarter of 2004. Operating profits in the third quarter of 2005 were 11% lower than the second quarter of 2005, and 18% lower than in the third quarter of 2004.

Earnings for the third quarter of 2005 declined compared to the second quarter as lower earnings in U.S. uncoated papers and pulp and for our operations in Europe were partially offset by improved results for U.S. coated papers and Brazil. Pricing in the United States for both uncoated papers and pulp were down from the 2005 second quarter levels, while sales volumes were up slightly. Average price realizations for coated papers improved versus the second quarter, and operating results benefited from seasonally higher sales volume from a strong catalog season. Raw material and energy costs continued to increase and more than offset the favorable impact of strong mill operations. Third quarter of 2005 results also included a $6 million special charge for severance costs related to the indefinite shutdown of three U.S. paper machines, and a $3 million special charge for environmental reserves. Second quarter of 2005 results included a $17 million special charge for severance and other charges related to the indefinite shutdown of the three U.S. paper machines. In Europe, earnings declined compared to the second quarter due to lower volumes and higher raw material and energy costs. Volumes were lower due to a seasonal decline in sales and the start up of both the Kwidzyn, Poland and Svetogorsk, Russia mills following capital outages. Improved earnings in Brazil reflected higher sales volumes and sales prices, partially offset by increases in raw material and energy costs.

Earnings in the 2005 third quarter declined versus the 2004 third quarter reflecting lower sales volumes and higher raw material and energy costs in U.S. uncoated papers and lower U.S. pulp earnings. Strong U.S. coated paper results along with increased earnings in Brazil somewhat mitigated this decline, while results in Europe were essentially flat. In the U.S. uncoated papers business, total downtime in the third quarter of 2005 was 220,000 tons, of which 190,000 tons was related to lack of orders. This compares with a downtime total of 20,000 tons in the third quarter of 2004, none of which was related to lack of orders. This downtime, coupled with lower sales volumes, more than offset the benefits from significantly higher average sales prices and strong mill operations in the 2005 third quarter. Earnings were negatively impacted by the $6 million third quarter special charge related to the indefinite shutdown of three U.S. paper machines and the $3 million special charge related to environmental reserves discussed above. Increases in average coated paper prices and improved mill operations in the third quarter of 2005 compared to the third quarter of 2004

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more than offset the impact of increased raw material and energy costs. Coated paper sales volumes were flat. Pulp sales volumes were up, and mill operations improved year over year, but raw material and energy costs were higher and average sales prices were essentially flat. In Europe, sales volumes increased slightly, but the impact was offset by lower average sales prices. Favorable prices in Russia were offset by lower prices in Western and Central Europe. Higher raw material and energy costs offset the benefit from improved sales mix and mill operations. In Brazil, sales volumes were improved compared with the 2004 third quarter; however, this benefit was offset by higher raw material costs.

Entering the fourth quarter, we expect earnings to be lower than in the third quarter. In the United States, uncoated papers price realizations are expected to be lower due to the lower level of prices as the fourth quarter began, although volumes should be in line with the third quarter. Further increases in natural gas and fiber costs are anticipated, driven by the effects of the hurricanes in the southern United States. Start up costs associated with the rebuild and start up of a paper machine at our Eastover, South Carolina mill will also negatively impact earnings. Average pulp prices should improve slightly as announced price increases begin to be realized and an increase in pulp sales volumes is anticipated. Seasonal sales volume decreases in U.S. coated papers coupled with higher average input costs are expected to negatively impact earnings. In Europe, price realizations and overall sales volume are expected to improve.

Industrial Packaging

	2005						2004
In millions	3rd Quarter		2nd Quarter		Nine Months		3rd Quarter		2nd Quarter		Nine Months
Sales	$	1,115	$	1,240	$	3,650	$	1,330	$	1,125	$	3,535
Operating Profit *		33		85		223		133		70		249

* Includes 2005 third quarter special charges of $4 million before taxes to adjust reserves previously provided.

Industrial Packaging net sales for the third quarter of 2005 were 10% lower than the second quarter of 2005, and 16% lower than the third quarter of 2004. Operating profits in the third quarter of 2005 were 61% lower than the second quarter of 2005, and 75% lower than in the third quarter of 2004.

Compared with the 2005 second quarter, lower average containerboard prices were the principal factor in the decrease in earnings. However, this impact was partially offset by improved mill operations and a decline in lack-of-order downtime. This segment took 50,000 tons of downtime in the third quarter of 2005, all of which was related to lack of orders, compared to 200,000 tons of downtime in the second quarter of 2005, of which 140,000 was related to lack of orders. Higher distribution and energy costs and lower sales volumes also negatively impacted mill earnings. For the U.S. converting businesses, sales volumes also declined from the 2005 second quarter, reflecting a slight drop in market share. Earnings were also down due to lower price realizations and higher raw material, energy and distribution costs. The European converting business was negatively impacted by seasonally lower volumes in the agricultural segment and a $4 million special item to adjust reserves previously provided.

The decrease in operating profits in the third quarter of 2005 compared with the third quarter of 2004 reflected lower average sales prices and volumes for both containerboard and our converting businesses and an increase in lack-of-order downtime in the mills. Lack-of-order downtime in the third quarter of 2005 was approximately 50,000 tons compared to none in the third quarter of 2004. Costs for raw materials, freight and energy were significantly higher than in the prior year for both mill and converting operations.

Fourth quarter earnings expectations are generally mixed. International Paper’s announced price increases are not expected to impact earnings until mid-to-late in the quarter. Accordingly, average price realizations are projected to decline slightly. Containerboard sales volumes should improve, but sales volumes for the

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converting operations are expected to decline as the result of fewer shipping days. Raw material costs and energy costs are expected to be higher in the fourth quarter due to the effects of the hurricanes in the U.S. South.

Consumer Packaging

	2005						2004
In millions	3rd Quarter		2nd Quarter		Nine Months		3rd Quarter		2nd Quarter		Nine Months
Sales	$	685	$	650	$	1,965	$	665	$	645	$	1,920
Operating Profit *		37		41		101		50		41		122

* Includes 2005 third quarter special charges of $1 million before taxes for environmental reserves; 2004 second quarter estimated loss on the sale of Food Pack S.A. of $4 million before taxes.

Consumer Packaging net sales for the third quarter of 2005 were 5% higher than the second quarter of 2005 and 3% higher than the third quarter of 2004. Operating profits in the third quarter of 2005 were 10% lower than the second quarter of 2005 and 26% lower than in the third quarter of 2004.

Bleached board earnings for the 2005 third quarter declined compared to the 2005 second quarter due to lower sales volumes resulting from weaker demand in the folding carton, cupstock and cigarette packaging segments. Earnings were also negatively impacted by annual maintenance outages and increased lack-of-order downtime. In the third quarter the mills took 40,000 tons of downtime, of which 20,000 was related to lack of orders, compared to only 10,000 tons of downtime, all maintenance related, in the second quarter. Average sales price realizations also declined from the prior quarter. Compared to the second quarter of 2005, Shorewood’s earnings almost doubled with a seasonal upturn in the home entertainment segment. Beverage Packaging’s earnings improved slightly reflecting favorable pricing, while sales volumes were essentially flat. Earnings for the Foodservice business declined, partially due to the settlement of a lawsuit and an adjustment of the loss on the sale of the Jackson, TN bag plant in July 2005.

Compared to the third quarter of 2004, earnings in the third quarter of 2005 for Bleached board declined as the benefits of higher average sales price realizations and strong mill operations were more than offset by lower sales volumes, increased lack-of-order downtime and higher raw material and energy costs. In the third quarter of 2005, the mills took 20,000 tons of lack-of-order downtime compared to none in the third quarter of 2004. Shorewood’s earnings increased as a result of higher sales volumes in the home entertainment segment. Earnings for the Foodservice business were down due to a decrease in sales volumes, an increase in raw material costs, the settlement of a lawsuit and the adjustment of the loss on the sale of the Jackson, TN bag plant, partially offset by higher average sales prices and favorable operating costs. Beverage Packaging earnings declined due to increased raw material and energy costs; however, both sales volumes and prices increased.

Looking forward to the fourth quarter, expectations are mixed. Bleached board sales volumes should improve as the market for folding cartons strengthens. Average price realizations should be about flat as previously announced price increases will not have a significant impact until 2006. Increases in raw material and energy costs are expected to more than offset the positive volume factor. Seasonally stronger demand for home entertainment and consumer products is expected to lead to a further improvement in Shorewood’s earnings. Earnings for Foodservice should decrease slightly due to lower volumes and higher raw material costs. Beverage Packaging earnings for the fourth quarter are forecasted to decrease from third quarter levels. Sales volumes are expected to remain steady while sales prices should trend upwards; however, this will be offset by increased raw material costs.

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Distribution

	2005						2004
In millions	3rd Quarter		2nd Quarter		Nine Months		3rd Quarter		2nd Quarter		Nine Months
Sales	$	1,645	$	1,570	$	4,745	$	1,565	$	1,485	$	4,515
Operating Profit		23		18		59		27		21		65

Distribution’s 2005 third-quarter sales were up 5% from both the second quarter of 2005 and the third quarter of 2004. Operating profits were up 28% in the third quarter of 2005 compared with the second quarter of 2005, but down 15% compared with the third quarter of 2004.

Compared with the 2005 second quarter, earnings in the 2005 third quarter improved as sales volumes increased across all segments. Average prices were relatively flat, although printing segment prices were trending lower toward the end of the quarter.

Compared with 2004 third quarter results, sales volumes for facility supplies and packaging improved, partially offset by a decline in printing paper volumes. Compared to the prior year third quarter, average pricing improved in all segments. However, lower trading margins and increased fuel costs more than offset the higher prices, resulting in an earnings decrease compared to the third quarter of 2004.

Looking forward, operating results in the fourth quarter are expected to decrease slightly as the price of uncoated paper softens and as volumes decline below seasonally high third quarter levels due to the December holiday season.

Forest Products

	2005									2004
In millions	3rd Quarter			2nd Quarter			Nine Months			3rd Quarter			2nd Quarter			Nine Months
Sales	$	700		$	605		$	1,915		$	600		$	625		$	1,825
Operating Profit:
Forest Resources-
Gross Margin-
Sales of Forestlands		125			67			261			77			78			250
Harvest & Recreational Income		63			62			194			69			61			200
Forestland Expenses		(43	)		(39	)		(116	)		(43	)		(38	)		(123	)
Real Estate Operations		65			39			158			22			20			69
Wood Products		62			62			173			66			101			221
Operating Profit *	$	272		$	191		$	670		$	191		$	222		$	617

* Includes 2005 third and second quarter special charges of $2 million and $14 million before taxes, respectively, for costs associated with relocating the headquarters to Memphis, TN from Savannah, GA.

Forest Products net sales in the third quarter of 2005 were 16% higher than in the second quarter of 2005 and 17% higher than in the third quarter of 2004. Operating profits in the third quarter of 2005 were 42% higher than in both the second quarter of 2005 and the third quarter of 2004.

Compared with the second quarter of 2005, harvest income from Company forestlands was essentially unchanged. Gross margins from forestland sales in the third quarter of 2005 increased by $58 million reflecting both higher average per-acre pricing and an increase in acreage sold. Profits from sales of higher and better use real estate properties also increased by $26 million mainly due to the completion of a large,

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high value sale in South Carolina. Operating results for the second quarter of 2005 also included a $10 million special charge related to the relocation of the Forest Resources headquarters to Memphis, TN from Savannah, GA. Wood Products’ profits were flat quarter-to-quarter reflecting the impact of higher sales volumes, particularly in plywood as demand increased in response to the hurricanes in the South, offset by lower price realizations for lumber and plywood and higher wood costs. Wood Products’ 2005 third and second quarter results included special charges of $2 million and $4 million, respectively, related to the above headquarters relocation.

Compared with the 2004 third quarter, harvest income declined by $6 million reflecting lower harvest volumes. Gross margins on forestland sales increased $48 million. Forestland operating expenses were flat as lower administrative overhead costs offset the relocation costs discussed above. Real Estate operating profits rose by $43 million, reflecting the increased sales activity in the 2005 third quarter discussed above, while Wood Products’ profits decreased by $4 million as the benefits of higher sales volumes and improved sales mix were offset by higher raw material costs.

In the fourth quarter, a decline in timber harvest volumes is anticipated. This effect should be somewhat offset by a favorable product mix. However, lower forestland and real estate sales are expected to result in lower earnings. Wood Products’ earnings are forecasted to decrease as sales volumes and prices experience seasonal declines and wood and energy costs continue to increase.

Specialty Businesses and Other

	2005							2004
In millions	3rd Quarter			2nd Quarter		Nine Months		3rd Quarter		2nd Quarter		Nine Months
Sales	$	220		$	230	$	725	$	275	$	290	$	860
Operating Profit *		(8	)		7		9		7		14		31

* Includes 2005 third quarter special charges of $13 million before taxes related to a plant shutdown.

The Specialty Businesses and Other segment includes the operating results of Arizona Chemical, European Distribution, and certain smaller businesses. Third quarter of 2005 net sales were 4% lower than in the second quarter of 2005, and 20% lower than in the third quarter of 2004. Earnings in the 2005 third quarter were down significantly from both the 2005 second quarter and the 2004 third quarter.

Earnings for Arizona Chemical for third quarter of 2005 were down from second quarter of 2005 primarily due to the increase in natural gas costs and a reduced supply of available raw materials. Third quarter of 2005 results also included a $13 million special charge related to a plant shutdown in Norway. Looking ahead to the fourth quarter, a price surcharge has been announced that should help mitigate the effects of the increased input costs resulting from the hurricanes in the southern United States.

Liquidity and Capital Resources

Cash provided by continuing operations totaled $1.2 billion for the first nine months of 2005, up slightly from $1.1 billion in the comparable 2004 period. Higher earnings from continuing operations were partially offset by higher non-cash items, while working capital requirements for accounts receivable, inventories, accounts payable and accrued liabilities were slightly higher in the 2005 period.

Investments in capital projects totaled $771 million and $743 million for the first nine months of 2005 and 2004, respectively. Full year capital spending for 2005 is now expected to be approximately $1.3 billion or lower, which is below projected depreciation and amortization charges. Approximately $1.4 billion of proceeds were generated in the first nine months of 2005 from divestitures, including approximately $1.14

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billion from the sale in September 2005 of the Company’s interest in Carter Holt Harvey Limited, and proceeds from the sales of the Fine Papers and Industrial Papers businesses, Papeteries de France, and from the collection of a $25 million note receivable from the 2001 sale of the Flexible Packaging business.

Financing activities for the first nine months of 2005 included a $2.3 billion net decrease in debt and preferred securities versus a $1.0 billion net decrease during the comparable 2004 nine-month period. International Paper used a portion of the cash proceeds from the CHH sale to repay a subsidiary’s $250 million long-term debt with an interest rate of LIBOR plus 62.5 basis points and maturity date of June 2007, and $312 million of commercial paper that had been issued in the same quarter. International Paper plans to use most of the remaining cash from the CHH sale proceeds for further debt reduction. Other reductions in the third quarter 2005 included $662 million of notes with coupon rates ranging from 4% to 7.35% and original maturities from 2009 to 2029, and the repayment of $150 million of 7.10% notes with a maturity date of September 2005. In the second quarter 2005, International Paper repatriated approximately $1.2 billion in cash from certain of its foreign subsidiaries, including amounts under the American Jobs Creation Act of 2004. In June 2005, International Paper used approximately $400 million of cash available after the repatriations to repay a portion of a subsidiary’s long-term debt with an interest rate of LIBOR plus 62.5 basis points and a maturity date of June 2007. In February 2005, the Company redeemed the outstanding $464 million aggregate principal amount of International Paper Capital Trust 5.25% convertible subordinated debentures at 100.5% of par plus accrued interest, and made early payments of approximately $295 million on notes with coupon rates ranging from 4% to 7.875% and original maturities from 2006 to 2015.

In August 2004, an International Paper subsidiary issued 500 million euro-denominated long-term debt (equivalent to approximately $619 million at issuance) with an initial interest rate of EURIBOR plus 55 basis points and a maturity in August 2009. Third quarter 2004 debt reductions of approximately $500 million included $150 million of 8.125% notes with a scheduled maturity date of June 2024 and $193 million of debt assumed in connection with the Box USA acquisition. Also in the 2004 third quarter, International Paper repurchased $168 million of limited partnership interests in Georgetown Equipment Leasing Associates, L.P. and Trout Creek Equipment Leasing, L.P. In June 2004, International Paper issued $650 million of long-term debt with an interest rate of LIBOR plus 62.5 basis points and a scheduled maturity date of June 2007, which refinanced $650 million of long-term debt having an interest rate of LIBOR plus 100 basis points and a scheduled maturity of August 2004. In April 2004, $1.0 billion of 8.125% coupon rate debt was retired using the proceeds from the March 2004 issuance of $400 million of 5.25% notes due in April 2016 and $600 million of 4.00% notes due in April 2010. In January 2004, approximately $1.0 billion of debt with an 8.05% blended coupon rate was retired using $1.0 billion of proceeds from 4.875% coupon rate debt issued in December 2003.

On June 20, 2006, the holders of International Paper’s zero-coupon convertible debt have the option to require the Company to repurchase these securities at a price equal to the accreted principal amount of $1.2 billion plus interest. The repurchase may be settled in International Paper common stock or cash, or a combination of both, at the Company’s option, in an amount equal to the accreted principal amount through the repurchase date. The Company anticipates using a combination of cash from operations, from divestitures and from new debt issuances if this repurchase in 2006 is required.

At September 30, 2005 and December 31, 2004, International Paper classified $1.25 billion and $87 million, respectively, of tenderable bonds, commercial paper and bank notes and current maturities of long-term debt as Long-term debt. International Paper has the intent and ability to renew or convert these obligations, as evidenced by the credit facilities described below.

In the first nine months of 2005, approximately 3.0 million shares of common stock were issued for various incentive plans, including stock option exercises that generated $19.9 million of cash and restricted stock that does not generate cash. During the first nine months of 2004, approximately 1.3 million of common stock and 3.6 million treasury shares were issued for various incentive plans, including stock option exercises that generated $132 million of cash and restricted stock that does not generate cash. Common stock dividend

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payments totaled $368 million and $364 million for the first nine months of 2005 and 2004, respectively. Dividends were $0.75 per share in both periods.

Maintaining an investment-grade credit rating is an important element of International Paper’s finance strategy. In July 2005, Standard & Poor’s (S&P) reaffirmed the Company’s current long-term credit rating of BBB (negative outlook). On July 20, 2005, Moody’s Investor Services (Moody’s) announced that it had placed the Company’s debt ratings (currently Baa2 for long-term credit) on review for possible downgrade. Moody’s expects this review to be completed in November 2005. The Company currently has short-term credit ratings by S&P and Moody’s of A-3 and P-2, respectively.

International Paper expects to be able to meet projected capital expenditures, service existing debt and meet working capital and dividend requirements during 2005 through cash from operations, supplemented as required by its various existing credit facilities.

At September 30, 2005, International Paper has approximately $3.2 billion of committed liquidity, including contractually committed bank credit agreements and a receivables securitization program. As of September 30, 2005, International Paper had no outstanding borrowings under this receivables securitization program.

The Company will continue to rely upon debt capital markets for the majority of any necessary funding not provided by operating cash flow, proceeds from divestitures or repatriated cash. Funding decisions will be guided by our capital structure planning and liability management practices. The primary goals of the Company’s capital structure planning are to maximize financial flexibility and preserve liquidity while reducing interest expense. In 2005, the Company will continue to access the capital markets where there are opportunities to replace high coupon debt with new financing instruments at lower interest rates. The initial targeted reduction to $12 billion by the end of 2006 was already surpassed by the end of the 2005 third quarter, and additional reductions are anticipated in connection with the Company’s transformation plan.

Transformation Plan

On July 19, 2005, International Paper announced a plan to transform its business portfolio to concentrate on two key global platform businesses: Uncoated Papers and Packaging. Subsequently, the Company completed the sale of Carter Holt Harvey Limited for $1.14 billion. Consistent with the previously announced plan, the Company continues to evaluate strategic options for specific businesses, including the possible sale or spin-off of the businesses identified in the plan, and has distributed bid package information for some of these businesses. Based on an estimated amount of proceeds, the Company previously outlined a use-of-proceeds plan. The exact use of any such proceeds is dependent on various factors affecting future cash flows, such as the amounts received from divestments and changes in market conditions, input costs and capital spending. The Company remains committed to using its free cash flow to pay down debt, to return value to shareholders, and for selective high-return investments.

As this transformation plan is executed, it is expected that additional one-time implementation charges will be incurred in future periods.

Critical Accounting Policies

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires International Paper to establish accounting policies and to make estimates that affect both the amounts and timing of the recording of assets, liabilities, revenues and expenses. Some of these estimates require judgments about matters that are inherently uncertain.

Accounting policies whose application may have a significant effect on the reported results of operations and financial position of International Paper, and that can require judgments by management that affect their application, include SFAS No. 5, “Accounting for Contingencies,” SFAS No. 144, “Accounting for the

33

Impairment or Disposal of Long-Lived Assets,” SFAS No. 142, “Goodwill and Other Intangible Assets,” SFAS No. 87, “Employers’ Accounting for Pensions,” SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions,” as amended by SFAS No. 132 and 132R, “Employers’ Disclosures About Pension and Other Postretirement Benefits,” and SFAS No. 109, “Accounting for Income Taxes.”

The Company has included in its Annual Report on Form 10-K for the year ended December 31, 2004, a discussion of these critical accounting policies, which are important to the portrayal of the Company’s financial condition and results of operations and require management’s judgments. The Company has not made any changes in any of these critical accounting policies during the first nine months of 2005.

Significant Accounting Estimates

Pension Accounting. Net pension expense totaled approximately $182 million for International Paper’s U.S. plans for the nine months ended September 30, 2005, or about $99 million higher than the pension expense recorded for the first nine months of 2004. The increase in U.S. plan pension expense was principally due to an increase in the amortization of unrecognized actuarial losses over a shorter average remaining service period, a decrease in the assumed discount rate to 5.75% in 2005 from 6.00% in 2004, and a decrease in the expected return on plan assets to 8.50% in 2005 from 8.75% in 2004. Net pension expense for non-U.S. plans was about $12 million for the first nine months of both 2005 and 2004.

After consultation with our actuaries, International Paper determines key actuarial assumptions on December 31 of each year that are used to calculate liability information as of that date and pension expense for the following year. Key assumptions affecting pension expense include the discount rate, the expected long-term rate of return on plan assets, the expected rate of future salary increases, and various demographic assumptions including expected mortality.

The discount rate assumption is determined based on a yield curve that incorporates approximately 570 Aa-graded bonds. The plans’ projected cash flows are then matched to the yield curve to develop the discount rate. At December 31, 2004, International Paper used a 5.75% discount rate assumption for calculation of 2005 pension expense. While the calculation of pension expense for 2006 will depend upon the rate at December 31, 2005, interest rates are currently below December 31, 2004 levels. Lower rates result in an increase in pension expense, while higher rates result in lower expense. A change in the discount rate of 25 basis points compared with December 31, 2004 would have about a $25 million impact on 2006 pension expense.

The expected long-term rate of return on plan assets reflects projected returns for an investment mix, determined upon completion of a detailed asset/liability study that meets the plans’ investment objectives. At December 31, 2005, International Paper’s expected long-term rate of return assumption was 8.50%. Actual plan asset returns for 2005 through September 30 were 8.4%, and no change to this assumption is anticipated at December 31, 2005. An increase in this rate would result in a decrease in pension expense. A 25 basis point change in this rate would have about a $15 million impact on 2006 pension expense.

International Paper used an expected rate of future salary increases of 3.25% at December 31, 2004 and anticipates no change in this rate for the December 31, 2005 calculation. However, International Paper intends to revise its expected mortality assumption by using a more recent mortality table beginning with the December 31, 2005 calculation. While the actual impact on expense will depend upon the final table selected, it is currently estimated that this change will increase 2006 pension expense by approximately $85 million compared with 2005.

Changes in key actuarial assumptions can also affect the minimum pension liability and related charge to Other comprehensive income in Shareholders’ equity. While any adjustment in 2005 will depend upon actual factors at December 31, 2005, a 25 basis point decline in the discount rate assumption would result in

34

approximately a $160 million net charge to Shareholders’ equity. Additionally, the change in the mortality assumption will result in approximately a $350 million charge to Shareholders’ equity at December 31, 2005.

At September 30, 2005, the market value of plan assets for International Paper’s U.S. plans totaled approximately $6.9 billion, consisting of approximately 60% equity securities, 28% fixed income securities, and 12% real estate and other assets.

While International Paper may elect to make voluntary contributions to its U.S. qualified plan up to the maximum deductible amount per IRS tax regulations in the coming years, it is unlikely that any contributions to the plan will be required before 2007 unless International Paper changes its funding policy to make contributions above the minimum requirements.

Accounting for Stock Options. International Paper accounts for stock options using the intrinsic value method under APB Opinion No. 25, “Accounting for Stock Issued to Employees.” Under this method, compensation expense is recorded over the related service period when the market price exceeds the option price at the measurement date, which is the grant date for International Paper’s options. No compensation expense is recorded as options are issued with an exercise price equal to the market price of International Paper stock on the grant date.

During each reporting period, fully diluted earnings per share is calculated by assuming that “in-the-money” options are exercised and the exercise proceeds are used to repurchase shares in the marketplace. When options are actually exercised, option proceeds are credited to equity and issued shares are included in the computation of earnings per common share, with no effect on reported earnings. Equity is also increased by the tax benefit that International Paper will receive in its tax return for income reported by the optionees in their individual tax returns.

During 2003, the Company decided to eliminate its stock option program for all U.S. employees with the intent of minimizing the use of stock options globally in 2006. In the United States, the stock option program was replaced with performance-based restricted shares for approximately 1,250 employees to more closely tie long-term incentive compensation to Company performance on two key performance drivers: return on investment (ROI) and total shareholder return (TSR). As part of this shift in focus away from stock options to performance-based restricted stock, the Company accelerated the vesting of all 14 million unvested stock options to July 12, 2005. The Company also considered the benefit to employees and the income statement impact in making its decision to accelerate the vesting of these options. Based on the current market value of the Company’s common stock on July 12, 2005, the exercise prices of all such stock options were above the current market value and, accordingly, the Company recorded no expense as a result of this action.

Under the provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” expense for stock options is measured at the grant date based on a computed fair value of options granted, and then charged to expense over the related vesting period. Had this method of accounting been applied, additional after-tax expenses of $55 million and $30 million would have been recorded in the first nine months of 2005 and 2004, respectively, decreasing the reported earnings per share – assuming dilution from $2.36 and $(0.42) for the first nine months of 2005 and 2004, respectively, to $2.25 and $(0.48) in the first nine months of 2005 and 2004, respectively.

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Forward-Looking Statements

This Quarterly Report on Form 10-Q, and in particular, statements found in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, as well as oral statements and written reports made from time to time by the Company, contain forward-looking statements. Such 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 statements reflect management’s current views and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these statements.

Factors which could cause actual results to differ relate to:

• Market and Economic Factors, including:

• Changes in the cost or availability of raw material and energy. The Company relies heavily on the availability of certain raw materials in its manufacturing process. Supply and demand for these raw materials could materially affect the availability of, or prices for, such raw materials. In addition, the Company’s manufacturing operations utilize natural gas, electricity and other forms of energy. The Company may hedge a portion of the risk with respect to energy prices when it deems it appropriate to do so. There can be no assurance that the Company is protected against any changes in the price or availability of energy sources.

• Competition, demand and pricing for the Company’s products. The Company faces intense competition both domestically and internationally for its products in all of its current operating segments, including the two key platform businesses under the Company’s previously announced transformation plan, uncoated papers and packaging. The supply/demand balance in the markets in which the Company operates may lead to price competition and product substitutions may lead to lower consumption of the Company’s products, both of which could have an adverse impact on revenues and financial results.

• The level of housing starts. Demand for certain of the Company’s products is dependent in part on the level of housing starts in domestic and international markets. Declines in housing starts could have a material adverse impact on sales volumes and pricing for those products as well as on the feasibility and terms of any sale or spin-off of the wood products business.

• Changes in international economic conditions. The Company’s results could be substantially affected by foreign market risks in the countries in which the Company has manufacturing facilities or sells its products. Specifically, Brazil, Russia, Poland and China, where substantial manufacturing facilities exist, are developing countries subject to economic and political instability. Downturns in economic activity, adverse foreign tax consequences or any change in social, political or labor conditions in any of these countries or regions may affect the Company’s financial results.

• Changes in currency exchange rates. The Company is impacted by the movement of various currencies relative to the U.S. dollar. The Company may hedge a portion of the risk from its transactions and commitments denominated in non-U.S. dollar currencies when it deems it appropriate to do so. There can be no assurance that the Company will be protected against substantial foreign currency fluctuations.

• Changes in credit ratings issued by nationally recognized statistical rating organizations. The Company’s debt ratings are from time to time reviewed by the rating organizations and remain subject to change. Any such change could impact the Company’s cost and ability to borrow funds, as well as its cost to reduce outstanding debt under the Company’s transformation plan.

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• Pension and healthcare costs. The Company’s pension and healthcare benefits are dependent upon numerous factors resulting from actual plan experience and assumptions of future experience. Pension plan assets are primarily made up of equity and fixed income investments. Fluctuations in actual equity market returns as well as changes in general interest rates may result in increased or decreased pension costs in future periods. Likewise, changes in assumptions regarding current discount rates and expected rates of return on plan assets could also increase or decrease pension costs. Future pension funding requirements could be affected by legislation currently being considered in the U.S. Congress.

• Natural disasters. The occurrence of a natural disaster, such as a hurricane, tropical storm, tornado, flooding or other unanticipated problem, could cause operational disruptions which could impair our profitability.

• The Company’s Transformation Plan, including:

• Ability to accomplish the transformation plan. On July 19, 2005, the Company announced a three-part plan (the “Plan”) to transform its business portfolio to improve returns, strengthen the balance sheet and return cash to shareholders. The Plan includes narrowing the Company’s business portfolio to two key global platform businesses: uncoated papers (including the xpedx distribution business) and packaging. Among the uncertainties that exist to completing the Plan are uncertainties relating to the Company’s ability to divest or spin-off the businesses under evaluation as well as the timing, terms and net proceeds of any such transactions.

• Impact of the Plan on the Company’s relationships with its employees, customers and vendors.

• Ability to realize anticipated profit improvement from the Plan. The profitability of the Company’s two platform businesses, uncoated papers and packaging, is subject to variable demand and the Company’s ability to execute internal profit initiatives, including ongoing supply chain and overhead initiatives and volume/mix improvements. There can be no assurance that profit improvements will be achieved.

• Results of legal proceedings and compliance costs, including:

• Unanticipated expenditures related to the cost of compliance with environmental and other governmental regulations. The Company’s operations are subject to significant regulation by federal, state and local environmental and safety authorities both domestically and internationally. There can be no assurance that the costs of compliance with existing and new regulations will not require significant capital expenditures.

• Results of legal proceedings. The costs and other effects of pending litigation against the Company and related insurance recoveries cannot be determined with certainty. Although the disclosure in Part II, Item 1. “Legal Proceedings,” together with the disclosure contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 and in its subsequently filed Quarterly Reports on Form 10-Q, contains management’s current views as of the respective dates of such reports of the impact such litigation would have on the Company’s financial results, there can be no assurance that the outcome of such proceedings will be as expected.

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INTERNATIONAL PAPER COMPANY

Financial Information by Industry Segment

(Unaudited)

(In millions)

Sales by Industry Segment

	Three Months Ended September 30,						Nine Months Ended September 30,
	2005			2004 (1)			2005			2004 (1)
Printing Papers	$	1,970		$	1,930		$	5,850		$	5,685
Industrial Packaging (2)		1,115			1,330			3,650			3,535
Consumer Packaging (2)		685			665			1,965			1,920
Distribution		1,645			1,565			4,745			4,515
Forest Products		700			600			1,915			1,825
Other Businesses (3)		220			275			725			860
Corporate and Inter-segment Sales		(299	)		(349	)		(887	)		(998	)
Net Sales	$	6,036		$	6,016		$	17,963		$	17,342

Operating Profit by Industry Segment

	Three Months Ended September 30,						Nine Months Ended September 30,
	2005			2004 (1)			2005			2004(1)
Printing Papers	$	132	(4)	$	160		$	464	(4,7)	$	385
Industrial Packaging (2)		33	(4)		133			223	(4)		249
Consumer Packaging (2)		37	(4)		50			101	(4)		122	(9)
Distribution		23			27			59			65
Forest Products		272	(4)		191			670	(4,7)		617
Other Businesses (3)		(8	)(4)		7			9	(4)		31
Operating Profit		489			568			1,526			1,469
Interest expense, net		(120	)(5)		(180	)		(442	)(5,8)		(541	)
Minority interest (6)		—			1			1			2
Corporate items, net		(142	)		(101	)		(430	)		(313	)
Restructuring and other charges		(41	)		(26	)		(65	)		(153	)
Insurance recoveries		188			103			223			103
Net (losses) gains on sales and impairments of businesses held for sale		(5	)		(38	)		(65	)		(56	)
Reversal of reserves no longer required, net		3			6			3			19
Earnings from continuing operations before income taxes and minority interest	$	372		$	333		$	751		$	530

(1) Prior-year industry information has been restated to conform to 2005 management structure.

(2) Beginning with the 2005 first quarter, Industrial Packaging and Consumer Packaging are reported as separate industry segments. Prior-period segment information has been restated to reflect this presentation.

(3) Includes Arizona Chemical, European Distribution and certain smaller businesses.

(4) Includes a 2005 third quarter special charge of $6 million before taxes in the Printing Papers segment for severance charges related to the indefinite shutdown of three U.S. paper machines, $3 million before taxes in the Printing Papers segment and $1 million before taxes in the Consumer Packaging segment for environmental reserves, $4 million before taxes in the Industrial Packaging segment related to adjust reserves previously provided, $2 million before taxes in the Forest Products segment for costs associated with relocating the headquarters to Memphis, TN from Savannah, GA, and $13 million before taxes in the Other Businesses segment related to a plant shutdown.

(5) Includes interest income of $43 million before taxes related to completion of a tax audit.

(6) Operating profits for industry segments include each segment’s percentage share of the profits of subsidiaries included in that segment that are less than wholly owned. The pre-tax minority interest for these subsidiaries is added here to present consolidated earnings before income taxes and minority interest.

(7) Includes 2005 second quarter special charges of $17 million before taxes in the Printing Papers segment for severance and other charges related to the indefinite shutdown of three U.S. paper machines, and $14 million before taxes in the Forest Resources segment for 2005 second quarter costs associated with relocating the Forest Products headquarters to Memphis, TN from Savannah, GA.

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(8) Includes interest income of $11 million before taxes from the collection of a note receivable from the 2001 sale of the Flexible Packaging business.

(9) Includes a 2004 second quarter estimated loss on the sale of Food Pack S.A. of $4 million before taxes in the Consumer Packaging segment.

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INTERNATIONAL PAPER COMPANY

Sales Volumes By Product (1) (2)

(Unaudited)

International Paper Consolidated

	Three Months Ended September 30,		Nine Months Ended September 30,
	2005	2004	2005	2004
Printing Papers (In thousands of short tons)
Brazil Uncoated Papers	111	117	330	345
Europe & Russia Uncoated Papers and Bristols	342	336	1,059	1,036
U.S. Uncoated Papers and Bristols	1,041	1,143	3,197	3,488
Uncoated Papers and Bristols	1,494	1,596	4,586	4,869
Coated Papers	572	574	1,582	1,641
Market Pulp (3)	402	309	1,149	1,048
Packaging (In thousands of short tons)
Container of the Americas	752	795	2,294	2,053
European Container (Boxes)	262	256	794	767
Other Industrial and Consumer Packaging	264	278	788	796
Industrial and Consumer Packaging	1,278	1,329	3,876	3,616
Containerboard	467	556	1,375	1,629
Bleached Packaging Board	341	378	1,063	1,128
Kraft	155	170	456	468
Forest Products (In millions)
Panels (sq. ft. 3/8" - basis)	444	411	1,212	1,201
Lumber (board feet)	675	644	1,951	1,850

(1) Sales volumes include third party and inter-segment sales.

(2) Sales volumes for divested businesses are included through the date of sale, except for discontinued operations.

(3) Includes internal sales to mills.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information relating to quantitative and qualitative disclosures about market risk is shown on pages 31 and 32 of International Paper’s Form 10-K Annual Report for the year ended December 31, 2004, which information is incorporated herein by reference.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Controls and Procedures:

As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (Exchange Act), Company management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e) as of September 30, 2005. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report. As required by Exchange Act Rule 13a-15(d), Company management, including the Chief Executive Officer and Chief Financial Officer, also conducted an evaluation of the Company’s internal control over financial reporting to determine whether any changes occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Based on that evaluation, there has been no such change during the quarter covered by this report.

Changes in Internal Controls:

The Company has ongoing initiatives to standardize and upgrade its financial, operating and supply chain systems. The system upgrades will be implemented in stages, by business, over the next several years. Management believes the necessary procedures are in place to maintain effective internal controls over financial reporting as these initiatives continue.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The following matters discussed in previous filings under the Exchange Act, are updated as follows:

Exterior Siding and Roofing Litigation

A discussion of developments relating to the financial impact of certain class action lawsuits that were settled in 1998 and 1999 is found in Note 9 in this Form 10-Q.

Other Litigation

The “Quality Supplier” class action lawsuit pending in Federal District Court in Columbia, South Carolina is discussed in Note 10 to the Financial Statements included in International Paper’s Annual Report on Form 10-K for the year ended December 31, 2004, and in its Quarterly Report on Form 10-Q for the period ended June 30, 2005.

The linerboard class action lawsuit, which was settled in September 2003, and the linerboard opt-out cases are discussed in Note 10 to the Financial Statements included in International Paper’s Annual Report on Form 10-K for the year ended December 31, 2004, and in its Quarterly Report on Form 10-Q for the period ended June 30, 2005.

The high pressure laminates antitrust lawsuits, which were settled in 2004, are discussed in Note 10 to the Financial Statements included in International Paper’s Annual Report on Form 10-K for the year ended December 31, 2004, and in its Quarterly Report on Form 10-Q for the period ended June 30, 2005.

The publications papers antitrust lawsuits are discussed in Note 10 to the Financial Statements included in International Paper’s Annual Report on Form 10-K for the year ended December 31, 2004, and in its Quarterly Report on Form 10-Q for the period ended June 30, 2005.

International Paper is also involved in various other inquiries, administrative proceedings and litigation relating to contracts, sales of property, environmental protection, tax, personal injury and other matters, some of which allege substantial monetary damages. While any proceeding or litigation has the element of uncertainty, International Paper believes that the outcome of any of the other lawsuits or claims that are pending or threatened, or all of them combined, will not have a material adverse effect on its consolidated financial statements.

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ITEM 6. EXHIBITS

(a)	Exhibits
	10.1	Share Purchase Agreement by and among International Paper Container Holdings (Spain) S.L. and Financiere Papier Et Carton Kadiria-Finapack dated September 15, 2005
	10.2	Shareholders’ Agreement by and between International Paper Container Holdings (Spain) S.L. and Cofipac dated September 15, 2005
	10.3	Share Purchase Agreement among Maghreb Private Equity Fund Ltd., Capital Morocco, Access Capital Atlantique Maroc, Afric-Invest Limited, Atijariwafa Bank, Ms. Hanane Mechat and International Paper Container Holdings (Spain) S.L. dated October 3, 2005 (previously dated September 15, 2005)
	11	Statement of Computation of Per Share Earnings
	12	Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
	31.1	Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31.2	Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

INTERNATIONAL PAPER COMPANY (Registrant)
Date: November 8, 2005	By	/s/ MARIANNE M. PARRS
		Marianne M. Parrs
		Executive Vice President and Chief Financial Officer
Date: November 8, 2005	By	/s/ ROBERT J. GRILLET
		Robert J. Grillet
		Vice President – Finance and Controller

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EX-10.1

Exhibit 10.1

SHARE PURCHASE AGREEMENT

BY AND AMONG

INTERNATIONAL PAPER CONTAINER HOLDINGS (Spain) S.L.

AND

FINANCIERE PAPIER ET CARTON KADIRIA - FINAPACK

DATED SEPTEMBER 15, 2005

Table of Contents

ARTICLE I DEFINITIONS		6
1.1     Defined Terms		6
1.2     Presumption and Headings		10
ARTICLE II PURCHASE AND SALE		10
2.1     Purchase and Sale of the Acquired Shares		10
2.2     Consideration for the Acquired Shares		10
2.2.1	Purchase Price	10
2.2.2	Method of Payment	11
ARTICLE III CLOSING		11
3.1     Date and Place of Closing		11
3.2     Closing Deliveries		11
ARTICLE IV REPRESENTATIONS AND WARRANTIES		12
4.1     Representations and Warranties of the Seller		12
4.1.1	Financial Statements	12
4.1.2	Authority and Powers and Enforceability	13
4.1.3	Setting up of CMCP and its Subsidiaries	13
4.1.4	Shares of CMCP and its Subsidiaries	13
4.1.5	Transfer of the Acquired Shares	14
4.1.6	Registers and Documents	15
4.1.7	Options, Mortgages and Other Liens	15
4.1.8	Compliance with Laws and Regulations	15
4.1.9	Contracts	15
4.1.10	Unusual Contracts, Financial Commitments, Contracts with Shareholders	16
4.1.11	Off-Balance Sheet Liabilities and Commitments	17
4.1.12	Profit Sharing Agreements	17
4.1.13	Clients and Suppliers	17
4.1.14	Insolvency	17
4.1.15	Litigation	17
4.1.16	Employees, Corporate Officers of CMCP and its Subsidiaries	18
4.1.17	Retirement	19
4.1.18	Movable Assets and Real Property	19
4.1.19	Leases	20
4.1.20	Intellectual Property Rights	20
4.1.21	Insurance	21
4.1.22	Powers and Authorizations	21
4.1.23	Taxes, Duties and Contributions	21

4.1.24	Inventories	22
4.1.25	Products and Services	23
4.1.26	Environment	23
4.1.27	Third Party Consents	23
4.1.28	Pre-signing transactions	23
4.1.29	Affiliates Transactions	24
4.1.30	Illegal Payments	24
4.1.31	No Advisors’ Fees	24
4.1.32	Truthfulness of the Representations	24
4.2     Representations and Warranties of the Purchaser		24
4.2.1	Authority and Powers and Enforceability	24
4.2.2	Setting up of the Purchaser	25
ARTICLE V COVENANTS		25
5.1     Covenants of the Seller		25
5.1.1	Operation of the Business	25
5.1.2	Restricted Actions	26
5.1.3	CMCP Corporate Structure	27
5.1.4	Permits and Consents	27
5.1.5	Macarpa Acquisition	28
5.1.6	Share Capital Reduction	28
5.1.7	Past Restructurings	28
5.1.8	Tax Matters	28
5.1.9	Specific Indemnities	28
5.1.10	Cooperation	29
5.1.11	Notices	29
5.2     Mutual Covenants		30
5.2.1	Publicity	30
5.2.2	Fullfilment of Conditions Precedent.	30
5.2.3	Confidentiality	30
ARTICLE VI CONDITIONS PRECEDENT		31
6.1     Condition to Obligation of both Parties to Close		31
6.1.1	No Legal Impediment	31
6.2     Condition to Obligation of the Purchaser to Close		31
6.2.1	Representations and Warranties True and Correct	31
6.2.2	Compliance with the Obligations of this Agreement	31
6.2.3	No Material Adverse Change	31
6.2.4	Satisfactory Implementation of the Prior Transactions Set Forth in Schedule 4.1.28	31
6.2.5	Notification of transfer of first demand guaranty and original version of this guaranty	32
6.3     Condition to Obligation of the Seller to Close		32

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6.3.1	Representations and Warranties True and Correct	32
ARTICLE VII INDEMNIFICATION		32
7.1     Indemnification Principles		32
7.1.1	Seller’s Agreement to Indemnify	32
7.1.2	Limitation of Liability	33
7.2     Survival of Representations and Warranties		34
7.3     Third Party Claims		34
7.4     Indemnification Procedure		35
7.4.1	Notices	35
7.4.2	When Payable	36
7.5     Guarantees		36
7.5.1	Pledge of Shares	36
7.5.2	Transfer of bank guaranty	36
ARTICLE VIII TERMINATION		37
8.1     Grounds for Termination		37
8.2     Effect of Termination		37
ARTICLE IX MISCELLANEOUS PROVISIONS		37
9.1       Fees and Expenses		37
9.2       Notices		38
9.3       Transfer		39
9.4       No Shop		39
9.5       Entire Agreement		39
9.6       Incorporation by Reference; Disclosure Schedules		39
9.7       Confidentiality		39
9.8       Modifications and Waivers		39
9.9       Severability		39
9.10     Language		40
9.11     Governing Law		40
9.12     Dispute Resolution		40

4

SHARE PURCHASE AGREEMENT

BETWEEN THE UNDERSIGNED:

I.P. CONTAINER HOLDINGS (Spain) S.L., a company organized and existing under the Laws of Spain with a capital of EUR 6,000, having its registered office in Madrid - 20, General Yagüe, 28020 Spain, and currently undergoing registration of its company number, duly represented by Mr. Marc Van Lieshout (the “Purchaser”) and

FINANCIERE PAPIER ET CARTON KADIRIA, abbreviated as FINAPACK, a société anonyme (corporation) with managing board and supervising board, organized and existing under the Laws of Morocco with a capital of MAD 226,000,000, having its head office at Casablanca (Aïn Sebaâ) – Route Secondaire 110, boulevard Chefchaouni and registered under number 93.957 with the Registry of Commerce of Casablanca, duly represented by Mr. Aziz Qadiri (“FINAPACK”) (the “Seller”)

(each of the Seller and the Purchaser are referred to individually as a “Party” and collectively as the “Parties”).

RECITALS

WHEREAS, the Seller, as of today, owns directly and through its subsidiary COFIPAC one hundred percent (100%) of Groupe CMCP, a société anonyme (corporation) with managing board and supervising board, organized under the laws of Morocco with a capital being reduced to MAD 448,220,000, having its head office at Kénitra, Quartier Industriel, Morocco, registered under number 9.919 with Kénitra Registry of Commerce (“CMCP”);

WHEREAS, CMCP is engaged in the business of purchase, import, sale, export, manufacturing and transformation of cellulose, paper and cardboard and all similar or related items or products, including the machines and parts necessary for their manufacture (the “Business”);

WHEREAS, the Purchaser is a wholly-owned subsidiary of International Paper Company, a US corporation having its head office at 400 Atlantic Street, Stamford, Connecticut 06921, USA;

WHEREAS, the Seller desires to sell to the Purchaser, and the Purchaser desires to purchase from the Seller, fifty-one percent (51%) of all of the outstanding shares of CMCP at the Closing Date, of par value MAD 100 (the “Acquired Shares”);

WHEREAS, the Purchaser has separately agreed to acquire an additional 15.49% of the equity and voting rights of CMCP from various parties presently shareholders of FINAPACK and who will be shareholders of CMCP on the Closing Date following the ongoing share exchange transaction described in Schedule 4.1.28.;

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WHEREAS, simultaneously with the execution of this Agreement, COFIPAC and the Purchaser have entered into that Shareholders’ Agreement (the “Shareholders’ Agreement”) to set forth the terms and conditions concerning their relationship as shareholders in CMCP and to provide for the orderly governance and the management of CMCP following the consummation of the transactions contemplated by this Agreement;

NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

ARTICLE I

DEFINITIONS

1.1 Defined Terms

For the purposes of this Agreement, unless the context requires otherwise, the following terms shall have the following meanings:

Accounting Principles	means Moroccan GAAP, as applied according to Schedule 4.1.1;
Acquired Shares	means 2,285,922 Shares representing fifty-one percent (51%) of the share capital and voting rights of CMCP;
Affiliate	means, with respect to any Person: (a) any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with, such first Person. The term “control” (including its correlative meanings “controlled by” and “under common control with”) shall have the meaning ascribed thereto in Article L. 233-3 of the French Commercial Code (Code de Commerce). (b) any Person that serves as a director or officer of such specified Person;
Antitrust Notification	means the notification of the Transaction to the Moroccan Prime Minister as regards Moroccan competition Laws;
Appendix	means any appendix to this Agreement signed by the Parties;
Business Day	means any day other than a Saturday, Sunday or other days on which banking institutions are authorized or obligated by Laws to be closed in Casablanca or Paris, as the case may be.

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Cleanup	means all actions required to: (i) cleanup, remove, treat or remediate Hazardous Substances in the outdoor environment; (ii) prevent the release of Hazardous Substances so that they do not migrate, endanger or threaten to endanger public health or welfare or the outdoor environment; (iii) perform preremedial studies and investigations and postremedial monitoring and care; (iv) respond to any government requests for information or documents in any way relating to cleanup, removal, treatment or remediation or potential cleanup, removal, treatment or remediation of Hazardous Substances in the outdoor environment; or (v) any legal or administrative proceedings related to items (i) through (iv), including, but not limited to, actions brought by third parties to recover costs incurred with respect to Cleanup;
Closing	means the sale of the Acquired Shares by the Seller to the Purchaser and the payment of the Purchase Price by the Purchaser to the Seller hereunder;
Closing Date	means the date on which the Closing shall occur;
Consent	means any or all authorization, approval, consent, filing, permit, license, registration and notification, including Antitrust Clearance, whether from a Governmental Authority or a third party;
Contract	means any contract, agreement, undertaking, commitment, lease, license, mortgage, bond, note or instrument, whether written or oral, that is legally binding, and to which CMCP or any of its Subsidiaries is a party;
Environmental Law	means all applicable environmental, health and safety Laws in Morocco;
Financial Statements	has the meaning given to it under Article 4.1.1;

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GAAP	means Moroccan generally accepted accounting principles and practices;
Governmental Authority	means any government or any subdivision of the foregoing, authority, agency, commission, or other similar body including any control commission or similar regulatory body, or any court, tribunal, or judicial or arbitral body of any jurisdiction;
Governmental Order	means any order entered by or with any Governmental Authority specifically relating to CMCP or any of its Subsidiaries;
Hazardous Substances	means all substances or materials regulated as explosive, flammable, toxic or radioactive under any Environmental Law;
Indebtedness	means (i) obligations for borrowed money (including penalties, prepayment and other fees and accrued interest thereon), (ii) securitized receivables whether with or without recourse, (iii) obligations under financing leases and crédits-baux, (iv) indebtedness for the deferred purchase price of property or services (other than trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices), and (v) all amounts owed by CMCP and any of its Subsidiaries to Affiliates or third parties under a loan, a line of credit or overdraft or cash pooling arrangements;
Indemnifiable Loss	has the meaning given to it under Article 7.1.1;
Law	means all applicable enforceable treaties, laws, regulations, directives, circulaires, orders, decrees, judgments, injunctions, permits, approvals, authorizations, permissions or notices applicable as of the Closing Date.
Liens	means liens, pledges, mortgages, charges, security interests, burdens, encumbrances, options, pre-emption rights, voting agreements, guarantees, usufructs or other restrictions or limitations of any nature whatsoever;
Material Adverse Change	means any event, circumstance, loss, or other occurrence which, individually or in the aggregate with other events, circumstances, losses, or other occurrences, has a Material Adverse Effect;

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Material Adverse Effect	means an effect, whether internal or external to the Business of CMCP and its Subsidiaries, materially adverse to the financial condition, results of operations, assets or prospects of CMCP or any of its Subsidiary, or to the Purchaser as a majority shareholder of CMCP;
Off Balance Sheet Liabilities	means the off balance sheet liabilities of CMCP and its Subsidiaries as required to be disclosed under GAAP;
Past Restructurings	has the meaning given to it under Article 5.1.7;
Person	means any natural person, corporation, general or limited partnership, limited liability company, proprietorship, other business organization or entity, trust, union, unincorporated association, Governmental Authority or other organization;
Premises	means any site, plot of land, real property, office or construction owned or leased by CMCP or any of its Subsidiaries for the conduct of its Business;
Restructuring Plan	means the decrease of workforce implemented by CMCP as part of the restructuring of the group;
Schedule	means any schedule delivered by the Seller to the Purchaser concurrently with the execution of this Agreement and signed by the Parties, which sets forth the exceptions to the representations and warranties contained in this Agreement and certain other information called for by this Agreement;
Share Capital Reduction	means CMCP’s capital reduction to MAD 448,220,000 by means of a buyback of Shares as described in Schedule 4.1.28;
Shares	means any or all of the outstanding shares of capital stock and voting rights of CMCP on a fully diluted basis;
Subsidiary	means, with regards to any Person, any other Person directly or indirectly controlled by such first Person where “control” and correlatively “controlled by” have the meaning set forth in Article L. 233-3 of the French Commercial Code. It is specified, for the record, that on the date hereof CMCP does not hold any Subsidiary.

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Tax

means any tax (including income tax, profit tax, withholding tax, précompte, capital gains tax, value-added tax, sales tax, property tax, gift tax, real estate tax, excise tax, retirement, unemployment, and social security contributions in any applicable jurisdiction), tariff or duty (including any stamp or customs duty) and any fine, penalty, interest or addition to tax imposed, assessed or collected by or under the authority of any Governmental Authority;

Transaction

has the meaning given to it under Article 2.1;

1.2 Presumption and Headings

The Parties acknowledge that each Party and its counsels have reviewed and revised this Agreement and that in the event an ambiguity or question of intent of the Parties or interpretation arises regarding this Agreement, this Agreement (including any Appendices and Schedules) shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring either Party to this Agreement by virtue of the authorship of any provisions to this Agreement. The Article headings contained in this Agreement are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Agreement.

ARTICLE II

PURCHASE AND SALE

2.1 Purchase and Sale of the Acquired Shares

Upon the terms and subject to the conditions set forth in this Agreement, at the Closing Date the Seller shall sell to the Purchaser, and the Purchaser shall purchase from the Seller, the Acquired Shares free and clear of all Liens, for the consideration for the price set forth in Article 2.2 (the “Transaction”). IP shall have the economic rights attaching to the Acquired Shares as of July 1^st, 2005. Consequently, IP shall have the right to receive 50% (fifty percent) of the share of dividends relating to the 2005 fiscal year corresponding to the percentage of its interest in CMCP’s share capital.

2.2 Consideration for the Acquired Shares

2.2.1 Purchase Price

The consideration to be paid for the Acquired Shares (hereafter referred to as the “Purchase Price”) shall be:

MAD four hundred and fifty-nine million (MAD 459,000,000).

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2.2.2 Method of Payment

On the Closing Date, the Purchaser shall pay to the Seller the Purchase Price by wire transfer in same day immediately available funds in Casablanca.

ARTICLE III

CLOSING

3.1 Date and Place of Closing

Unless otherwise agreed in writing between the Parties, consummation of the Transaction pursuant to the terms of this Agreement (the “Closing”) shall take place at the offices of Société Générale Marocaine de Banque in Casablanca, at 10:00 a.m. (local time) on the later the date that is ten (10) Business Days following satisfaction (or waiver if permitted) of the conditions referred to in Article VI.

3.2 Closing Deliveries

On the Closing Date:

(a) the Seller shall deliver or shall cause to be delivered to the Purchaser:

(i) transfer certificates and certified extracts from Shareholders Accounts, or other document or documents necessary to effect the transfer of the Acquired Shares; and

(ii) copies of resolutions of the relevant corporate bodies of CMCP approving the transfer of the Acquired Shares to the Purchaser pursuant to this Agreement, to the extent that the Laws or the bylaws require for such resolutions to be passed in order for such transfer of shares to be validly entered into.

(b) the Purchaser shall deliver or shall cause to be delivered to the Seller the Purchase Price by bank wire transfer in same day available funds in Casablanca to the account specified by the Seller, whose name and address are mentioned in Schedule 3.2(b).

(c) the Seller shall deliver or shall cause to be delivered to the Société Fiduciaire du Maroc -71, rue Allal Ben Abdellah, Casablanca - acting as escrow agent, a copy of the bylaws updated pursuant to the Shareholders’ Agreement.

(d) the Seller shall deliver to the Purchaser the Share Pledge Agreement and the notification of transfer of first demand guaranty referred to in Article 7.5 hereof.

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES

4.1 Representations and Warranties of the Seller

Except as set forth in the Schedules (it being understood that if a matter is set forth in one Schedule, it shall be deemed to be set forth in all other Schedules in which a reference to it is made), the Seller hereby warrants to the Purchaser the accuracy and completeness of the representations contained in this Article 4.1 as of the date hereof and as of the Closing Date as though they had been made as of the Closing Date, except to the extent these representations are by their express terms made as of a particular date (in which case, such representations and warranties shall be accurate as of such date).

4.1.1  Financial Statements

(a) The financial statements (as defined in Moroccan law 9-88 relating to the accounting obligations of commercial persons) drawn up by CMCP and its Subsidiaries as of December 31, 2002, December 31, 2003, December 31, 2004 and June 30, 2005 (hereinafter the “Financial Statements”) have been prepared in accordance with GAAP and the Accounting Principles, applied on a consistent and coherent basis, and present fairly the assets, liabilities, the financial condition and income of CMCP and its Subsidiaries on the date of the Financial Statements. The Financial Statements have been audited and certified by the statutory auditors of CMCP and are attached hereto as Schedule 4.1.1.

(b) Except as and to the extent disclosed or reserved against on the Financial Statements, CMCP and its Subsidiaries do not have, in particular, any debt or obligations, whether existing, contingent or eventual, resulting from one or more events that have occurred or that are foreseeable on the date of or prior to the date of the Financial Statements, or one or more transactions entered into or being entered into on the date of the Financial Statements or prior to such date and, in particular, no obligation or debt, whether commercial, fiscal, administrative or concerning social security, nor related fees, taxes, interest, penalties or fines, nor Off-Balance Sheet Liabilities.

(c) CMCP and its Subsidiaries have good and marketable title to the assets shown in the Financial Statements. The assets that are not being used in the operation of the Business have been written off or written down to their realizable value. All the receivables shown in the Financial Statements are of sure collection or have been adequately reserved for in the Financial Statements.

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4.1.2  Authority and Powers and Enforceability

The Seller has all powers and authority to make the representations and warranties herein which constitute obligations thereby validly engaging and binding said Seller pursuant to their terms.

The Seller has all necessary corporate power and authority to enter into this Agreement, and to carry out its obligations hereunder and to consummate the Transaction.

This Agreement has been duly executed by the Seller and constitutes a legal, valid and binding obligation of the Seller, enforceable against it in accordance with its terms.

There are no actions, claims or other proceedings or investigations pending or threatened against or involving the Seller or any of its present directors or officers, or the assets of CMCP and of its Subsidiaries and which, if adversely determined, would reasonably be expected to have a Material Adverse Effect on the Seller’s ability to consummate the Transaction or affect the validity or enforceability of this Agreement.

The Transaction has been duly authorized by the Supervising Board of the Seller.

4.1.3  Setting up of CMCP and its Subsidiaries

The information set forth in the recitals hereto are true and correct.

CMCP and its Subsidiaries have been duly and lawfully set up and their bylaws, as well as the functioning of their corporate bodies, are in compliance with Laws in force.

The corporate registers of CMCP and of its Subsidiaries are complete and have been kept in accordance with applicable Laws and have all the required signatures.

4.1.4  Shares of CMCP and its Subsidiaries

(a) CMCP is a corporation (société anonyme) with managing board and supervising board existing under the Laws of Morocco with capital of 548,220,000 dirhams (before the Share Capital Reduction), divided into 5,482,200 Shares with a par value of 100 dirhams each, all validly issued, fully paid and non-assessable.

(b) Except for the exchange of shares described in Schedule 4.1.28, there exist no Contract or commitment in force in respect of the award or issuance of shares of CMCP or its Subsidiaries or granting any person whatsoever the right to an award or issuance of shares of CMCP and its Subsidiaries or the purchase or pre-emption right to all or part of the shares issued by CMCP or its Subsidiaries.

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(c) Neither CMCP nor any of its Subsidiaries holds, directly or indirectly, interests in any company, partnership or grouping of any nature whatsoever including a partnership (société de personnes), non-trading real estate company (société civile immobilière), intercompany partnership (groupement d’intérêt économique), joint venture company (société de participation) or any other company or grouping in which the liability of the members or partners is not limited to their contribution. A complete list of the Subsidiaries and interests of CMCP is attached hereto as Schedule 4.1.4.

(d) Neither CMCP nor its Subsidiaries has issued founding partner shares, priority shares, preferential shares, bonds convertible into shares, exchangeable for shares, reimbursable in shares or granting right to subscription to shares. In general, neither CMCP nor its Subsidiaries has issued shares granting right by conversion, exchange, reimbursement, presentation of a coupon or, in any other manner, to the award, at any time or on a fixed date, of shares of CMCP or its Subsidiaries. No issuance of the types set forth in this paragraph is presently underway.

(e) Moreover, there exist no shares of CMCP or of its Subsidiaries granting double voting rights and no limitation has been brought to the voting rights attached to the shares of CMCP or of its Subsidiaries. No issuance of shares with double voting rights and no limitation as to voting rights are underway.

(f) The shareholders’ accounts and the share transfer registers for CMCP and its Subsidiaries are up to date and in compliance with applicable Laws.

4.1.5  Transfer of the Acquired Shares

The Acquired Shares are validly owned by the Seller who has the free disposal and the option to Transfer them without any restriction whatsoever, except for the application of statutory clauses of CMCP as concerns the transfer of Shares.

The different transactions required for the proper completion of the transfer of the Acquired Shares have been, or shall be, completed no later than the Closing Date, in accordance with applicable Laws, and shall validly transfer the ownership of the Acquired Shares to the benefit of the Purchaser.

The transfer of the Acquired Shares to the Purchaser does not breach any of the contractual or other obligations of CMCP and of its Subsidiaries and is not contrary to any of the Laws applicable to CMCP and its Subsidiaries, will not entail the termination of any Contract to which CMCP and its Subsidiaries are party and will not allow any Person to be released from a surety issued as a guarantee to a commitment of CMCP and its Subsidiaries.

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4.1.6  Registers and Documents

All the accounting books, registers and files required by applicable Laws have been duly kept by CMCP and its Subsidiaries, are in their possession and contain information that is exact and duly registered according to generally accepted customs in the sector of business of CMCP and its Subsidiaries.

All the deeds or other documents establishing the ownership of assets of CMCP and its Subsidiaries and the signed copies of all the Contracts in force that are essential to the functioning of their business, entered into by them and that should be in their possession, are indeed in their possession.

4.1.7  Options, Mortgages and Other Liens

Except as set forth in Schedule 4.1.7, there is no Lien pertaining to all or part of the assets or Contracts of CMCP and its Subsidiaries. No Contract to consent to any of the rights or guarantees referred to above has been entered into. Neither CMCP nor its Subsidiaries, nor their employees or executives have received any claims from a Person that might lay claim to any of the guarantees referred to above. The completion of the Transaction shall not give rise to any Lien on all or part of the assets or Contracts of CMCP.

4.1.8  Compliance with Laws and Regulations

CMCP and its Subsidiaries have all the necessary Consents for the full ownership of their assets and for their current Business. All conditions relative to such Consents have been complied with by CMCP and its Subsidiaries. The completion of the Transaction shall not give rise to any withdrawal, cancellation or modification of any such Consents.

All applicable Laws have been complied with by CMCP and its Subsidiaries.

CMCP and its Subsidiaries are not obliged to proceed with new investments in order to be in compliance with any of such Laws.

To the best knowledge of the Seller, there exists no event which may entail the withdrawal or cancellation of the Consents which CMCP and its Subsidiaries have, or which may trigger their liability or that of their directors or their personnel.

All information and accounting statements transmitted by CMCP or its Subsidiaries to the Governmental Authorities are true and correct.

4.1.9  Contracts

(a) All of the current Contracts of CMCP and its Subsidiaries are valid and enforceable. CMCP and its subsidiaries have duly carried out all their obligations under such Contracts. Except for contracts listed in Schedule

15

4.1.9(a), there do not exist any events, in particular related to the Transaction, which may void or entail the early termination of such Contracts, or authorize a third party to require an early repayment, or trigger in any way the liability of CMCP and its Subsidiaries or of their directors or employees, towards any third party, including the employees of CMCP.

The transfer of the Acquired Shares shall not increase the contractual obligations and shall not restrict the contractual rights of CMCP and of its Subsidiaries.

(b) All the Contracts to which CMCP and its Subsidiaries are party are covered by appropriate legal documentation allowing CMCP and its Subsidiaries to exercise and to cause to be exercised all of their rights. Schedule 4.1.9(b) contains a list of all of CMCP’s material Contracts.

(c) Neither CMCP nor its Subsidiaries is bound by any agency, distribution, marketing or franchise Contract, except those listed in Schedule 4.1.9(c).

4.1.10  Unusual Contracts, Financial Commitments, Contracts with Shareholders

Except as set forth in Schedule 4.1.10, neither CMCP nor its Subsidiaries:

(i) has entered into any Contract committing it in an unusual or abnormal way in relation to the normal course of its business, or triggering its liability in an unlimited or joint manner;

(ii) has entered into any Contract which could be cancelled or terminated early as a result of the Transfer of the Acquired Shares;

(iii) has entered into any Contract which may be terminated only by payment of an indemnity greater than five hundred thousand dirhams (MAD 500,000) or with a prior notice period greater than three (3) months;

(iv) is party to a Contract with the Seller or with any Affiliate or any executive or officer of such Persons;

(v) has, vis-à-vis the Seller or any Affiliate of the Seller, any commitment or debt whatsoever other than incurred in the normal course of business and under customary market conditions; Schedule 4.1.10(v) sets forth (i) all the dividends and interim dividends which distribution has been decided by CMCP’s competent corporate bodies for the fiscal year ended December 31, 2004, as well as all the dividends and interim dividends which distribution has been decided by CMCP’s competent corporate bodies and not yet paid, and (ii) all the dividends and interim dividends which distribution has been decided by CMCP’s Subsidiaries’ corporate bodies for the fiscal year ended December 31, 2004.

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(vi) is party to a Contract with a third party which would allow such third party to exercise a right of inspection of CMCP and its Subsidiaries’ management;

(vii) is bound by a non-compete obligation.

Schedule 4.1.10 contains all the information (such as the amount, term, guarantees, rates, etc.) related to loans, credit agreements, overdraft agreements and other current banking facilities of CMCP and its Subsidiaries.

4.1.11  Off-Balance Sheet Liabilities and Commitments

Except as set forth in Schedule 4.1.11, no guarantee, lien, sponsorship or comfort letter, and other Off-Balance Sheet Liabilities of any nature whatsoever, granted or incurred by CMCP and its Subsidiaries, was in force as of December 31, 2004 and as of June 30, 2005, and shall be in force as of the Closing Date.

4.1.12  Profit Sharing Agreements

Neither CMCP nor its Subsidiaries is party or has agreed to be party to any Contract whatsoever designed to share all or part of its profits with third Persons.

4.1.13  Clients and Suppliers

Except as set forth in Schedule 4.1.13, CMCP has not received information indicating that one of its clients or one of its suppliers would have the intention to cease or to reduce materially its operations with CMCP immediately or in the future, in particular due to the Transfer of the Acquired Shares.

4.1.14  Insolvency

(a) No public trustee (syndic) has been appointed to manage all or part of the assets or business (fonds de commerce) of CMCP or of its Subsidiaries.

(b) No request, or declaration in view of a judicial reorganization (redressement judiciaire) or liquidation of CMCP or its subsidiaries or in view of the dissolution and early liquidation of CMCP or of its Subsidiaries has been made or is anticipated by CMCP or its Subsidiaries and/or their executives nor, to the best knowledge of the Seller, by any third party.

(c) Neither CMCP, nor its Subsidiaries, nor the Seller, have suspended their payments, are insolvent, or not able to pay their debts that are due.

4.1.15  Litigation

Except as set forth in Schedule 4.1.15, CMCP and its Subsidiaries are not involved in any legal, criminal, administrative or arbitral proceedings, as applicant or as

17

defendant, including counter-claims, in which the risk for each dispute would be greater than fifty thousand dirhams (MAD 50,000).

Moreover, to the best knowledge of the Seller, there exists no event which may give rise to any proceedings whatsoever against CMCP and its Subsidiaries or against one of their executives, directors, employees or former directors, former executives or former employees for which they would be civilly liable.

In particular, CMCP and its Subsidiaries have not been subject to, and to the best knowledge of the Seller are not threatened with, any claim on the part of clients or other third parties.

Furthermore, no judicial or administrative decision, no statute of limitations, no time limit granted by a professional organization or a supervising authority has intervened, from which would result for either CMCP or its Subsidiaries, an obligation which may have, in the future, unfavorable consequences on the normal course of their business.

4.1.16  Employees, Corporate Officers of CMCP and its Subsidiaries

(a) No amount is due to a current or former employee, agent or corporate officer of CMCP or its Subsidiaries under his employment agreement or other Contracts, other than the rights to compensation due but not yet payable, reimbursements of professional expenses, or debts inscribed in the Financial Statements.

(b) Except as set forth in Schedule 4.1.16(b), neither CMCP nor any of its Subsidiaries have obligations of any nature whatsoever either towards former employees or temporary workers, and in particular obligations not yet executed on account of the termination of any employment agreement or service or under indemnities for unfair dismissal or for not having complied with an obligation to reinstate an employee.

(c) CMCP and its Subsidiaries have complied with the instructions and obligations imposed by the competent Governmental Authorities as regards employment Laws (insofar as such obligations are applicable), of social security Laws, of regulations concerning health and safety and of any other applicable Laws relative to the employment of salaried personnel.

(d) Laws relative to the representation of employees within CMCP and its Subsidiaries have been complied with by both CMCP and its Subsidiaries.

(e) Except as set forth in Schedule 4.1.16(e), no employment agreement or any agreement entered into with the employees, agents or company officers (current or former), provides for unusual conditions, in particular benefits or provisions or terms exceeding those provided for by the applicable collective bargaining agreement.

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(f) Except as set forth in Schedule 4.1.16(f), none of the executives or officers of CMCP or its Subsidiaries has resigned or has been relieved of his duties within CMCP or its Subsidiaries, or has made known to them his intention to resign since January 1, 2005.

(g) All the additional retirement or contingency fund regimes of which CMCP and its Subsidiaries are members are listed on Schedule 4.1.16(g).

(h) CMCP and its Subsidiaries have not granted loans to their personnel, their agents or legal representatives except as set forth in Schedule 4.1.16(h).

(i) The employment agreements for the salaried personnel of both CMCP and its Subsidiaries are in compliance with applicable Laws.

4.1.17  Retirement

All contributions due and payable by CMCP and its Subsidiaries as regards retirement and various company benefits and all future commitments taken by CMCP or its Subsidiaries in this regard have been duly paid or reserved for in the Financial Statements.

4.1.18  Movable Assets and Real Property

CMCP and its Subsidiaries are rightful owners of all the assets necessary for their current Business, except those movable assets and real property subject to rental contracts appearing on Schedule 4.1.18(i). Except as set forth in Schedule 4.1.18(ii), no asset purchased by CMCP and its Subsidiaries is subject to any Lien and, generally, there exists no clause in the agreements entered into by CMCP and its Subsidiaries limiting the right to exploit their assets.

All the movable assets or real property of which CMCP and its Subsidiaries are owners or lessors are in a proper state of repair and in good working condition, of normal wear, free of any encumbrances and are suitable for the uses to which there are intended. CMCP and its Subsidiaries have all spare parts necessary in the normal course of business and as is customary in the industry. These spare parts are in a proper state of repair and in good working condition, and free of any encumbrances.

No agreement, restriction or stipulation has been agreed to by CMCP and its Subsidiaries, which would be unusual, would come into conflict with the use of the real property or affect their value. No action, claim or demand relative to the real property of which CMCP and its Subsidiaries are owners is pending.

All Consents concerning the real property of CMCP and its Subsidiaries have been obtained and complied with. In particular, all necessary Consents have been obtained for the work carried out on the real property.

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No decision has been notified to either CMCP or its Subsidiaries by any Governmental Authority which may restrict or modify the use of the real property used by CMCP and its Subsidiaries.

CMCP and its Subsidiaries are not incurring any liability of any nature whatsoever in regards to the real property occupied by CMCP or its Subsidiaries in the past.

4.1.19  Leases

Concerning the buildings of which CMCP and its Subsidiaries are lessees:

(a) CMCP and its Subsidiaries have complied with their obligations under the leases related to them;

(b) No right of occupation or usage has been acquired, or, to the best knowledge of the Seller, is in the process of being acquired by any third party or has been consented or agreed with a third party;

(c) The Dahir dated May 24, 1955 related to building leases and premises for commercial, industrial or small company use applies to leases entered into by CMCP and its Subsidiaries so that they have the right to renew such leases pursuant to Articles 5 and following of such Dahir.

(d) CMCP and its Subsidiaries have not received notice from a lessor terminating a lease or threatening to do so.

4.1.20  Intellectual Property Rights

CMCP and its Subsidiaries have the ownership or license of all intellectual property rights (such as patents, trademarks, trade names, trade secrets, and computer software programs) that they currently use to operate the Business. None of these rights infringe on the rights of any third party. All documents pertaining to these rights are set forth in Schedule 4.1.20.

CMCP and its Subsidiaries do not use any intellectual property right that is not described in Schedule 4.1.20.

CMCP and its Subsidiaries have renewed in a timely manner all trademarks set forth in Schedule 4.1.20.

CMCP and its Subsidiaries have not granted to any third party any license or right to purchase the patents, designs, trademarks and trade names owned by CMCP and its Subsidiaries.

No intellectual property right used by CMCP or its Subsidiaries is owned by the Seller or any of its Affiliates.

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To the best knowledge of the Seller, the operation of the Business by CMCP and its Subsidiaries do not infringe on any third party intellectual property right.

The intellectual property rights referred to in Schedule 4.1.20 are not subject to any claim or dispute.

To the best knowledge of the Seller, no third party infringes upon the patents, trademarks, trade names, trade secrets, and computer software programs of CMCP or its Subsidiaries.

There are no Liens on any trademark or patent owned by CMCP or its Subsidiaries.

4.1.21  Insurance

(a) CMCP and its Subsidiaries are insured, in compliance with applicable Laws, by existing insurance policies as listed in Schedule 4.1.21, for which premiums have been duly paid, and which provide coverage, under customary terms, for the risks customarily insured against by entities carrying on the same type of business as CMCP and its Subsidiaries. CMCP and its Subsidiaries have not performed any act or omitted to perform any act which may nullify or void the insurance policies contracted or cause their termination.

(b) Except as set forth in Schedule 4.1.21, there is currently no dispute involving the insurance policies of CMCP or its Subsidiaries, and no event has occurred which could result in such a dispute.

4.1.22  Powers and Authorizations

Neither CMCP nor any of its Subsidiaries have granted any power or other authorization (express or tacit) to anyone that is still in force, to enter into Contracts on their behalf, except for powers granted to senior managers of CMCP or its Subsidiaries in connection with their duties.

4.1.23  Taxes, Duties and Contributions

Except as set forth in Schedule 4.1.23:

(a) CMCP and its Subsidiaries have duly and in due course carried out or caused to be carried out with all competent authorities, the filing of all forms, declarations and reports as regards Taxes that must be made by each company, whether individually or as a member of a group of companies, in accordance with applicable Laws, and each of such forms, declarations and reports reflect accurately the obligations of CMCP and its Subsidiaries as regards Taxes and includes all information that must be indicated on them. All the Taxes and duties due by CMCP and its Subsidiaries relative to all the fiscal periods (or fractions of such periods) ending before the Closing Date shall have been entirely paid or reserved for. All the

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Taxes due by CMCP and its Subsidiaries on the date of the Financial Statements have been duly entered in the Financial Statements;

(b) CMCP and its Subsidiaries do not benefit as regards Taxes from any preferential treatment dependent upon commitments of CMCP and its Subsidiaries which shall continue to bind CMCP and its Subsidiaries after June 30, 2005;

(c) all the transactions between CMCP, its Subsidiaries and their Affiliates have been completed under normal commercial conditions. There exists no transaction or commitment involving CMCP and its Subsidiaries subject to challenge by a Governmental Authority under transfer pricing restrictions;

(d) Except for the tax audits underway at CARSUD, ONDUMAR and CENTRE EMBALLAGE following notifications as shown in Schedule 4.1.23, CMCP and its Subsidiaries have not, during the last twenty-four months, been subject to and are not currently subject to an investigation, audit or visit by any Governmental Authority in respect of Taxes and, to the best knowledge of the Seller, no investigation, audit or visit of this type is contemplated. CMCP and its Subsidiaries have not been subject to any Tax or social security assessment in respect of the last three fiscal years;

(e) CMCP and its Subsidiaries have not entered into any tax sharing agreement relative to their income, profits or losses;

(f) the execution and performance of this Agreement shall not trigger any Tax or other charge for CMCP and its Subsidiaries;

(g) CMCP and its Subsidiaries have not made a request or obtained exemptions or tax deferrals relative to mergers or other restructuring during the current fiscal year or over the five (5) previous fiscal years, other than those in connection with the merger of Cartonnerie et Emballages du Centre - Centre Emballage, Cartonnerie du Maroc - Ondumar and Cartonnerie du Sud - Carsud within CMCP.

4.1.24  Inventories

(a) Inventories of raw materials, goods-in-progress, finished and consumable products accounted for in the Financial Statements exist on the date of the Financial Statements and have been evaluated according to the principles set forth in Schedule 4.1.24.

(b) The volume and composition of the inventories reflect the practices and methods habitually followed by CMCP in connection with the normal conduct of its businesses.

(c) The inventories of CMCP have been managed in the normal course of business. The quality and quantity of CMCP’s inventories allow the use and sale of such inventories in the normal course of business.

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4.1.25  Products and Services

None of the products manufactured or sold and no services rendered by CMCP and its Subsidiaries are tainted with any apparent or hidden defect which could justify a request for cancellation from sale and/or for damages and interest on the part of a buyer, a consumer or any third party.

To the best knowledge of the Seller, there exists no event which may entail such a cancellation or an order to pay damages.

4.1.26  Environment

Except as set forth in the URS report attached hereto as Schedule 4.1.26, the businesses of CMCP and its Subsidiaries have always been and remain in compliance with the Environmental Laws and no product manufactured, assembled or sold, or service rendered by CMCP and its Subsidiaries, is in contravention of the Environmental Laws.

Except as set forth in the URS report attached hereto as Schedule 4.1.26, CMCP and its Subsidiaries have, on the Closing Date, all the necessary Consents pursuant to Environmental Laws for the conduct of the Business, the occupancy and use of the Premises by CMCP or its Subsidiaries, or which are necessary or desirable for the Closing of the Transaction.

Except as set forth in the URS report attached hereto as Schedule 4.1.26, no overflow or evacuation of any toxic or dangerous matter, substance or waste, has occurred on the sites belonging to or occupied by CMCP and its Subsidiaries, and CMCP and its Subsidiaries are not obliged or should not reasonably be obliged to Cleanup in any manner whatsoever contamination of the water or soil.

Since August 2004, date of the above-mentioned URS environmental report, CMCP and its Subsidiaries have not materially changed any practices which may have an impact on the environment and no overflow or evacuation of any substance, matter or waste, toxic or dangerous, has occurred on the sites belonging to or occupied by CMCP and its Subsidiaries.

4.1.27  Third Party Consents

Subject to the Antitrust Notification, no third party consent, including from the Governmental Authorities, is required or being sought for the completion of the transactions provided for herein.

4.1.28  Pre-signing transactions

All transactions described in Schedule 4.1.28 have been or shall be carried out in full compliance with applicable Laws; they are not subject to any third party claim and shall be in full force and effect as of the Closing Date.

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4.1.29  Affiliates Transactions

There is no Contract between CMCP and an Affiliate.

4.1.30  Illegal Payments

Neither CMCP nor its Subsidiaries nor their Affiliates or employees has, directly or indirectly, made or agreed to make an illegal gift, payment, or contribution or any other similar benefit to a supplier, a client, a government official, an employee or any other person in order to obtain their assistance in any actual or proposed transaction, or made or agreed to make any illegal contribution, or reimbursed any illegal political gift or contribution made by any other person, to any candidate for public office:

(i) which violates applicable Laws, or

(ii) which might subject CMCP or its Subsidiaries to civil or criminal proceedings, or

(iii) the non-continuation of which might have a material adverse effect on CMCP’s or its Subsidiaries’ business.

4.1.31  No Advisors’ Fees

There is no Person entitled to receive any brokerage, commission or finder’s or financial advisory fee from CMCP or its Subsidiaries in connection with the Transaction.

4.1.32  Truthfulness of the Representations

This Agreement does not contain inaccurate or incomplete representations nor voluntarily omits to represent an important fact so as to make the representations contained herein misleading.

The Seller does not have knowledge of any important fact capable of adversely affecting the operations, the assets or the financial condition of CMCP and its Subsidiaries and which has not been set forth or identified in this Agreement.

4.2 Representations and Warranties of the Purchaser

The Purchaser hereby represents and warrants to the Seller that the statements contained in this Article shall be accurate as of the date hereof and shall be accurate as of the Closing Date as though made as of the Closing Date, except to the extent these representations are by their express terms made as of a particular date (in which case, such representations and warranties shall be accurate as of such date):

4.2.1  Authority and Powers and Enforceability

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The Purchaser has all powers and authority to make the representations and warranties herein which constitute obligations thereby validly engaging and binding said Purchaser pursuant to their terms.

The Purchaser has all necessary corporate power and authority to enter into this Agreement and to carry out its obligations hereunder and to consummate the Transaction.

This Agreement has been duly executed by the Purchaser and constitutes a legal, valid and binding obligation of the Purchaser, enforceable against it in accordance with its terms.

There are no actions, claims or other proceedings or investigations pending or threatened against or involving the Purchaser or any of its present directors or officers, or the assets and which, if adversely determined, would reasonably be expected to have a Material Adverse Effect on the Purchaser’s ability to consummate the Transaction or affect the validity or enforceability of the Agreement.

4.2.2  Setting up of the Purchaser

The Purchaser has been duly and lawfully set up and its bylaws, as well as the functioning of its corporate bodies, are in compliance with Laws in force.

ARTICLE V

COVENANTS

5.1 Covenants of the Seller

5.1.1 Operation of the Business

Between the date of this Agreement and the Closing Date, except as specifically contemplated by this Agreement or as otherwise consented to in writing by the Purchaser,

(i) the Seller shall ensure that CMCP and the Subsidiaries are managed in the ordinary course and in a prudent manner (en bon père de famille) and, in particular, the Seller shall use its best efforts to maintain and develop the activities and business relations of CMCP and the Subsidiaries; and

(ii) CMCP and its Subsidiaries shall maintain their inventory, accounts receivable and accounts payable in the ordinary course of business consistent with past practice.

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5.1.2  Restricted Actions

As part of the Seller’s commitment to ensure that CMCP and its Subsidiaries are managed in the ordinary course and in a prudent manner (en bon père de famille), without limiting the generality of the foregoing, and except as expressly permitted hereunder, the Seller, without the consent of the Purchaser (which consent shall not be unreasonably withheld or delayed and, if the Purchaser does not notify the Seller in writing of its refusal to grant such consent within five (5) Business Days of the receipt of a written request, in reasonable detail, such consent shall be deemed to have been granted), shall not and shall cause CMCP and each of the Subsidiaries not to:

(a) amend their bylaws or other constituent or governing document other than as a consequence of the Share Capital Reduction underway or of a requirement of Law, or provided for in the Shareholders’ Agreement;

(b) be a party to any acquisition, merger, spin-off, consolidation, purchase of stock or interest in any corporation, partnership, association or other business organization or enter into or form any material joint-venture or enter into any agreement leading to any of the foregoing;

(c) alter CMCP’s capital stock or declare, set aside, make or pay any dividend (other than any dividend which has been approved prior to the date hereof), or purchase or redeem any shares of CMCP’s capital stock (other than the Share Capital Reduction), except to the extent contemplated by this Agreement, including the effects of the share exchange underway as described in Schedule 4.1.28;

(d) issue or sell any of its capital stock or any options, warrants or other rights to purchase any such shares or any securities convertible into or exchangeable for such shares (other than any such issuances or sales by a Subsidiary to CMCP or other Subsidiaries);

(e) incur any additional debt or make any early repayments on existing loans, debts or other liabilities other than in the ordinary course of business;

(f) acquire, sell or dispose in any way any goodwill, real property or intellectual property or any other material asset;

(g) other than in the ordinary course, enter into any transaction involving a Contract in excess of one million dirhams (MAD 1,000,000) or binding CMCP for a term greater than one year;

(h) enter into a binding agreement for the hiring or dismissal of any employee of CMCP or any of its Subsidiaries for an annual aggregate amount in excess of five hundred thousand dirhams (MAD 500,000);

(i) amend its employees’ collective status or to grant any additional benefits, or make any material change in the compensation payable, or to

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become payable, to any employee of CMCP or any of its Subsidiaries (other than normal recurring increases in the ordinary course of business or pursuant to plans, programs or agreements existing on the date hereof, and other than pursuant to statutory or regulatory requirements);

(j) except as set forth in Schedule 5.1.2(j), make any capital expenditures in excess of five hundred thousand dirhams (MAD 500,000) for any individual expenditure or MAD two million dirhams (MAD 2,000,000) in the aggregate;

(k) waive any receivable involving an amount greater than two hundred thousand dirhams (MAD 200,000) outside the ordinary course of business;

(l) grant any Lien, mortgage or pledge or issue any security undertaking or commitment whereby it would assume liability of a third party other than in the ordinary course of business;

(m) except as set forth in Schedule 5.1.2(m), other than in the ordinary course of business, settle any action, claim or dispute against or affecting CMCP or any Subsidiary involving an amount greater than two hundred thousand dirhams (200,000 MAD) or

(n) conclude any agreement with an Affiliate;

(o) agree to take any of the actions set forth in the foregoing subparagraphs 5.1.2(a) through 5.1.2(n).

CMCP and its Subsidiaries may cure a breach of any representation or warranty contained in this Agreement, provided that the Seller informs the Purchaser in writing of such cure does not breach the provisions of Article 5.1.2 hereabove, that its cost is borne by the Seller.

5.1.3  CMCP Corporate Structure

The Seller shall take, and cause CMCP to take, all actions necessary so that within fifteen (15) days from the Closing Date, the bylaws (statuts) of CMCP are amended in order to make them compliant with the provisions of the Shareholders’ Agreement, including the adoption by CMCP of the “Société Anonyme à Conseil d’administration” company form, provided that legal formalities of publicity and registration with the commercial register shall be completed within fifteen (15) Business Days of the Closing Date.

5.1.4  Permits and Consents

The Seller shall cause those permits identified as being missing in the URS report attached as Schedule 4.1.26 to be obtained by CMCP as soon as possible.

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5.1.5  Macarpa Acquisition

The Seller undertakes to disclose to the Purchaser all information in its possession regarding Macarpa, a Moroccan corporation with a capital of MAD 3 million, having its registered offices at Casablanca (Aïn Sebaâ) – Quartier industriel, rue F registered with the Registry of Commerce of Casablanca under number 45.475, and to include the Purchaser in any discussion in view of the acquisition of Macarpa by CMCP in January 2006.

5.1.6  Share Capital Reduction

The Seller undertakes to submit to the Purchaser or to its counsel, for information, all documents relating to the Share Capital Reduction before the Closing Date.

5.1.7  Past Restructurings

The Seller specifically warrants that all past corporate restructuring transactions listed in Schedule 5.1.7 leading to the current CMCP (the “Past Restructurings”) have been carried out in full compliance with applicable Laws (including tax and accounting rules).

5.1.8  Tax Matters

(a) The Seller shall see to it that CMCP prepare and file when due all Tax returns (the “Straddle Period Returns”) that are required to be filed by or with respect to CMCP or any Subsidiary or their respective businesses or assets for taxable periods or years commencing before and ending after the Closing Date (a “Straddle Period”), if the due date for such Straddle Period Returns is on or before the Closing Date.

(b) The Seller shall see to it that CMCP timely pay all Taxes with respect to the Tax returns filed pursuant to paragraph (a) above.

(c) Neither CMCP nor any of its Subsidiaries shall suffer any losses nor incur any liabilities with respect to any Taxes or as a result of having parted from, or having been a party to the tax group to which they belonged.

(d) The Seller shall not and shall not permit any of their Affiliates to amend, refile or otherwise modify any Tax return relating in whole or in part to CMCP or any of its Subsidiaries with respect to any taxable year or period ending on or before the Closing Date (or with respect to any Straddle Period) without the prior written consent of the Purchaser.

5.1.9  Specific Indemnities

(a) The Seller undertakes to indemnify the Purchaser, CMCP or its Subsidiaries in respect of any Indemnifiable Loss incurred by it, directly or through CMCP, and which arises out of:

(i) the Past Restructurings (including the terms for their implementation);

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(ii) the Restructuring Plan, exclusively for the part already implemented or initiated at the Closing Date;

(iii) claims of employees or temporary workers regarding damages suffered prior to the Closing Date;

(iv) any dispute relating to the ownership to the Acquired Shares;

(v) liabilities referred to in Article 5.1.8; and

(vi) liabilities referred to in Article 4.1.26.

(b) The indemnification procedure described in Article VII shall apply to claims arising out of this Article 5.1.9, except for the limitation specifically provided for in Article 7.1.2(b).

5.1.10  Cooperation

Between the date of this Agreement and the Closing Date, the Seller shall cause CMCP and its Subsidiaries, upon reasonable notice from the Purchaser and during normal business hours:

(i) to give the Purchaser and its authorized representatives reasonable access to all books, records, offices, Premises and other facilities and properties as well as to management and advisers of CMCP and any of its Subsidiaries;

(ii) permit the Purchaser to make such inspections thereof as the Purchaser may reasonably request; and

(iii) cause its officers to furnish the Purchaser with such financial and operating data and other information with respect to business and properties of CMCP and any of its Subsidiaries as the Purchaser may from time to time reasonably request.

5.1.11  Notices

Between the date of this Agreement and the Closing Date, the Seller shall immediately notify the Purchaser in writing:

(i) of any material decision with respect to CMCP or any of its Subsidiaries (other than for actions referred to in Article 5.1.2 which require the prior written consent of the Purchaser);

(ii) of any development regarding the Restructuring Plan;

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(iii) of any Material Adverse Change;

(iv) of any event that causes or shall cause any breach of the representations and warranties under Article 4.1.

5.2 Mutual Covenants

5.2.1  Publicity

(a) The Seller and the Purchaser agree that, from the date hereof through the Closing Date, no public release or announcement concerning the Transaction shall be issued by either Party without the prior consent of the other Party, except as such release or announcement may be required by Laws, in which case the Party required to make the release or announcement shall allow the other Party reasonable time to comment on such release or announcement in advance of such issuance.

(b) The Seller and the Purchaser agree not to disclose the Purchase Price, except as legally required.

5.2.2  Fullfilment of Conditions Precedent.

Subject to the terms and conditions of this Agreement, the Parties shall cooperate and use all reasonable efforts to cause each of the conditions precedent to Closing to be fulfilled as soon as possible.

5.2.3  Confidentiality

Each of the Parties shall maintain, and shall cause its Affiliates to maintain, in strict confidence, all information relating to the business of CMCP and its Subsidiaries (including, but not limited to, intellectual property rights and all information other than information which is or becomes readily obtainable from a public source through no fault of the Party disclosing the information). Without limiting the generality of the foregoing, each of the Parties undertakes not to disclose, and shall cause its Affiliates not to disclose, to a third party any information concerning CMCP or the Subsidiaries except:

(i) when required to disclose such information by Laws; or

(ii) as authorized by the other Party and to the extent necessary in the ordinary course of business, and in this case, the Party disclosing the information shall not itself use, and shall cause its Affiliates not to use, such information.

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ARTICLE VI

CONDITIONS PRECEDENT

6.1 Condition to Obligation of both Parties to Close

The respective obligation of each Party to consummate the Transaction contemplated hereby shall be subject to the satisfaction or waiver, on or prior to the Closing Date, of the following condition precedent:

6.1.1  No Legal Impediment

No Law restraining or prohibiting the purchase of the Acquired Shares shall be in effect at the Closing Date, all Consents that are necessary to consummate the Transaction shall have been obtained, and any applicable waiting periods thereunder shall have expired or been terminated.

6.2 Condition to Obligation of the Purchaser to Close

The obligation of the Purchaser to consummate the Transaction contemplated hereby shall be subject to the satisfaction or waiver, at or prior to the Closing Date, of the following conditions precedent:.

6.2.1  Representations and Warranties True and Correct

None of the representations and warranties of the Seller made in this Agreement shall turn out to be incorrect or misleading in any material respect as of the date hereof or as of the Closing Date.

6.2.2  Compliance with the Obligations of this Agreement

The Seller shall have complied in all material respects with its obligations and covenants under this Agreement, or shall have cured any instance of material non-performance or non-compliance to the satisfaction of the Purchaser, on or before the Closing Date.

6.2.3  No Material Adverse Change

No Material Adverse Change shall have occurred after the date of this Agreement, nor be continuing as of the Closing Date.

6.2.4  Satisfactory Implementation of the Prior Transactions Set Forth in Schedule 4.1.28

FINAPACK and its controlling shareholders shall have carried out, to the satisfaction of the Purchaser’s Moroccan legal counsel, the prior restructuring transactions involving CMCP’s capital or assets described in Schedule 4.1.28.

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6.2.5  Notification of transfer of first demand guaranty and original version of this guaranty

FINAPACK shall have delivered to the Purchaser the notification of transfer of first demand guaranty referred to in Article 7.5 hereof and the original version of such guaranty.

6.3 Condition to Obligation of the Seller to Close

The obligation of the Seller to consummate the Transaction contemplated hereby shall be subject to the satisfaction or waiver, at or prior to the Closing Date, of the following condition precedent:

6.3.1  Representations and Warranties True and Correct

None of the representations and warranties of the Purchaser made in this Agreement shall turn out to be incorrect or misleading in any material respect as of the date hereof or as of the Closing Date.

ARTICLE VII

INDEMNIFICATION

7.1 Indemnification Principles

7.1.1  Seller’s Agreement to Indemnify

(a) Without prejudice to the specific indemnification obligations of the Seller provided in Article 5.1.9, the Seller agrees to indemnify, and hold the Purchaser and CMCP and its Subsidiaries, as the case may be, (collectively, “Purchaser’s Group”) harmless from and against any and all liabilities, obligations, damages, deficiencies of assets, losses, claims, actions, lawsuits, proceedings, judgments, demands, costs and penalties (including reasonable attorneys’ fees) asserted against, or suffered by any member of Purchaser’s Group resulting from

(i) any inaccuracy or breach of Seller’s representations or warranties contained herein;

(ii) any breach of the Seller’s covenants contained herein

(any such loss hereinafter referred to as an “Indemnifiable Loss”).

The Seller undertakes to indemnify the Purchaser up to 51 % of the amount of any Indemnifiable Loss, provided, however, that any claim for a single Indemnifiable Loss in excess of MAD 100 million shall be indemnified directly at the level of CMCP up to 84.5 % of the amount concerned. Any payment made pursuant to this Article VII or Article 5.1.9 shall be considered for tax purposes as a Purchase Price adjustment.

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(b) Without limiting in any way the generality of the foregoing, the term “Indemnifiable Loss” shall include:

(i) increases in liabilities resulting from third party claims against CMCP or any of its Subsidiaries arising from activities prior to the Closing Date, and

(ii) any penalty, late payment interest, surcharge or fine which may fall or be deemed to be due as a result of any Tax audit as well as of any other action or administrative proceeding by any Governmental Authority, as well as any penalty, late payment interest, surcharge or fine or cost or expense of compliance with any order, decree, directive or judgment which may fall or be deemed to be due as a result of any claim, proceeding, order, directive or judgment relating, directly or indirectly, to the domestic or international operations or activities of CMCP or any of its Subsidiaries.

7.1.2  Limitation of Liability

(a) The Seller’s indemnification for any inaccuracy or breach of any representation or warranty under this Agreement shall be due if the aggregate Indemnifiable Loss exceed five hundred thousand dirhams (MAD 500,000), in which case the full amount of such Indemnifiable Loss shall be taken into account for the determination of any indemnification hereunder.

(b) Subject to the provisions of Article 5.1.9, the Seller’s aggregate indemnification of the Purchaser’s Group for any inaccuracy or breach of any representation or warranty under this Agreement shall be limited to the amount of the Purchase Price.

(c) Any indemnification due by the Seller shall be calculated taking into account:

(i) the effect of any savings realized by the Purchaser or CMCP or any of its Subsidiaries as a result of the Tax deductibility of the relevant Indemnifiable Loss; and

(ii) the tax cost of any such indemnification for its beneficiary,

so that the Purchaser, CMCP or the relevant Subsidiary shall be in the same position as it would have been should the Indemnifiable Loss have not occurred.

(d) The Parties agree that a Tax assessment which merely moves the Tax burden from one fiscal year to another without increasing it shall not constitute an Indemnifiable Loss, provided that the time period involved is four years or less and provided further that the Seller shall reimburse the financial cost of such move.

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(e) The amount of any indemnity payable hereunder on account of an Indemnifiable Loss shall be reduced by any insurance proceeds effectively received by the Purchaser’s Group with respect thereto.

(f) In addition, the amount of any indemnity payable hereunder on account of an Indemnifiable Loss involving doubtful accounts totally or partially unreserved for shall be reduced by the amount of any doubtful account reserve cancelled prior to the filing of the relevant claim for indemnification as a result of the payment to CMCP of the amount reserved for, but only insofar as:

(i) such doubtful account concerns a client with whom CMCP has ceased all business relations;

or, with respect to a client with whom business relations are continuing,

(ii) it will be established that the payment made to CMCP corresponds truly and precisely to the claim which amount had been reserved for and that such amount has thereby reduced, on the date of the filing of the relevant claim for indemnification, the total amount of claims for this same client.

7.2 Survival of Representations and Warranties

(a) All representations and warranties under this Agreement, other than those referred to in paragraphs (b) and (c) below, shall survive for a period of four (4) years after the Closing. Any claim notified to the Seller within such period may be indemnified;

(b) The representations and warranties under Article 4.1.23 (“Taxes, Duties and Contributions”) of this Agreement shall survive for the applicable statute of limitations plus sixty (60) calendar days. Any claim notified to the Seller within such period may be indemnified;

(c) The representations and warranties under Articles 4.1.2, 4.1.3, 4.1.4 and 4.1.5 of this Agreement shall survive indefinitely;

7.3 Third Party Claims

The obligation of a Party (“Indemnifying Party”) to indemnify the other Party and the entitlement to indemnification of the other Party (the “Indemnified Party”) in respect of, arising out of or involving a claim or demand made by third parties (“Third Party Claim”) shall be subject to the following specific provisions:

(a) Subject to the provisions of (b) below, upon receipt of written notice of any Third Party Claim asserted against, imposed upon or incurred by an Indemnified Party, such Indemnified Party shall undertake the defense thereof,

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by counsel of its own choosing, which counsel shall be reasonably satisfactory to the Indemnifying Party, provided that

(i) the Indemnified Party shall consult with the Indemnifying Party in a timely manner on all important strategic matters relating to any such Third Party Claim;

(ii) the Indemnified Party shall not settle any Third Party Claim without the prior consent of the Indemnifying Party, which consent shall not be unreasonably withheld, taking into account the balance of interests between the legal merits of the claim and any bona-fide commercial interest of the Indemnified Party and of CMCP to agree to a prompt settlement; and

(iii) the Indemnified Party shall have the good faith duty to mitigate any Indemnifiable Loss in a reasonable manner, including taking all reasonable steps to recover amounts due to the Indemnified Party as a result of the relevant Third Party Claim.

The Indemnifying Party shall pay the reasonable legal fees and expenses incurred by the Indemnified Party in the defense of such claims.

(b) If the Third Party Claim relates to Taxes, the Indemnifying Party shall be entitled to request that a counsel of its choice be fully involved in the proceedings.

(c) The Indemnifying Party shall provide the Indemnified Party against whom a Third Party Claim is asserted with access to all records and documents relating to any Third Party Claim, and reciprocally.

7.4 Indemnification Procedure

7.4.1  Notices

The Indemnified Party shall notify the Indemnifying Party in writing, and in reasonable detail, of the nature of the claim:

(i) within thirty (30) Business Days after a determination by the Indemnified Party that any facts or circumstances of which it has learned give rise to a claim,

(ii) within thirty (30) Business Days after receipt by such Indemnified Party of written notice of any Third Party Claim, and

(iii) with respect to Taxes, within eight (8) calendar days of any Tax assessment or Tax audit notice;

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provided, however, that the failure to notify on a timely basis shall only reduce the indemnification due by the Seller to the extent this failure shall have increased the amount of the resulting Indemnifiable Loss or shall have precluded the Indemnifying Party from exercising a recourse.

7.4.2  When Payable

Indemnification under this Article VII shall be payable with respect to any claim concerning an Indemnifiable Loss within thirty (30) days from the earliest of:

(i) the date any payment is required to be made to any Tax or other Governmental Authority with respect to any claim from such authority unless such authority has granted a deferral for performance,

(ii) the resolution of such claim by mutual agreement between the Seller and the Purchaser,

(iii) the issuance of a final judgment, award, order or other ruling (which is not subject to appeal or with respect to which the time for appeal has elapsed) by a court or arbitral tribunal having jurisdiction over the appropriate parties and the subject matter of such claim or to which such claim was submitted for resolution by joint agreement between the Seller and the Purchaser, or

(iv) the final settlement of such claim with a third party.

7.5 Guarantees

7.5.1  Pledge of Shares

As security for the payment of any amounts due under this Agreement, including any indemnification pursuant to Article VII hereof, the Seller shall see to it that COFIPAC pledge on the Closing Date to the benefit of the Purchaser 174,308 Shares of CMCP, representing the equivalent as of the Closing Date of thirty-five million dirhams (MAD 35,000,000), under a Pledge Agreement substantially in the form of Attachment I hereto.

7.5.2  Transfer of bank guaranty

In addition, the Seller shall transfer to the Purchaser, on the Closing Date, the benefit of the Attijarwafa Bank first demand bank guaranty provided by the O’Hana Group in connection with the sale of Shares implemented between the O’Hana Group and the Seller and its Affiliates, as of July 28, 2005, as well as the full benefit of the indemnification obligations pursuant to any and all representations and warranties made by the O’Hana Group in connection with such sale, under a notification of transfer substantially in the form of the draft attached in Attachment II hereto.

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ARTICLE VIII

TERMINATION

8.1 Grounds for Termination

This Agreement may be terminated at any time prior to the Closing Date:

(i) by the written agreement of each of the Purchaser and the Seller;

(ii) by either the Purchaser or the Seller in the case of a material breach by the other Party of its covenants pursuant to this Agreement which is not cured within thirty (30) days of written notice thereof given by the non-breaching Party to the breaching Party; or

(iii) by either the Purchaser or the Seller in the event that the Closing shall not have occurred by December 21, 2005, in the absence of a breach by the Party seeking termination.

8.2 Effect of Termination

If this Agreement is terminated pursuant to Article 8.1 hereabove, such termination shall be without liability to either Party to this Agreement or any Affiliate, shareholder, director, officer or representative of such Party, except for liability arising from a breach of this Agreement, and all confidential information provided by either Party to the other shall be returned to the other Party or, upon such Party’s instruction, destroyed.

If terminated pursuant to Article 8.1 hereabove, this Agreement shall become void and of no further force or effect, except for the provisions of:

(i) Article 9.1 relating to certain expenses and Article 4.1.31 relating to advisors’ fees,

(ii) Article 5.2.1 relating to publicity and Article 5.2.3 relating to confidentiality,

(iii) Article 9.11 relating to governing law and Article 9.12 relating to dispute resolution and

(iv) this Article 8.2.

ARTICLE IX

MISCELLANEOUS PROVISIONS

9.1 Fees and Expenses

Unless otherwise agreed, each of the Parties shall bear the expenses and fees incurred by it or for it in relation to this Agreement and the Transaction, including the fees of any brokers and legal, accounting and financial advisors. If the Transaction closes, the Seller shall be

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responsible for such fees and expenses incurred by CMCP, except with regard to the adoption by CMCP of the company form of a “société anonyme à conseil d’administration”, or, alternatively, such fees and expenses shall be deducted from the Purchase Price.

9.2 Notices

Any notices or communications required or permitted to be given to any Party under this Agreement shall be addressed in writing to the persons and addresses indicated below, and shall be deemed to have been duly given when delivered by hand, courier on D+1, or, if mailed with return receipt requested, as of the date certified by the return receipt, and, regardless of method, addressed to the Party at its email address or facsimile number set forth below (or at such other address or facsimile number as such Party shall furnish the other Party in accordance with this Section):

To the Purchaser:

I.P. CONTAINER HOLDINGS (Spain) S.L.

20, General Yagüe

28020 Madrid

Spain

Attn: Mr. Marc Van Lieshout

With a copy to:

INTERNATIONAL PAPER (EUROPE SA)

Chaussée de la Hulpe 166

1170 Brussels

Attn: General Counsel

Facsimile: +32 2 774 12 59

To the Seller:

Mr. Aziz Qadiri

FINAPACK

Route Secondaire 110, boulevard Chefchaouni

Casablanca (Aïn Sebaâ)

Facsimile: +212 22 35 07 54

Email: azizqadiri@cofipac.com

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9.3 Transfer

No Party may assign or Transfer, in any way whatsoever, its rights and obligations under this Agreement without the prior written consent of the other Party.

9.4 No Shop

From the date hereof through the Closing Date, the Seller shall stop all discussion with third parties regarding the sale of the Shares and shall abstain from any response to a third party solicitation in that regard.

9.5 Entire Agreement

This Agreement together with the Shareholders’ Agreement and any agreement referred to herein and therein, embody the entire agreement of the Parties hereto with respect to the subject matters hereof, and supersede all prior agreements with respect thereto.

9.6 Incorporation by Reference; Disclosure Schedules

The Schedules and Appendices to this Agreement constitute integral parts of this Agreement and are hereby incorporated into this Agreement by this reference.

9.7 Confidentiality

Each of the Parties shall maintain and cause the Affiliates to maintain the confidentiality of this Agreement. Without limiting the generality of the foregoing, each of the Parties undertakes to refrain from communicating and will cause the Affiliates to refrain from communicating all or part of this Agreement to any third party whatsoever, except:

(a) when required to disclose such information by Laws; or

(b) as authorized by the other Party and to the extent necessary in the ordinary course of business.

9.8 Modifications and Waivers

(a) This Agreement shall only be modified by a written agreement duly signed by the Parties hereto.

(b) Any waiver by a Party to one of its rights pursuant to this Agreement shall only take effect if made in writing, and shall be strictly interpreted.

(c) No waiver of any one of the provisions of this Agreement shall constitute a waiver of any other provision.

9.9 Severability

If any of the provisions of this Agreement becomes null, illegal, unenforceable, or incapable of being performed in any manner whatsoever (hereinafter, “Disputed Provisions”):

(a) The validity and enforceability of the other provisions shall not be affected or compromised in any way; and

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(b) the Parties shall negotiate in good faith in order to replace the Disputed Provisions with valid and enforceable provisions that are as close as possible to the Parties’ common intent or, if such common intent cannot be determined, the intent of those among the Parties which the Disputed Provisions is supposed to protect.

9.10 Language

This Agreement has been executed both in French and in English language.

If any difficulty regarding interpretation were to arise, the Parties shall refer to both French and English versions of this Agreement to determine their intent.

If any contradiction between the French version and the English version of this Agreement were to arise, the French version shall prevail.

9.11 Governing Law

This Agreement shall be governed by, and construed in accordance with, the laws of France to the fullest extent compatible with any mandatory provision of Moroccan law.

9.12 Dispute Resolution

(a) The Parties shall seek to resolve amicably any dispute between them arising out of, or in connection with this Agreement (including, without limitation, in respect of the validity, interpretation, enforcement, breach or termination thereof), or any of the transactions contemplated hereby, through good faith negotiations for a period of ninety (90) days following written notice in reasonable detail of the existence of such dispute by either Party to the other.

(b) If at the end of such ninety (90) day period, the Parties shall have been unable to resolve such dispute, either Party may submit the matter to international arbitration for final settlement under the Rules of Arbitration of the International Chamber of Commerce (ICC) as in effect on the date of commencement of the arbitration. The arbitral tribunal shall be composed of three (3) arbitrators appointed in accordance with said Rules. The seat of arbitration shall be Paris, France. The arbitration proceeding shall be conducted in the French language, provided that the Parties may file their submissions in French or English and that evidentiary documents and testimonies may be submitted in their original language if such language is English.

(c) The arbitral tribunal shall not have the power to:

(i) alter or modify any of the express terms, provisions, or conditions of this Agreement, or

(ii) act as “amiable compositeur”.

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The arbitral award may include pre-award and/or post-award interest, at a rate of interest set in the discretion of the arbitral tribunal, but not in excess of the rates of pre-judgment or post-judgment interest, as the case may be, permitted by applicable Laws. The award granted by the arbitral tribunal may be subject to a decision conferring authority to execute the award (exequatur) in any court having jurisdiction in the country in which assets of any liable Party is located. The Parties agree that such award shall be enforceable in any country or countries in which such assets are found and agree to submit to enforceability of such award in such country or countries.

(d) The Parties shall use their best efforts to cause arbitration proceedings arising under this Article 9.10 to proceed in a prompt and cost-effective manner, avoiding all undue delay and with the intention that the arbitration award is rendered not more than one hundred twenty (120) calendar days from the date of the confirmation by the ICC of all of the members of the arbitral tribunal, unless the Arbitration Court of the ICC decides to extend the proceedings in accordance with the Rules of Arbitration of the ICC.

(e) The foregoing provisions of this Article 9.10 shall not preclude either Party from applying for any preliminary or interim injunctive remedies or restraining order available from any court of competent jurisdiction where necessary to protect its rights hereunder, including securing the subsequent enforcement of any arbitral award made pursuant to the procedures provided in this Article 9.10.

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Done in Casablanca and Brussels, on September 15, 2005,

in two (2) original counterparts.

I.P. CONTAINER HOLDINGS (Spain) S.L.
	Mr. Marc Van Lieshout
Title:	Chairman of the Board of Directors

duly authorized

FINAPACK
	Mr. Aziz Qadiri
Title:	Chairman of the Managing Board

duly authorized

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Attachment I	Draft Pledge Agreement
Attachment II	Draft notification of transfer of first demand bank guaranty

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EX-10.2

Exhibit 10.2

SHAREHOLDERS’ AGREEMENT

BY AND BETWEEN

I.P. CONTAINER HOLDINGS (SPAIN) S.L.

AND

COFIPAC

DATED SEPTEMBER 15, 2005

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS
Section 1.1	Certain Defined Terms	3
Section 1.2	Presumption and Headings	5
ARTICLE II GOVERNANCE AND MANAGEMENT OF CMCP
Section 2.1	General	5
Section 2.2	Business and Financial Plans	5
Section 2.3	The Board of Directors	6
Section 2.4	Management	7
Section 2.5	Strategic Decisions	8
Section 2.6	Constituent Documents	9
Section 2.7	No Conflicting Agreements	9
ARTICLE III FINANCING
Section 3.1	Dividend Policy	9
Section 3.2	Loans	9
Section 3.3	New Capital Requirements	10
ARTICLE IV SHARE TRANSFER RESTRICTIONS
Section 4.1	General Restrictions on Transfer	10
Section 4.2	Permitted Transferees	10
Section 4.3	Lock-Up	11
ARTICLE V RIGHTS AND OBLIGATIONS RELATING TO THE TRANSFER OF SHARES
Section 5.1	Right of First Offer	11
Section 5.2	Right of First Refusal	11
Section 5.3	Tag Along	12
Section 5.4	Drag Along	13
ARTICLE VI PUT AND CALL OPTIONS
Section 6.1	Put Option	14
Section 6.2	Lapse of the Put Option	14
Section 6.3	Call Option	14
Section 6.4	Change of Control of COFIPAC or FINAPACK	15

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ARTICLE VII CERTAIN ADDITIONAL BUSINESS MATTERS
Section 7.1	CMCP Sole Vehicle	15
Section 7.2	CMCP Supply Policy	16
Section 7.3	Export Policy and Further Joint Opportunities	16
ARTICLE VIII FINANCIAL INFORMATION AND COMPLIANCE
Section 8.1	Business and Financial Records	16
Section 8.2	Financial and Management Reports	16
Section 8.3	Quarterly and Annual Reports	17
Section 8.4	Access	17
Section 8.5	Compliance with Applicable US Regulatory Obligations	17
ARTICLE IX INTELLECTUAL PROPERTY
ARTICLE X CONFIDENTIALITY
Section 10.1	Confidential Information	18
Section 10.2	Required Disclosure	19
ARTICLE XI TERM
Section 11.1	Effective Date - Termination	20
Section 11.2	Effect of Termination; Survival	20
ARTICLE XII MISCELLANEOUS
Section 12.1	Fees and Expenses	20
Section 12.2	Notices	20
Section 12.3	Entire Agreement	21
Section 12.4	Modifications and Waivers	21
Section 12.5	Severability	21
Section 12.6	Language	21
Section 12.7	Successors and Assigns; No Third-Party Beneficiaries	22
Section 12.8	Governing Law	22
Section 12.9	Dispute Resolution	22

EXHIBIT I INITIAL BUSINESS PLAN

ii

THIS SHAREHOLDERS’ AGREEMENT (this “Agreement”)

BY AND BETWEEN:

I.P. CONTAINER HOLDINGS (Spain) S.L., a corporation organized and existing under the laws of Spain with capital of EUR 6,000, having its registered office at 20, General Yagüe, Madrid, 28020, Spain and currently undergoing registration of its company number, duly represented by Mr. Marc Van Lieshout (“IP”), and

COFIPAC, a société anonyme (corporation) with managing board and supervisory board, organized and existing under the laws of Morocco with a share capital of MAD 490,000,000, having its registered office in Casablanca at 67, avenue de l’Armée Royale and registered under number 126.553 with the Registry of Commerce of Casablanca, duly represented by Mr. Aziz Qadiri (“COFIPAC”),

(IP and COFIPAC, collectively, the “Parties”, and each, individually, a “Party”).

RECITALS

WHEREAS, COFIPAC is a wholly-owned subsidiary of FINANCIERE PAPIER ET CARTON KADIRIA, abbreviated as FINAPACK, a société anonyme (corporation) with managing board and supervisory board, organized and existing under the laws of Morocco with a share capital of MAD 226,000,000, having its registered office at Casablanca (Aïn Sebaâ) – Route Secondaire 110, boulevard Chefchaouni and registered under number 93.957 with the Registry of Commerce of Casablanca (“FINAPACK”);

WHEREAS, IP is a wholly-owned subsidiary of International Paper Company (“IPC”), a US corporation having its head office at 400 Atlantic Street, Stamford, Connecticut 06921, USA;

WHEREAS, FINAPACK and IP have entered into that Share Purchase Agreement of even date herewith (the “SPA”), pursuant to the terms and subject to the conditions of which FINAPACK has agreed to sell to IP and IP has agreed to purchase from FINAPACK 51% of the equity and voting rights of GROUPE CMCP, a société anonyme organized and existing under the laws of Morocco with a share capital being reduced to MAD 448,220,000, divided into 4,482,200 shares with a nominal value of MAD 100 each, with its registered office in Kénitra in the Industrial Quarter, and registered with the Registry of Commerce of Kénitra under number 9.919 (“CMCP”);

WHEREAS, IP has also agreed under a separate agreement to acquire from various shareholders a number of shares representing 15.49% of the equity and voting rights of CMCP, following which IP shall own 2,980,551 shares representing 66.49% of the

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outstanding shares of CMCP (the “Shares”) and COFIPAC shall own the remaining 1,501,649 Shares, or 33.51% of the Shares;

WHEREAS, the Parties desire to enter into this Agreement to set forth certain terms and conditions concerning their relationship as shareholders in CMCP and to provide for the orderly governance and management of CMCP following the consummation of the transactions contemplated by the SPA;

NOW, THEREFORE, in consideration of the premises and covenants set forth below and intending to be legally bound, the Parties agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Certain Defined Terms For the purposes of this Agreement, unless the context requires otherwise, the following terms shall have the following meanings:

“Affiliate” shall mean, with respect to any Person: (a) any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with, such first Person. The term “control” (including its correlative meanings “controlled by” and “under common control with”) shall have the meaning ascribed thereto in Article L. 233-3 of the French Commercial Code (Code de Commerce), or (b) any Person that serves as a director or officer of such specified Person.

“Business Day” shall mean any day other than a Saturday, Sunday or other days on which banking institutions are authorized or obligated by law to be closed in Casablanca or Paris, as the case may be.

“Cause” shall mean, in connection with the removal of a Director or senior manager of CMCP, such Person’s (i) willful and continued failure to perform his or her duties as a Director or senior manager of CMCP, (ii) gross negligence that results in a material financial injury to CMCP or any of its Subsidiaries, (iii) bankruptcy or other insolvency proceeding or (iv) involvement in any criminal charges.

“Closing” and “Closing Date” shall have the respective meanings ascribed thereto in the SPA.

“Control” shall have the meaning ascribed thereto in Article L.233-3 of the French Commercial Code (Code de Commerce).

“Equity Securities” with respect to any Person, shall mean: (i) any common and preferred shares; (ii) any other instruments convertible, exercisable or exchangeable for common or preferred shares; (iii) any other equity or equity-linked security issued from time to time; and (iv) any rights to acquire common or preferred shares or any other equity or equity-linked security which may be issued in the future.

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“Fair Market Value” with respect to any property, shall mean, as of a particular date, a good faith determination of the amount that a willing and informed buyer would pay a willing seller in an arm’s length transaction, to acquire such property; provided, that for purposes of any Share Transfer contemplated by this Agreement, the fair market value of the Shares to be transferred shall be determined on the basis of the value of CMCP without taking into account any premium or discount (subject to the provisions of Section 6.2(ii)). In the event that the Parties cannot agree on such an amount within thirty (30) days of either Party’s notice to that effect to the other, Fair Market Value shall be finally determined within ninety (90) days of appointment by the Moroccan subsidiary of an investment bank of international standing independent of the Parties and jointly appointed by them (or, failing such joint appointment, by the President of the Tribunal de Commerce de Paris at the request of the most diligent Party), using customary valuation techniques. The fees and expenses of such investment bank shall be shared equally between the Parties.

“Governmental Authority” shall mean any government or any subdivision of the foregoing, authority, agency, commission, or other similar body including any control commission or similar regulatory body, or any court, tribunal, or judicial or arbitral body of any jurisdiction.

“Permitted Transfer” shall mean any Transfer pursuant to Section 4.2.

“Permitted Transferee” shall mean any transferee pursuant to a Permitted Transfer.

“Person” shall mean any natural person, corporation, general or limited partnership, limited liability company, proprietorship, other business organization or entity, trust, union, unincorporated association, Governmental Authority or other organization.

“Representative” shall mean, with respect to any Person, the officers, directors, managers, employees, agents or other representatives (including any investment banker, attorney or accountant retained by such Person) acting on behalf of such Person.

“Shareholder” shall mean each of IP or COFIPAC.

“Shares” shall mean the shares, par value of one hundred (100) dirhams per share, of CMCP, or, in the event of any change in the number or character of any of the foregoing by reason of any merger, stock dividend or split, combination of shares or similar event, any securities replacing the foregoing, subject to any appropriate adjustments to fairly and equitably preserve the economic benefits and original rights and obligations of their holders.

“Subsidiary” shall mean, with respect to any Person, any other Person Controlled by such first Person (either alone or through or together with any other Subsidiary).

“Third Party” shall mean any Person that is not a Party hereto.

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“Transfer” shall mean, with respect to any Shares, (i) when used as a verb, to sell, give, bequeath, transfer, exchange, assign, pledge or in any other way whatsoever encumber or dispose of such Shares or any participation or interest therein, whether directly or indirectly (including by way of the Transfer of such Shares to any Subsidiary of any Person that is subsequently Transferred in whole or in part to any other Person), or to enter into any contract, option, or other arrangement, commitment or understanding to do any of the foregoing actions, and (ii) when used as a noun, any indirect or direct sale, gift, bequest, transfer, exchange, assignment, pledge or any other encumbrance or disposal whatsoever of such Shares or any participation or interest therein or any contract, option, or other arrangement, commitment or understanding to effect any of the foregoing.

“Voting Rights” shall mean the voting rights attached to any Equity Securities that entitle the holder thereof to vote at the shareholder’s meetings of the issuer of such Equity Securities.

Section 1.2 Presumption and Headings

The Parties acknowledge that each Party and its counsel have reviewed and revised this Agreement and that in the event an ambiguity or question of intent or interpretation arises regarding this Agreement, this Agreement (including any Exhibits) shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring either Party to this Agreement by virtue of the authorship of any provisions to this Agreement. The Article headings contained in this Agreement are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Agreement.

ARTICLE II

GOVERNANCE AND MANAGEMENT OF CMCP

Section 2.1 General

(a) CMCP shall generally be governed in accordance with the applicable provisions of Moroccan corporate law, except as provided in this Agreement.

(b) The day-to-day management of CMCP shall be the responsibility of its chairman (the “Chairman”) and its senior managers, under the overall direction and supervision of CMCP’s Board of Directors (the “Board”).

Section 2.2 Business and Financial Plans

(a) It is the intention of the Parties to operate the business of CMCP through business plans (the “Business Plans”) outlining the customers and products targeted for sale by CMCP, and financial plans (the “Financial Plans”) outlining the source and application of all capital, including capital budgeting, expense budgeting, compensation of key employees and operating forecast. Preparation of Business Plans and Financial Plans shall be the responsibility of the Chairman, and on such a calendar basis as he shall determine, subject to the approval of the Board and consistent with IP’s reporting requirements. The parties agree that the Financial Plan should include reasonable contingencies for the expenditure of less than material unbudgeted capital items and expense items, so that the Chairman shall have

5

the authority to continue operations without seeking the approval of the Parties for such expenditures.

(b) From the effective date of this Agreement, CMCP shall be run in accordance with the business plan attached hereto as Exhibit I as amended on two points as per the Parties’ agreement (the “Initial Business Plan”) and any subsequent Business Plans adopted by the Board of Directors.

Section 2.3 The Board of Directors

The Shareholders shall take, or cause to be taken, all necessary action as may be required under applicable Moroccan law from and after the Closing, to cause the Board to have the composition and powers set forth in this Section 2.3.

(a) Composition. For so long as (i) COFIPAC shall own no less than 24.5% of the outstanding Shares of CMCP and (ii) Messrs. Aziz Qadiri and Hicham Qadiri shall remain part of the senior management of CMCP, the Board shall be composed of seven (7) directors (the “Directors”), four (4) of which shall be nominated by IP (the “IP Directors”), and three (3) of which shall be nominated by COFIPAC (the “COFIPAC Directors”), including Mr. Aziz Qadiri who shall act as Chairman. In case of impediment of the latter, Mr. Hicham Qadiri shall act as Chairman. The Chairman of the Board of Directors shall not have a casting vote. The Vice Chairman of the Board of Directors shall be the Vice President of International Paper Company’s European Container Division, an IP Director.

(b) Removal. The Parties agree that, if a board member may be revoked at any time by a resolution of a shareholders meeting and the Chairman of the Board of Directors may be revoked by the Board of Directors, they shall not vote for the removal of any Director, including the Chairman, and they shall not vote any of their Shares in favor of the removal of any Director designated pursuant to Section 2.3(a), unless such removal shall be for Cause or the Shareholder entitled to designate such Director shall have consented to such removal in writing; provided, however, that IP shall have the right to cause any IP Director to be removed from the Board at any time and COFIPAC shall have the right to cause any COFIPAC Director to be removed from the Board at any time, in each case with or without Cause and at the relevant Shareholder’s sole discretion.

(c) Vacancies. If a vacancy of a seat on the Board occurs at any time as a result of the death, disability, resignation, retirement, or removal of any Director, the Shareholder that designated the Director whose death, disability, resignation, retirement or removal caused the vacancy shall have the right to designate a replacement Director for appointment or election and the vacancy shall be filled within five (5) Business Days of its occurrence. If at any time there is a vacancy, the Board shall not conduct any further business until a replacement Director has been appointed or elected to the Board in accordance with this Section; provided, however, that the foregoing restriction shall not apply, and the Board may continue to conduct business, in the event that a vacancy has continued for longer than five (5) Business Days after the event giving rise to such vacancy.

(d) Board Meetings. The Board shall meet as often as required by the operations and affairs of CMCP and at least quarterly. Board meetings shall be convened by the Chairman, either acting in its sole initiative or upon the request of any Shareholder, by notice to each Director (by facsimile or electronic transmission) to be received not later than

6

three (3) Business Days before the meeting, stating the date, time and place of such meeting and the agenda of business to be conducted thereat. A Board meeting may be held without the foregoing notice thereof, if all Directors are present and agree to hold a meeting. Meetings may from time to time be held outside of the Morocco.

(e) Quorum. At all meetings of the Board, the actual presence of half of the members of the entire Board, among which no less than two (2) IP Directors and no less than one (1) COFIPAC Director, shall be required to constitute a quorum for the transaction of business. To the extent permitted by applicable Moroccan law, a Director may participate in any meeting of the Board by means of an audio or video conference or other communications equipment that allows all Directors participating in such meeting to hear each other; participation in any such meeting by such means shall constitute presence in person for all purposes (including the satisfaction of any quorum requirement) of this Agreement.

(f) Action by the Board. All actions of the Board shall require the affirmative vote of at least a majority of the Directors present or represented at a duly-convened meeting of the Board held in accordance with Sections 2.3(d) and 2.3(e), including no less than two (2) IP Directors and no less than one (1) COFIPAC Director.

(g) Proxy. Each Director may hold a proxy for one (1) other Director to vote at a Board meeting in accordance with applicable Moroccan law.

(h) Language. The Board meetings shall be held in French and English and the minutes shall be drafted in French and translated to English as needed.

Section 2.4 Management

(a) The Board shall appoint the Chairman and the other senior managers of CMCP, who shall hold their offices for such terms and shall perform such duties as the Board shall determine from time to time. From an operational standpoint, the Chairman shall report to the Vice President of the European Container Division of International Paper, to which CMCP shall belong. Any senior manager may be removed at any time, in compliance with applicable law, by the affirmative vote of the Board and any vacancy occurring among the senior managers shall be filled by the Board. The salaries and other compensation of the senior managers shall be determined by the Board.

(b) The Parties agree that the management of CMCP immediately from and after the Closing shall be Mr. Aziz Qadiri, acting as Chairman, and Mr. Hicham Qadiri, acting as General Manager in charge of Sales and Marketing, each of whom have separately agreed to assume these positions for three years following the Closing. The former members of the managing board of CMCP shall have, like Mr. Hicham Qadiri, upon the adoption by CMCP of the form of a corporation with a board of directors, the authority of general managers, provided, however, that they shall only bind the company with the joint signature of Mr. Aziz Qadiri or Mr. Hicham Qadiri, and subject to the limitations to be determined by the Board, and which shall be reflected in CMCP’s by-laws. IP shall designate the CFO/Controller of CMCP, who may be entitled to the benefits reserved to International Paper Company’s expatriates, provided that International Paper Company shall bear the additional cost pertaining to these benefits. Management shall act in accordance with the annual Financial Plans and Business Plans approved by the Board and in compliance with the

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provisions of Section 2.5 below. It will regularly inform the Board of Directors of any change or planned change in Morocco’s legislative or regulatory environment.

Section 2.5 Strategic Decisions

CMCP and its management shall take no action with respect to any of the following matters (and shall cause the Subsidiaries of CMCP not to take any action with respect to any of the following matters) without such action being submitted to, and authorized in advanced by, a duly-convened meeting of the Board held in accordance with Sections 2.3(d), (e) and (f):

(i) the adoption of a business plan subsequent to the Initial Business Plan;

(ii) any material departures from an approved business plan;

(iii) the adoption or modification of any annual Financial Plan;

(iv) the appointment, removal and management compensation of senior managers and officers (including facility managing directors, manufacturing / mills managers and sales managers;

(v) sales compensation structure and incentive payout approval;

(vi) any amendment to any existing Affiliates transaction or any approval of any new Affiliates transaction;

(vii) any transaction outside the ordinary course of business, including any (A) merger, statutory share exchange or consolidation or similar corporate transaction proposal, (B) sale or other disposition, directly or indirectly, of all or substantially all of the assets of CMCP, (C) acquisition of the stock of any other Person, (D) joint venture or partnership, (E) incurrence of indebtedness for borrowed money or guarantee of any such indebtedness of another Person, (F) issuance or sale of any debt securities or warrants or rights to acquire any debt securities or any guarantee of any debt securities of another Person, or (G) sale or disposition of any material assets of CMCP not held for sale in the ordinary course;

(viii) any new transaction or new series of related transactions involving (A) export sales of an annual amount in excess of the equivalent in MAD of two hundred fifty thousand US dollars (USD 250,000) or (B) capital expenditures in excess of the equivalent in MAD of three hundred thousand US dollars (USD 300,000);

(ix) any loan or series of related loans (other than any loan to a wholly-owned Subsidiary of CMCP) in excess of three hundred thousand US dollars (USD 300,000);

(x) the adoption or amendment of treasury management policies;

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(xi) any plan for the creation or dissolution of Subsidiaries;

(xii) any proposal for the appointment or removal of the statutory auditors of CMCP, or the change or adoption of material accounting principles;

(xiii) any proposal for action to be submitted to the Shareholders meeting;

(xiv) any filing for bankruptcy, voluntary winding up or liquidation or reduction in the share capital of CMCP or any arrangement having the same economic effect as the foregoing;

(xv) internal policies and decisions in respect of safety, environment, human resources and IT; and

(xvi) the grant of authority to any Person to act for or on behalf of CMCP or any of its Subsidiaries in any material way.

Section 2.6 Constituent Documents

As between Shareholders, in the event of any conflict between this Agreement and the bylaws (statuts) of CMCP, this Agreement shall prevail.

Section 2.7 No Conflicting Agreements

No Shareholder shall grant any proxy or enter into or agree to be bound by any stockholder agreement or like arrangements of any kind (including any arrangement or agreement with respect to the acquisition, disposition or voting of any Shares) with any Person (including another Shareholder) that is inconsistent with any of the provisions of this Agreement.

ARTICLE III

FINANCING

Section 3.1 Dividend Policy

CMCP’s dividend policy shall be determined by CMCP’s Board, it being understood that the Parties have agreed that as a general rule fifty percent (50%) of the distributable earnings of each financial year shall be distributed to all of the shareholders as dividends.

Section 3.2 Loans

With the approval of the Board, funding for CMCP may be obtained by loans from commercial or government lending institutions, or from the Parties. Any of such loans shall bear market interest rates. Neither Party shall be required to guarantee loans obtained by CMCP.

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Section 3.3 New Capital Requirements

The Parties shall ensure that the capital of CMCP always remains at an adequate level according to its needs. In any event, COFIPAC undertakes not to oppose a capital increase of CMCP when such capital increase results from a legal or regulatory requirement or from an increase of CMCP liabilities or a decrease in CMCP’s assets subject to indemnification under the Share Purchase Agreement and in excess of MAD 100 million in aggregate.

ARTICLE IV

SHARE TRANSFER RESTRICTIONS

Section 4.1 General Restrictions on Transfer

(a) No Transfers except as Permitted. Each Shareholder agrees not to Transfer any Shares now or at any time hereafter owned by it (or any interest therein) to any Person (a “Transferee”), except as expressly permitted by and in accordance with the terms of this Agreement.

(b) Agreement to be Bound. Except as expressly agreed between the Shareholders in writing, no Transfer of any Shares by any Shareholder shall be permitted unless the Transferee shall have executed and delivered to each Party other than the transferring Shareholder, as a condition precedent to such Transfer, an agreement in writing to be bound by the terms of this Agreement.

(c) Compliance with Laws. Notwithstanding any other provision of this Agreement, no Transfer of any Shares to any Transferee shall be permitted unless such Transfer complies with all applicable requirements of law, including the securities laws of any applicable jurisdiction.

(d) No Partial Transfer. Except as expressly permitted under Section 4.2. and Article VI, in no event shall any Shareholder Transfer to any Third Party less than all of the Shares beneficially owned by it and its Affiliates.

(e) No Effect. Any attempt to Transfer any Shares in violation of the provisions of this Agreement shall be null and void ab initio and of no effect and the Shareholders shall cause CMCP not to record any such purported Transfer upon the stock register of the company.

Section 4.2 Permitted Transferees

Any Shareholder shall have the right at any time to Transfer (i) any or all of the Shares that it holds to a Subsidiary owned no less than eighty percent (80%) and (ii) the legally required number of Shares to Directors nominated by it and under its control (each, a “Permitted Transferee”); provided that the Transferring Shareholder shall be liable for reacquiring such Shares prior to the Transferee ceasing to be a Permitted Transferee. For the avoidance of doubt, the provisions of Section 4.3 and Article V shall not apply to Transfers to Permitted Transferees pursuant to this Section 4.2.

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Section 4.3 Lock-Up

Subject to the provisions of Section 4.2 and Article VI, for a period of three (3) years from the Closing Date, the Parties undertake to maintain their interest in CMCP at its level as of the Closing Date. The Kadiria company undertakes likewise concerning its Controlling interest in FINAPACK and that of FINAPACK’s interest in COFIPAC.

ARTICLE V

RIGHTS AND OBLIGATIONS RELATING TO THE TRANSFER OF SHARES

Section 5.1 Right of First Offer

(a) If a Shareholder desires to Transfer its Shares, such Shareholder (the “Selling Shareholder”) shall address to the other Shareholder (the “Non Selling Shareholder”) a written notice to that effect (the “Initial Transfer Notice”). The Non Selling Shareholder shall then have ninety (90) days from the date on which the Initial Transfer Notice is sent to determine whether it wishes to purchase the Shares so offered (the “Offered Shares”). If the Non Selling Shareholder wishes to purchase the Offered Shares, it shall deliver a notice (the “Reply Notice”) within such ninety (90)-day period to the Selling Shareholder specifying a purchase price for the Offered Shares (the “Bid Price”) and the other terms on which such Non Selling Shareholder is willing to purchase all (but not less than all) of the Offered Shares. The Selling Shareholder shall have seven (7) days from the date on which such Reply Notice is sent to determine whether to sell to the Non Selling Shareholder all of the Offered Shares at the price and on the other terms set forth in the Reply Notice, after which seven (7) day period the Non Selling Shareholder’s offer shall expire.

(b) If the Selling Shareholder shall have agreed to sell the Offered Shares to the Non Selling Shareholder, then the Non Selling Shareholder shall consummate its purchase by delivering the aggregate purchase price to be paid by it for the Offered Shares via wire transfer of immediately available funds to an account specified by the Selling Shareholder on the agreed closing date which shall be, at the latest, the later of sixty (60) days after the Reply Notice is sent and five (5) days after receipt of all governmental and regulatory consents and approvals and the expiration of all applicable waiting periods. The Selling Shareholder shall not be required to make any representations and warranties, other than as to its good title to the Offered Shares free and clear of all liens, claims and encumbrances, its power and authority as an entity to consummate such Transfer, and the absence of any conflicts, required consents or legal proceedings which could affect such Transfer, and shall not be required to provide any indemnities in respect of the Offered Shares.

(c) If the right of first offer provided for in this Section is not exercised or the Selling Shareholder does not accept the Bid Price, then it may transfer the Offered Shares to any Third Party subject to the provisions of Section 5.2 below.

Section 5.2 Right of First Refusal

(a) Without prejudice to the provisions of Section 5.1, each of the Shareholders hereby grants to the other Shareholder a right of first refusal in connection with any Transfer of Shares (the “Right of First Refusal”), which shall be exercised in accordance with this Section 5.2.

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(b) In the event that any Shareholder (the “Selling Shareholder”) has received from or otherwise negotiates with a Third Party (the “Offeror”) an offer to purchase for cash, securities or any other consideration all (but not less than all) of its Shares (the “Offered Shares”), and the Selling Shareholder desires to consummate such Transfer of such Offered Shares to the Offeror (the “Proposed Transfer”), the Selling Shareholder shall address a written notice for this purpose (the “Offer Notice”) to the other Shareholder (such Shareholder, the “Non-Selling Shareholder”). The Offer Notice shall set forth, in reasonable detail: (i) the name and address of the Offeror, provided that if the Offeror is not a natural Person, the Offer Notice shall also set forth the name and address of the Persons that control the Offeror; (ii) the proposed amount and the form of the consideration offered by the Offeror; (iii) if any part of such consideration is in a form other than cash, the Selling Shareholder’s good faith estimate of the Fair Market Value of such non-cash consideration (the aggregate value in cash of all cash and non-cash consideration set forth in clauses (ii) and (iii), the “Cash Equivalent Consideration”); and (iv) the material terms (including any vendor loan or similar arrangement) and conditions of the Proposed Transfer (including copies of the definitive agreements relating to such Proposed Transfer).

(c) If the Cash Equivalent Consideration is below the Non-Selling Shareholder Bid Price under the provisions of Section 5.1(a) hereabove, the Non-Selling Shareholder shall have the right to purchase the Offered Shares at an aggregate price equal to the Cash Equivalent Consideration and on the other terms and conditions set forth in the Offer Notice.

(d) The Non-Selling Shareholder shall deliver a written notice of acceptance to that effect (the “RFR Exercise Notice”) to the Selling Shareholder (with a copy to CMCP) at any time within thirty (30) days after the delivery of the Offer Notice (the “Exercise Period”).

(e) On the date (the “RFR Closing Date”) that is the later of (i) five (5) Business Days after the expiration of the Exercise Period and (ii) ten (10) Business Days after the final determination of the Cash Equivalent Consideration in the case of a dispute of the Fair Market Value of the share other than in cash for the Proposed consideration, the Non-Selling Shareholder shall purchase, and shall pay to the Selling Shareholder the purchase price (in the form and amount set forth in Section 5.2(f)) for all the Offered Shares, against delivery of duly completed and executed transfer forms (bordereaux de transfert) and other appropriate documentation; provided that, if the Transfer of such Offered Shares is subject to the receipt of any regulatory approval, the RFR Closing Date shall be automatically extended until the date that is two (2) Business Days after the receipt of all such regulatory approval.

(f) The purchase price to be paid on the RFR Closing Date shall be in an aggregate amount equal to the Fair Market Value of the Cash Equivalent Consideration and shall be paid in cash in immediately available funds, with the sole representations and warranties referred to in Section 5.1(b) hereabove.

Section 5.3 Tag Along

(a) Without prejudice to the provisions set forth in Section 5.1 and 5.2 hereof, the Shareholders hereby grant to each other a right to participate in any Proposed Transfer

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under the same terms and conditions than granted to the Selling Shareholder, which shall be exercised in accordance with the provisions of this Section 5.3 (a “Tag-Along Right”).

(b) The Selling Shareholder shall deliver a written notice (the “Tag-Along Notice”) to the Non-Selling Shareholder simultaneously with and in addition to its delivery of the Offer Notice pursuant to Section 5.2. The Tag-Along Notice shall confirm that: if the Non-Selling Shareholder does not timely exercise its Right of First Refusal, it shall be entitled to exercise its Tag-Along Right in connection with such Transfer in accordance with this Section 5.3.

(c) In the event that the Non-Selling Shareholder desires to exercise its Tag-Along Right, it shall deliver a written notice (the “Tag-Along Exercise Notice”) to the Selling Shareholder at any time on or prior to the expiration of the Exercise Period referred to in Section 5.2(d) hereabove.

(d) The Non-Selling Shareholder agrees to cooperate immediately in consummating such Proposed Transfer, including, without limitation, by becoming a party to any transfer agreement and other appropriate related agreements, delivering at the consummation of such Proposed Transfer, duly completed and executed transfer forms (bordereaux de transfert) and taking any other necessary or appropriate action in furtherance thereof, provided that each of the Shareholders shall bear its obligations at its own interest without solidarity with the other Shareholdert.

(e) On and subject to the consummation of the Proposed Transfer, the Non-Selling Shareholder shall be entitled to receive the quote-share of the purchase price paid by the Offeror amounting to the proportion of shares that it holds relative to the total number of Shares Transferred to the Offeror.

(f) If the Selling Shareholder does not consummate the Transfer within one hundred eighty (180) days from the Initial Transfer Notice, then the right of the Selling Shareholder to Transfer the Offered Shares shall terminate and the Selling Shareholder shall be required to comply once more with the procedures set forth in Sections 5.1 and 5.2 with respect to any Proposed Transfer to a Third Party.

Section 5.4 Drag Along

(a) Without prejudice to the provisions set forths in Sections 5.1, 5.2 and 5.3 hereof, in the event that IP would proceed with a Proposed Transfer, COFIPAC irrevocably undertakes to Transfer to the Offeror, at IP’s request, all of FINAPACK’s interest in CMCP, under the same terms and conditions as granted to IP, and in accordance with the provisions set forth in this Section 5.4.

(b) In the event IP wishes to exercise this drag-along right, IP shall deliver to COFIPAC a written notice to this effect, simultaneously with its delivery of the Offer Notice pursuant to Section 5.2. This notice shall confirm that if COFIPAC does not timely exercise its Right of First Refusal, IP shall be entitled to exercise its drag-along right.

(c) The provisions of Section 5.3(d) through 5.3(f) shall be applicable to this Section 5.4, provided that the Selling Shareholder referred to in Section 5.3 shall refer to IP and the Non-Selling Shareholder shall refer to COFIPAC.

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ARTICLE VI

PUT AND CALL OPTIONS

Section 6.1 Put Option

(a) IP irrevocably undertakes to buy, at COFIPAC’s request, at their Fair Market Value, all of the CMCP Shares held by COFIPAC (the “Put Option”), in accordance with the provisions set forth in this Section 6.1.

(b) The Put Option may be exercised by COFIPAC (i) at any time between January 1, 2010 and December 31, 2012, or (ii) in the event of the dismissal and/or removal of Messrs. Aziz Qadiri and/or Hicham Qadiri other than for Cause, within one hundred and eighty (180) days of the effectiveness of such events. COFIPAC may only exercise the Put Option once, and only for all of the CMCP Shares that it holds.

(c) If COFIPAC wishes to exercise the Put Option, it shall notify IP of its intent to do so (the “Put Notice”) in the form set forth in Section 12.2. The Put Notice shall constitute an irrevocable commitment on the part of COFIPAC to Transfer all of the CMCP Shares that it holds.

(d) In the event of the Put Notice pursuant to the provisions of Sections 6.1(b) and 6.1(c) above, COFIPAC shall Transfer the CMCP Shares that it holds to IP within ten (10) Business Days following the determination of the Fair Market Value, with the sole representations and warranties referred to in Section 5.1(b) hereabove.

Section 6.2 Lapse of the Put Option

Notwithstanding any contrary provision herein, the Put Option shall lapse and IP shall be discharged of the obligation to acquire the CMCP Shares held by COFIPAC pursuant to Section 6.1 hereabove if any one of the following circumstances has occurred at the time of such acquisition:

(i) filing by IP of indemnification claims under Article VII of the Share Purchase Agreement for an amount exceeding one-third (1/3) of the Purchase Price (as defined in the Share Purchase Agreement), or

(ii) significant deterioration of the legal or tax regime of foreign investment in Morocco, in particular affecting conditions for repatriation of dividends or taxation of economic activities, it being understood that in the event of a mere deterioration of the general foreign investment environment in Morocco, such circumstance shall be taken into account in the determination of the Fair Market Value of the Shares subject to the Put Option.

Section 6.3 Call Option

(a) In consideration for the Put Option described in Section 6.1 above, COFIPAC irrevocably undertakes to Transfer, at IP’s request, at their Fair Market Value, all of the CMCP Shares held by COFIPAC (the “Call Option”), in accordance with the provisions set forth in Section 6.3.

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(b) The Call Option may be exercised by IP (i) at any time between January 1, 2010 and December 31, 2012, or (ii) in the event that both Mr. Hicham Qadiri and/or Mr. Aziz Qadiri would no longer have a management function within CMCP or on its board of directors for whatever reason (except for a dismissal and/or removal without Cause), at any time within one hundred and eighty (180) days of the termination of such function. IP may only exercise the Call Option in only one time and for all of the CMCP Shares held by COFIPAC.

(c) If IP wishes to exercise the Call Option, it shall notify COFIPAC of its intent to do so (the “Call Notice”) in the form set forth in Section 12.2. The Call Notice shall constitute an irrevocable commitment on the part of IP to acquire (or to cause to be acquired by any person designated by IP) all of the CMCP Shares.

(d) In the event of the Call Notice pursuant to the provisions of Section 6.3(b) and 6.3(c) above, COFIPAC shall Transfer the CMCP Shares to IP within ten (10) Business Days following the determination of the Fair Market Value, with the representations and warranties referred to in Section 5.1(b) hereabove.

Section 6.4 Change of Control of COFIPAC or FINAPACK

(a) Without prejudice to the provisions of Article 4.3, in the event of a direct or indirect change of Control of COFIPAC or FINAPACK, IP shall have the right to acquire all or part of COFIPAC’s interest in CMCP at its Fair Market Value (the “Purchase Option”). COFIPAC shall immediately notify IP of such a change of Control plan as well as of any appropriate information concerning the contemplated transaction and the potential buyer. IP shall have thirty (30) days from such notice to notify COFIPAC if it wishes (i) to exercise its Purchase Option immediately and to acquire the relevant Shares before the contemplated change of Control, in which case the Parties shall rapidly take the necessary measures to allow the transfer of the relevant Shares to IP, or (ii) to authorize the future change of Control and to defer the exercise of the Purchase Option, subject to the new Controlling shareholder of FINAPACK or COFIPAC recognizing the Put Option and Purchase Option to the benefit of IP beforehand in writing, it being understood that such Purchase Option shall be automatically null and void if the above-mentioned exercise notice has not been sent to COFIPAC within a one-year period as from the completion of the change of Control concerned.

(b) The provisions of paragraph (a) above shall not apply in the event of a merger of COFIPAC with FINAPACK subject to FINAPACK assuming the obligations of COFIPAC hereunder.

(c) COFIPAC shall notify IP of any changes in the capital of COFIPAC or FINAPACK not entailing a change of Control.

ARTICLE VII

CERTAIN ADDITIONAL BUSINESS MATTERS

Section 7.1 CMCP Sole Vehicle

(a) Each Shareholder covenants and agrees that it shall not, and it shall cause its Affiliates not to, (i) conduct, develop, invest or otherwise participate in any business or

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operations directly competing with the business of CMCP in Morocco, or (ii) acquire (through merger, stock purchase or purchase of all or substantially all the assets of) or otherwise invest in any competitor of CMCP in Morocco; provided, however, that the foregoing restrictions shall not apply to any acquisition by IP or its Affiliates of a business with less than twenty-five percent (25%) of total sales in Morocco.

(b) The foregoing obligations shall survive the termination of this Agreement for a period of three (3) years.

Section 7.2 CMCP Supply Policy

IP shall have a right of first refusal regarding the supply of raw materials sold by International Paper or its Affiliates and necessary to the Business of CMCP, including but not limited to containerboard, which right shall be exercised on an arm’s length basis and based on the best offers made by Third Parties.

Section 7.3 Export Policy and Further Joint Opportunities

(a) CMCP’s sales policy outside Morocco shall be decided by the Board, it being understood that CMCP, as a rule, shall not have activities in the European Economic Area.

(b) The Parties shall consider in good faith the possibility of pursuing joint business opportunities outside of Morocco and of the European Economic Area, either through CMCP or otherwise, consistent with and subject to their respective overall business interests.

ARTICLE VIII

FINANCIAL INFORMATION AND COMPLIANCE

Section 8.1 Business and Financial Records

Full, true, correct and complete financial statements of CMCP shall be kept and maintained by CMCP in accordance with Moroccan generally accepted accounting principles and procedures applied on a consistent basis, in French language, and shall be available in English and compliant with US GAAP within the last four (4) days of each month. The first statements compliant with US GAAP shall be issued for the quarter ending December 31, 2005.

Section 8.2 Financial and Management Reports

(a) Consistent with the established internal reporting and Financial Plans processes of CMCP, CMCP’s general management shall on a regular and timely basis prepare and submit to the Board:

(i) a proposed annual operating Financial Plan of CMCP for the next succeeding fiscal year, which annual operating Financial Plan shall be subject to approval by the Board in accordance with Section 2.5(iii); and

(ii) monthly management reports that shall include statements on the sales, cost items and the cash position of CMCP, setting forth in each

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case in comparative form the corresponding figures for the corresponding period (A) of the preceding fiscal year and (B) in the annual operating Financial Plan for CMCP for such period, all in reasonable detail and accompanied by a succinct narrative discussion of the results of operations compared against the annual operating Financial Plan of CMCP.

(b) In addition, as promptly as practicable, CMCP shall inform the Shareholders of:

(i) the occurrence of any circumstance or event likely to result in a material adverse change in the results of operations or financial condition or prospects of CMCP;

(ii) the commencement of all actions, suits and proceedings before any Governmental Authority affecting CMCP.

(c) CMCP shall deliver to the Shareholders such financial and other management reports as the Shareholders may reasonably request.

Section 8.3 Quarterly and Annual Reports

CMCP shall deliver to the Shareholders the detailed financial statements of CMCP for each fiscal quarter, semester and fiscal year, in a format that complies with the disclosure and reporting obligations of the Shareholders, including financial reporting in US GAAP.

Section 8.4 Access

CMCP shall permit the Shareholders and their respective authorized Representatives reasonable access, during regular business hours and upon reasonable advance notice, to the management, premises and books and records of CMCP for purposes consistent with this Agreement, including the purposes of auditing and verification.

Section 8.5 Compliance with Applicable US Regulatory Obligations

COFIPAC acknowledges that, as an indirect Subsidiary of the International Paper Company, CMCP will be subject to various compliance obligations under applicable US laws and regulations, and undertakes to support and facilitate the timely compliance of CMCP with such requirements.

ARTICLE IX

INTELLECTUAL PROPERTY

Unless specifically agreed to in writing, neither Party shall acquire any right, title, or interest in, or to the intellectual property of the other.

(a) During the course of the business of CMCP, it may be necessary for one Party to disclose to the other, or to CMCP, certain valuable, confidential, technical data, processes, trade secrets, or other information (hereinafter referred to as “Trade Secrets”) as to design, manufacture, marketing, or distribution of packaging materials or the Products. Each

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Party agrees to keep, and shall ensure that its employees shall keep, in confidence and not to disclose to others or for the benefit of any Third Party such Trade Secrets disclosed by the other Party. Such obligation shall apply to Trade Secrets that are in written or other tangible form or oral disclosures. To safeguard the confidentiality of such Trade Secrets, CMCP and both Parties shall use at least the same degree of care to avoid publication or dissemination of such information as they use with their own materials or information which they do not desire to have published or disseminated.

(b) No Trade Secrets shall be considered proprietary and accorded confidentiality if such Trade Secret is or becomes available publicly through no wrongful act of CMCP or receiving Party, is rightfully received from a non-Affiliated Third Party without restriction, is furnished to a Third Party by the owner of the Trade Secret without a similar restriction on the Third Party’s rights, is independently developed by CMCP or receiving Party, or was already in possession of CMCP or the receiving Party prior to the date of disclosure.

(c) COFIPAC hereby acknowledges IP’s exclusive right, title and interest in and to all industrial and intellectual property pertaining to the packaging materials, the products, the confidential information, and the Trade Secrets disclosed by IP to COFIPAC and CMCP pursuant to this Agreement, and agrees not to contest and not to do or cause at any time any act or thing which would in any way impair any part of IP’s right, title, ownership and interest thereto other than where COFIPAC has a legitimate and good faith basis to contest the same. This shall not apply to any industrial or intellectual property of IP which is already known to COFIPAC or which is published or otherwise generally available to the public, except in consequence or a willful or negligent act or omission of COFIPAC or its employees or other personnel.

(d) Certain trademarks and products names to be used by CMCP in connection with the manufacture and sale of the products will be registered by IP in the name and at the cost of IP, and shall be the subject of a Trademark License Agreement to be signed between IP and CMCP to be registered by and at the cost of CMCP.

(e) All intellectual property jointly developed by CMCP and IP shall belong jointly to CMCP and IP, provided that the Parties mutually agree in writing to the same prior to the commencement of such joint development efforts. In such a case, CMCP and IP shall grant to International Paper Company a paid-up royalty free license for the term of this Agreement.

(f) Except as set forth in paragraph (e) above, the rights arising under this Article IX shall survive for five (5) years following the termination of this Agreement.

ARTICLE X

CONFIDENTIALITY

Section 10.1 Confidential Information

(a) Except as otherwise provided by this Agreement, each Party agrees that all information relating to any other Party or its Affiliates or to CMCP and its Subsidiaries obtained by such Party (whether before or after the date hereof) in connection with this Agreement, or in the course of negotiations or investigations leading up to the execution of

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this Agreement (all such information “Confidential Information”), shall be kept confidential by such Party.

(b) In addition, each Party agrees (i) to use such Confidential Information solely for the purposes contemplated by this Agreement, or as necessary to carry out the transactions contemplated hereby, and not to use it for any other purpose; (ii) not to disclose to any Person such Confidential Information, provided that any Party may disclose such Confidential Information to its Representatives who need to know such Confidential Information for purposes contemplated by this Agreement or as necessary to carry out the obligations of such Party hereunder, (iii) not to disclose to any Person that such Confidential Information has been made available to it and (iv) not to disclose to any Person the existence of this Agreement or any of the terms, conditions, or other facts with respect to this Agreement, without the prior written consent of the other Parties. Each Party will inform its Representatives of the confidential nature of the Confidential Information and each Party agrees to be responsible for any breach of this Section 10.1 by its respective Representatives.

(c) Notwithstanding anything to the contrary herein, the term “Confidential Information” shall not include any information that (i) at the time of disclosure or thereafter is generally available to and known by the public (other than as a result of a disclosure directly or indirectly by the Party relying on this exception or any of its Representative); (ii) was available to any Party on a non-confidential basis from a source other than any other Party or its Affiliates or any Representative of the foregoing (acting in its capacity as Representative), provided that such source was not known by the Party relying on this exception to be in breach of any obligation of confidentiality to any other Party; or (iii) has been independently acquired or developed by any Party without the use of, and is not derived from, any Confidential Information.

Section 10.2 Required Disclosure

(a) Notwithstanding Section 10.1, if any Party or any of its Affiliates or any of their Representatives becomes legally compelled (by deposition, interrogatory, request for documents, subpoena, civil investigative demand or similar process) to disclose any Confidential Information, such Party or Affiliate shall provide the relevant other Party with prompt prior written notice of such requirement (but in any event within twenty-four (24) hours) to enable the relevant other Party to seek a protective order or other appropriate remedy or waive compliance with the terms of this Section 10.2. In the event that such protective order or other remedy is not obtained, or that the relevant other Party waives compliance with the provisions hereof, the Party subject to the legal compulsion agrees to, and to cause their Affiliates and Representatives to, furnish only that portion of the Confidential Information which such compelled Party is advised by counsel is legally required and to exercise its best efforts to obtain assurance that confidential treatment will be accorded such Confidential Information.

(b) Notwithstanding clause (iv) of Section 10.1(b), any Party may disclose the existence and content of this Agreement, to the extent that such disclosure, on the advice of counsel, is required under applicable law; provided that such Party provide the other Party with prior written notice of, and (if reasonably practicable) opportunity to review and comment on, the form and content of such disclosure.

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ARTICLE XI

TERM

Section 11.1 Effective Date - Termination

This Agreement shall become effective on the Closing Date and, unless terminated at an earlier date by the mutual agreement of the Parties, shall continue in full force and effect until the earlier to occur of (i) the Sale by either Party of the entirety of its interest in CMCP in accordance with the provisions hereof or (ii) the twentieth (20th) anniversary of the Closing Date.

Section 11.2 Effect of Termination; Survival

The obligations set forth in Articles IX, X, XI and XII shall survive the termination or expiration of this Agreement.

ARTICLE XII

MISCELLANEOUS

Section 12.1 Fees and Expenses

Each of the Parties shall bear the expenses and fees incurred by it or for it in relation to this Agreement, including the fees of any legal, accounting and financial advisors.

Section 12.2 Notices

All notices, demands, and other communications required or permitted to be given to any Party under this Agreement shall be in writing and any such notice, demand or other communication shall be deemed to have been duly given when delivered by hand, courier or overnight delivery service or, if mailed, two (2) Business Days after deposit in the mail, certified or registered mail, return receipt requested and with first-class postage prepaid, and, regardless of method, addressed to the Party at its email address or facsimile number set forth below (or at such other address or facsimile number as such Party shall furnish the other Party in accordance with this Section):

(a) If to I.P. CONTAINER HOLDINGS (Spain) S.L.:

20, General Yagüe

Madrid 28020

Spain

Attn: Mr. Marc Van Lieshout

With a copy to:

INTERNATIONAL PAPER (EUROPE SA)

Chaussée de la Hulpe 166

1170 Brussels

Attn: General Counsel

Facsimile: +32 2 774 1259

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(a) If to COFIPAC:

Mr. Aziz Qadiri

Casablanca (Aïn Sebaâ)

Route Secondaire 110, boulevard Chefchaouni

Morocco

Facsimile: +212 22 35 07 54

Email: azizqadiri@cofipac.com

Section 12.3 Entire Agreement

This Agreement, together with the SPA and any agreement between the parties referred to herein and therein, embody the entire agreement of the Parties hereto with respect to their joint investment in CMCP.

Section 12.4 Modifications and Waivers

(a) This Agreement shall only be modified by a written agreement duly signed by the Parties.

(b) Any waiver by a Party to one of its rights pursuant to this Agreement shall only take effect if made in writing, and shall be strictly interpreted.

(c) No waiver of any one of the provisions of this Agreement shall constitute a waiver of any other provision.

Section 12.5 Severability

If any of the provisions of this Agreement becomes null, illegal, unenforceable, or incapable of being performed in any manner whatsoever (hereinafter, “Disputed Provisions”):

(i) the validity and enforceability of the other provisions shall not be affected or compromised in any way; and

(ii) the Parties shall negotiate in good faith in order to replace the Disputed Provisions with valid and enforceable provisions that are as close as possible to the Parties’ common intent or, if such common intent cannot be determined, the intent of those among the Parties which the Disputed Provisions is supposed to protect.

Section 12.6 Language

This Agreement has been executed both in French and in English language.

If any difficulty regarding interpretation were to arise, the Parties shall refer to both French and English versions of this Agreement to determine their intent.

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If any contradiction between the French version and the English version of this Agreement were to arise, the French version shall prevail.

Section 12.7 Successors and Assigns; No Third-Party Beneficiaries

This Agreement and all its provisions shall be binding upon and inure to the benefit of the Parties and their respective permitted successors and assigns. Nothing in this Agreement, whether expressed or implied, will confer on any Person, other than the Parties hereto or their respective permitted successors and assigns, any rights, remedies or liabilities. No Party may assign its rights or obligations under this Agreement without the prior written consent of the other Parties and any purported assignment without such consent shall be void.

Section 12.8 Governing Law

This Agreement shall be governed by, and construed in accordance with, the laws of France to the fullest extent compatible with any mandatory provision of Moroccan corporate law.

Section 12.9 Dispute Resolution

(a) The Parties shall seek to resolve amicably any dispute between them arising out of, or in connection with this Agreement (including, without limitation, in respect of the validity, interpretation, enforcement, breach or termination thereof), or any of the transactions contemplated hereby, through good faith negotiations for a period of ninety (90) days following written notice in reasonable detail of the existence of such dispute by either Party to the other.

(b) If at the end of such ninety (90) day period, the Parties shall have been unable to resolve such dispute, either Party may submit the matter to international arbitration for final settlement under the Rules of Arbitration of the International Chamber of Commerce as in effect on the date of commencement of the arbitration. The arbitral tribunal shall be composed of three (3) arbitrators appointed in accordance with said Rules. The seat of arbitration shall be Paris, France. The arbitration proceeding shall be conducted in the French language, provided that the Parties may file their submissions in French or English and that evidentiary documents and testimonies may be submitted in their original language if such language is English.

(c) The arbitral tribunal shall not have the power to alter or modify any of the express provisions of this Agreement or to act as “amiable compositeur”.

The arbitral award may include pre-award and/or post-award interest, at a rate of interest set in the discretion of the arbitral tribunal, but not in excess of the rates of pre-judgment or post-judgment interest, as the case may be, permitted by applicable law. The award granted by the arbitral tribunal may be subject to a decision conferring authority to execute the award (exequatur) in any court having jurisdiction in the country in which assets of any liable Shareholder is located. The Shareholders agree that such award shall be enforceable in any country or countries in which such assets are found and agree to submit to enforceability of such award in such country or countries.

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(d) The Parties shall use their best efforts to cause arbitration proceedings arising under this Section 12.8 to proceed in a prompt and cost-effective manner, avoiding all undue delay and with the intention that the arbitration award is rendered not more than one hundred twenty (120) calendar days from the date of the confirmation by the ICC of all of the members of the arbitral tribunal, unless the Arbitration Court of the ICC decides to extend the proceedings in accordance with the Rules of Arbitration of the ICC.

(e) The foregoing provisions of this Section 12.8 shall not preclude any Party from applying for any preliminary or interim injunctive remedies or restraining order available from any court of competent jurisdiction where necessary to protect its rights hereunder, including securing the subsequent enforcement of any arbitral award made pursuant to the procedures provided in this Section 12.8.

[The remainder of this page left intentionally blank; signature pages follow]

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IN WITNESS WHEREOF, each Party hereto has caused this Agreement to be duly executed on its behalf as of the day and year first above written.

Executed in Casablanca and Brussels, on September 15, 2005
In three (3) originals
I.P. CONTAINER HOLDINGS (Spain) S.L.
By:
	Mr. Marc Van Lieshout
	Chairman of the Board of Directors
FINAPACK
By:
	Mr. Aziz Qadiri
	Chairman of the Managing Board
KADIRIA
By:
	Mr. Aziz Qadiri
	Partner, representative of Mr. Omar Qadiri, Manager
For the purposes of the provisions of Articles 4.3 and 6.4

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Exhibit I     Initial Business Plan

25

EX-10.3

Exhibit 10.3

SHARE PURCHASE AGREEMENT

AMONG

MAGHREB PRIVATE EQUITY FUND LTD,

CAPITAL MOROCCO,

ACCESS CAPITAL ATLANTIQUE MAROC,

AFRIC-INVEST Limited,

ATIJARIWAFA BANK,

Ms. Hanane MECHAT,

AND

INTERNATIONAL PAPER CONTAINER HOLDINGS (Spain) S.L.

DATED OCTOBER 3^rd, 2005

Table of Contents

ARTICLE I DEFINITIONS		5
1.1	Defined Terms	5
1.2	Presumption and Headings	7
ARTICLE II PURCHASE AND SALE		7
2.1	Purchase and Sale of the Transferred Shares	7
2.2	Consideration for the Transferred Shares	8
2.2.1	Purchase Price	8
2.2.2	Method of Payment	8
ARTICLE III CLOSING		9
3.1	Date and Place of Closing	9
3.2	Closing Deliveries	9
ARTICLE IV REPRESENTATIONS AND WARRANTIES		9
4.1	Representations and Warranties of the Sellers	9
4.1.1	Authority, Powers and Enforceability	9
4.1.2	Good Standing	10
4.1.3	Ownership and Transferability of the Transferred Shares	10
4.1.4	Third Party Consents	10
4.1.5	Truthfulness of the Representations	10
4.2	Representations and Warranties of the Purchaser	10
4.2.1	Authority, Powers and Enforceability	11
4.2.2	Good Standing	11
4.3	Sanctions in case of inacurateness of the representations and warranties	11
ARTICLE V CONDITIONS PRECEDENT		11
5.1	Condition to Obligation of both Parties to Close	11
5.1.1	No Legal Impediment	12
5.2	Conditions to Obligation of the Purchaser to Close	12
5.2.1	Prior acquisition of the Controlling Block	12
5.2.2	Representations and Warranties True and Correct	12
5.2.3	Compliance with the Obligations of this Agreement	12
5.2.4	No Material Adverse Change	12

5.3	Condition to Obligation of the Sellers to Close	12
5.3.1	Representations and Warranties True and Correct	13
ARTICLE VI TERMINATION		13
6.1	Grounds for Termination	13
6.2	Effect of Termination	13
ARTICLE VII MISCELLANEOUS PROVISIONS		14
7.1	Publicity	14
7.2	Confidentiality	14
7.3	Fees and Expenses	14
7.4	Notices	14
7.5	Transfer	16
7.6	No Shop	16
7.7	Entire Agreement	16
7.8	Modifications and Waivers	16
7.9	Severability	17
7.10	Governing Law	17
7.11	Dispute Resolution	17

3

SHARE PURCHASE AGREEMENT

BETWEEN THE UNDERSIGNED:

I.P. CONTAINER HOLDINGS (Spain) S.L., a company organized and existing under the laws of Spain with capital of EUR 6,000, wholly-owned by International Paper Company, and having its registered office at 20, General Yagüe, Madrid, 28020 and currently undergoing registration of its company number (the “Purchaser”), duly represented by Mr. Marc Van Lieshout,,

Hereinafter referred as the “Buyer”, on the one hand,

and

MAGHREB PRIVATE EQUITY FUND LTD, a société anonyme organized and existing under the laws of Jersey, with capital of USD 23,196,000 and having its registered office in at 47, Esplanade Saint-Hélier in Jersey (“MAGHREB PRIVATE EQUITY FUND”), duly represented by Mr. Mohammed Ibrahim Eljaï,

CAPITAL MOROCCO, a limited partnership organized and existing under the laws of Jersey, and having its registered office at 47, Esplanade Saint Helier in Jersey (“CAPITAL MOROCCO”), duly represented by Mr. Mehdi Tahiri,

ACCESS CAPITAL ATLANTIQUE MAROC, a société anonyme organized and existing under the laws of Morocco with capital of MAD 99,000,000, and having its registered office at 199, angle boulevard Zerktouni and rue d’Avignon in Casablanca (Morocco) (“ACCESS CAPITAL”), duly represented by Mr. Hassan Laaziri,

AFRIC INVEST Limited, a company organized and existing under the laws of Mauritius, and having its registered office at Suite 520, Barkly Wharf, Le Caudan Waterfront in Port-Louis (Mauritius) (“AFRIC INVEST”), duly represented by Mr. Mohamed Ibrahim El Jai,

ATIJARIWAFA BANK, a société anonyme organized and existing under the laws of Morocco with capital of MAD 1,929,959.600, and having its registered office at 2, Boulevard Moulay Youssef, in Casablanca (Morocco) , duly represented by Mr. Mohamed EL Kettani et Boubker El Jai,

Ms. Hanane MECHAT, a Moroccan national born on November 9, 1961 in Casablanca and having her main residence at rue du Golfe Arabique, Lot. Lamchichia N. 59 in Casablanca (Morocco) (“Hanane MECHAT”),

(each referred to individually as a “Seller” and, collectively, as the “Sellers”),

on the other hand.

Each of the Sellers and the Purchaser are referred to individually as a “Party” and collectively as the “Parties”.

RECITALS

WHEREAS, pursuant to a share purchase agreement dated September 15^th, 2005 (the “Main SPA”) between FINANCIERE PAPIER ET CARTON KADIRIA - FINAPACK, a société anonyme (corporation) with managing board and supervising board organized and existing under the laws of Morocco with a share capital of MAD 226,000,000 (“FINAPACK”), and the Purchaser, FINAPACK agreed to sell to the Purchaser, and the Purchaser agreed to purchase from FINAPACK, fifty-one percent (51 %) of all of the outstanding shares of CMCP at the Closing Date (the “Controlling Block”);

WHEREAS, upon completion of the share exchange transaction with COFIPAC, the Sellers shall own collectively, on the Closing Date, approximately fifteen point forty-nine percent (15.49%) of Groupe C.M.C.P., a société anonyme with managing board and supervising board, organized under the laws of Morocco with a capital of MAD 448,220,000, having its head office at Kénitra, Quartier Industriel, Morocco, registered under number 9.919 with Kénitra Registry of Commerce (“CMCP”);

WHEREAS, the Purchaser has agreed to acquire additional shares of CMCP owned by the Sellers under the terms and conditions of this Agreement;

NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

ARTICLE I

DEFINITIONS

1.1 Defined Terms

For the purposes of this Agreement, unless the context requires otherwise, the following terms shall have the following meanings:

Shares	means any or all of the outstanding shares of capital stock and voting rights of CMCP on a fully diluted basis;
Transferred Shares	means 694,629 Shares transferred by the Sellers to the Purchaser under this Agreement, representing fifteen point forty-nine percent (15.49%) of the share capital and voting rights of CMCP;
Closing Date	shall have the meaning ascribed thereto in the Main SPA;
Tax	means any tax (including income tax, profit tax, withholding tax, précompte, capital gains tax, value-added tax, sales tax, property tax, gift tax, real estate tax, excise tax, retirement, unemployment, and social security contributions in any applicable jurisdiction), tariff or duty (including any stamp or customs duty) and any fine, penalty, interest or addition to tax imposed, assessed or collected by or under the authority of any Governmental Authority;

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Business Day	means any day other than a Saturday, Sunday or other days on which banking institutions are authorized or obligated by Laws to be closed in Casablanca or Paris, as the case may be;
Law	means all applicable and enforceable treaties, laws, regulations, directives, circulaires, orders, decrees, judgments, injunctions, permits, approvals, authorizations, permissions or notices applicable as of the Closing Date.
Liens	means liens, pledges, mortgages, charges, security interests, burdens, encumbrances, options, pre-emption rights, voting agreements, guarantees, usufructs or other restrictions or limitations of any nature whatsoever;
Person	means any natural person, corporation, general or limited partnership, limited liability company, proprietorship, other business organization or entity, trust, union, unincorporated association, Governmental Authority or other organization;
Governmental Authority	means any government or any subdivision of the foregoing, authority, agency, commission, or other similar body including any control commission or similar regulatory body, or any court, tribunal, or judicial or arbitral body of any jurisdiction;
Closing	means the sale of the Transferred Shares by all of the Sellers to the Purchaser and the payment of the purchase price by the Purchaser to each of the Sellers as set forth under Article 2.2;
Surety	Means any privileges, pledges, mortgages, charges, liens, options, preemption rights, voting conventions, guarantees, usufructs or other restrictions or limitations of any nature.

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1.2 Presumption and Headings

The Parties acknowledge that each Party and its counsels have reviewed and revised this Agreement and that in the event an ambiguity or question of intent of the Parties or interpretation arises regarding this Agreement, this Agreement (including any Schedules) shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring either Party to this Agreement by virtue of the authorship of any provisions to this Agreement. The Article headings contained in this Agreement are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Agreement.

ARTICLE II

PURCHASE AND SALE

2.1 Purchase and Sale of the Transferred Shares

Upon the terms and subject to the conditions set forth in this Agreement, on the Closing Date,

MAGHREB PRIVATE EQUITY FUND shall sell to the Purchaser, and the Purchaser shall purchase from MAGHREB PRIVATE EQUITY FUND, one hundred eighty-seven thousand one hundred twenty-six (187,126) Shares representing 4.17% of the share capital of CMCP, free and clear of any Lien, for the consideration set forth in Article 2.2;

CAPITAL MOROCCO shall sell to the Purchaser, and the Purchaser shall purchase from CAPITAL MOROCCO, one hundred eighty-seven thousand one hundred and eight (187,108) Shares representing 4.17% of the share capital of CMCP, free and clear of any Lien, for the consideration set forth in Article 2.2;

ACCESS CAPITAL shall sell to the Purchaser, and the Purchaser shall purchase from ACCESS CAPITAL, one hundred eighty-seven thousand one hundred and eight (187,108) Shares representing 4.17% of the share capital of CMCP, free and clear of any Lien, for the consideration set forth in Article 2.2;

AFRIC INVEST shall sell to the Purchaser, and the Purchaser shall purchase from AFRIC INVEST, eighty-seven thousand three hundred twenty-six (87,326) Shares representing 1.95% of the share capital of CMCP, free and clear of any Lien, for the consideration set forth in Article 2.2;

ATIJARIWAFA BANK shall sell to the Purchaser, and the Purchaser shall purchase from ATIJARIWAFA BANK, twenty-eight thousand nine hundred ninety-nine (28,999) Shares representing 0.65% of the share capital of CMCP, free and clear of any Lien, for the consideration set forth in Article 2.2;

Hanane MECHAT shall sell to the Purchaser, and the Purchaser shall purchase from Hanane MECHAT, sixteen thousand nine hundred sixty-two (16,962) Shares representing 0.38% of the share capital of CMCP, free and clear of any Lien, for the consideration set forth in Article 2.2;

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IP shall have the economic rights attaching to all of the Shares purchased from the Sellers (the “Transferred Shares”), with rights to dividends between the Purchaser and Sellers to be determined pro rata temporis as of July 1^st, 2005.

2.2 Consideration for the Transferred Shares

2.2.1  Purchase Price

The consideration payable by the Purchaser for the one hundred eighty-seven thousand one hundred twenty-six (187,126) Shares to be purchased from MAGHREB PRIVATE EQUITY FUND shall be MAD 50.098.433,80 million (MAD fifty million and ninety eight thousand four hundred and thirty three);

The consideration payable by the Purchaser for the one hundred eighty-seven thousand one hundred and eight (187,108) Shares to be purchased from CAPITAL MOROCCO shall be MAD 50.093.614,74 million (fifty million and ninety three thousand six hundred and fourteen);

The consideration payable by the Purchaser for the one hundred eighty-seven thousand one hundred and eight (187,108) Shares to be purchased from ACCESS CAPITAL shall be MAD 50.0093.614,74 million (fifty million and ninety three thousand six hundred and fourteen);

The consideration payable by the Purchaser for the eighty-seven thousand three hundred twenty-six (87,326) Shares to be purchased from AFRIC INVEST shall be MAD 23.379.411.90 million (twenty three million and three hundred and seventy nine thousand);

The consideration payable by the Purchaser for the twenty-eight thousand nine hundred ninety-nine (28,999) Shares to be purchased from ATIJARIWAFA BANK shall be MAD 7.763.776,72 million ();

The consideration payable by the Purchaser for the sixteen thousand nine hundred sixty-two (16,962) Shares to be purchased from Hanane MECHAT shall be MAD 4.541.162,82 million ().

2.2.2  Method of Payment

On the Closing Date, the Purchaser shall pay to each of the Sellers the purchase price payable to it as set forth in Article 2.2.1 by wire transfer in same day immediately available funds in Casablanca. The Purchaser shall wire to MAGHREB PRIVATE EQUITY FUND, CAPITAL MOROCCO and AFRIC INVEST, the EURO value at the date of signature of the present contract, of the amounts stipulated in Article 2.2.1 hereby, at a exchange rate of one EURO (1 EURO) for eleven Moroccan Dihrams (11 MAD).

8

ARTICLE III

CLOSING

3.1 Date and Place of Closing

Unless otherwise agreed in writing between the Parties, consummation of the transfers pursuant to the terms of this Agreement (the “Closing”) shall take place at the offices of Société Générale Marocaine de Banque at Casablanca, at 10.00 a.m. (local time) on the later the date that is ten (10) Business Days following satisfaction (or waiver if permitted) of the conditions referred to in Articles 5.1.1

3.2 Closing Deliveries

On the Closing Date:

(a) Each Seller for its portion of the Transferred Shares shall deliver or shall cause to be delivered to the Purchaser:

(i) transfer certificates and certified extracts from Shareholders Accounts or other documents necessary to effect the transfer of the Transferred Shares;

(ii) copies of resolutions of the relevant corporate bodies of CMCP approving the transfer of the Transferred Shares to the Purchaser pursuant to this Agreement, to the extent that the Laws or the bylaws require for such resolutions to be passed in order for such transfer of shares to be validly entered into.

(b) the Purchaser shall deliver or shall cause to be delivered to each of the Sellers, the purchase price payable to it as set forth in Article 2.2. by bank wire transfer in same day available funds in Casablanca to the account specified by each Seller whose coordinates shall be addressed to the Purchaser before the Closing Date.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

4.1 Representations and Warranties of the Sellers

Each of the Sellers for its portion of the Transferred Shares hereby warrants to the Purchaser the accuracy and completeness of the representations contained in this Article 4.1 as of the Closing Date.

4.1.1  Authority, Powers and Enforceability

Each Seller has all the necessary powers and authority to enter into this Agreement, and to carry out obligations hereunder and to consummate the transactions hereby contemplated.

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Each Seller has all the necessary powers and authority to give the representations and warranties herein, which constitute obligations validly binding said Seller pursuant to their terms.

This Agreement has been duly executed by each of the Sellers and constitutes a legal, valid and binding obligation of each of the Sellers, enforceable against it in accordance with its terms.

4.1.2  Good Standing

Each of the Sellers has been duly and lawfully set up under the Laws of its place of incorporation, and its bylaws, as well as the functioning of its corporate bodies, are in compliance with applicable Laws.

4.1.3  Ownership and Transferability of the Transferred Shares

On the Closing Date, each Seller shall validly own its Transferred Shares, having acquired them pursuant to share a exchange transaction with COFIPAC. Each Seller shall have the free disposal and the right to transfer the Transferred Shares owned by it to the Purchaser without any restriction whatsoever, except for the application of statutory clauses of CMCP as concerns the transfer of Shares.

The transactions required for the proper completion of the transfer of the Transferred Shares have been, or shall be, completed no later than the Closing Date, in accordance with applicable Laws, and shall validly transfer the ownership of the Transferred Shares to the benefit of the Purchaser.

4.1.4  Third Party Consents

No third party consent, including from a Governmental Authority, is required for the completion of the transactions hereby contemplated.

4.1.5  Truthfulness of the Representations

The Sellers guarantee, the truthfulness of the Representation made hereby.

The Sellers consent no guarantee whatsoever other than those stipulated in this Article 4.1 and in particular, no guarantee relative to CMCP, its financial situation, its business or otherwise, which is recognized and accepted by the Purchaser who declares having carried out all audits that it deemed useful.

It is furthermore specified, as needed, that the Sellers have not, directly or indirectly, filled any management or administrative function at CMCP and have not intervened in the management and administration of such company.

4.2 Representations and Warranties of the Purchaser

The Purchaser hereby represents and warrants to each of the Sellers that the statements contained in this Article shall be accurate as of the date hereof and as of the Closing Date as though made as of the Closing Date.

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4.2.1  Authority, Powers and Enforceability

The Purchaser has all the necessary powers and authority to enter into this Agreement, and to carry out its obligations hereunder and consummate the transactions hereby contemplated.

The Purchaser has all the necessary powers and authority to give the representations and warranties herein, which constitute obligations validly binding said Purchaser pursuant to their terms.

This Agreement has been duly executed by the Purchaser and constitutes a legal, valid and binding obligation of the Purchaser, enforceable against it in accordance with its terms.

4.2.2  Good Standing

The Purchaser has been duly and lawfully set up under the Laws of its place of incorporation, and its bylaws, as well as the functioning of its corporate bodies, are in compliance with applicable Laws.

4.3. Sanction in case of inaccurateness of the representations and warranties

In case of inaccurateness of any of the representations and warranties made by the Purchaser hereby, contained in the present article that may affect the validity of the transfer of the Transferred Shares, the sale of all the Transferred Shares shall be terminated, the Purchaser commits to transfer back all the Transferred shares to the Sellers, and the Sellers, for the part of the Transferred shares which is related to them, shall commit to give back the Purchaser the price received in accordance to Article 2.2.1. of the present Contract.

In case of inaccurateness of any of the representations and warranties contained hereby, made by one or several Sellers contained in the present Article, that would affect the validity of the transfer of the Transferred Shares, the sale of the part of the Transferred Shares of the Seller or the Sellers, will be terminated, the Purchaser commits to transfer back all the Transferred shares to the Sellers, and the Sellers, for the part of the Transferred shares which is related to them, shall commit to give back the Purchaser the price received in accordance to Article 2.2.1. of the present Contract.

ARTICLE V

CONDITIONS PRECEDENT

5.1 Conditions to Obligation of both Parties to Close

The respective obligation of each Party to consummate the transactions contemplated hereby shall be subject to the satisfaction or waiver, on or prior to the Closing Date, of the following condition precedent:

5.1.1  No Legal Impediment

No Law restraining or prohibiting the purchase of the Transferred Shares shall be in effect at the Closing Date, all consents that are necessary to consummate such purchase shall have been obtained, and any applicable waiting periods thereunder shall have expired or been terminated.

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5.2 Conditions to Obligation of the Purchaser to Close

The obligation of the Purchaser to consummate the transactions hereby contemplated shall be subject to the satisfaction or waiver, at or prior to the Closing Date, of the following conditions precedent:

5.2.1  Prior acquisition of the Controlling Block

The Purchaser shall have acquired the Controlling Block in accordance with the Main SPA.

5.2.2  Representations and Warranties True and Correct

The representations and warranties of the Sellers made in this Agreement shall be true and correct in all material respects as of the date hereof and as of the Closing Date.

5.2.3  Compliance with the Obligations of this Agreement

The Sellers shall have complied in all material respects with all of their obligations and covenants under this Agreement, or shall have cured any instance of material non-performance or non-compliance to the satisfaction of the Purchaser, on or before the Closing Date.

5.2.4  No Material Adverse Change

No event, circumstance, loss, or other occurrence, occurring after the date of this Agreement, whether internal or external to the business of CMCP and its subsidiaries, and having individually or in the aggregate with other events, circumstances, losses, or other occurrences, an effect which is materially adverse to the financial condition, results of operations, assets or prospects of CMCP or any of its subsidiaries, or to the Purchaser as a majority shareholder of CMCP shall have occurred and be continuing on the Closing Date.

5.3 Condition to Obligation of the Sellers to Close

The obligation of the Sellers and each of them for its portion of the Transferred Shares to consummate the transactions hereby contemplated shall be subject to the satisfaction or waiver, at or prior to the Closing Date, of the following condition precedent:

5.3.1  Representations and Warranties True and Correct

The representations and warranties of the Purchaser made in this Agreement shall be true and correct in all material respects as of the date hereof and as of the Closing Date.

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ARTICLE VI

TERMINATION

6.1 Grounds for Termination

This Agreement may be terminated at any time prior to the Closing Date:

(i) by the written agreement of each of the Purchaser and all of the Sellers;

(ii) by the Purchaser in the case of a material breach by any of the Sellers of its covenants pursuant to this Agreement which is not cured within thirty (30) days of written notice thereof given by the Purchaser to the breaching Seller, or by any of the Sellers in the case of a material breach by the Purchaser of its covenants pursuant to this Agreement which is not cured within thirty (30) days of written notice thereof given any of the Sellers to the Purchaser;

(iii) by either the Purchaser or any of the Sellers in the event that in the event that the transfer of the Controlling Block or the Closing shall not have occurred by December 21, 2005, in the absence of a breach by the Party seeking termination.

6.2 Effect of Termination

If this Agreement is terminated pursuant to Article 6.1 hereabove, such termination shall be without liability to either Party to this Agreement or any affiliate, shareholder, director, officer or representative of such Party, except for liability arising from a breach of this Agreement, and all confidential information provided by either Party to any other shall be returned to that Party or, upon such Party’s instruction, destroyed.

If terminated pursuant to Article 6.1 hereabove, this Agreement shall become void and of no further force or effect, except for the provisions of Article VII hereof and this Article 6.2.

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ARTICLE VII

MISCELLANEOUS PROVISIONS

7.1 Publicity

(a) The Sellers and the Purchaser agree that, from the date hereof through the Closing Date, no public release or announcement concerning the transfers shall be issued by either Party without the prior consent of all of the other Parties, except as such release or announcement may be required by Laws, in which case the Party required to make the release or announcement shall allow all of the other Parties reasonable time to comment on such release or announcement in advance of such issuance.

(b) The Sellers and the Purchaser agree not to disclose the purchase price of the Transferred Shares, except as legally required.

7.2 Confidentiality

Each of the Parties shall maintain, and shall cause its affiliates to maintain, in strict confidence, all information relating to the business of CMCP and its subsidiaries (including, but not limited to, intellectual property rights and all information other than information which is or becomes readily obtainable from a public source through no fault of the Party disclosing the information). Without limiting the generality of the foregoing, each of the Parties undertakes not to disclose, and shall cause its affiliates not to disclose, to a third party any information concerning CMCP or its subsidiaries except:

(i) when required to disclose such information by Laws; or

(ii) as authorized by the other Parties and to the extent necessary in the ordinary course of business, and in this case, the Party disclosing the information shall not itself use, and shall cause its affiliates not to use, such information.

7.3 Fees and Expenses

Unless otherwise agreed, each of the Parties shall bear the expenses and fees incurred by it or for it in relation to this Agreement and the transfers, including the fees of any brokers and legal, accounting and financial advisors.

7.4 Notices

Any notices or communications required or permitted to be given to any Party under this Agreement shall be addressed in writing to the persons and addresses indicated below, and shall be deemed to have been duly given when delivered by hand, courier on D+1, or, if mailed with return receipt requested, as of the date certified by the return receipt, and, regardless of method, addressed to the Party at its email address or facsimile number set forth below (or at such other address or facsimile number as such Party shall furnish the other Parties in accordance with this Section):

14

To the Purchaser:

INTERNATIONAL PAPER CONTAINER HOLDINGS (Spain) S.L.

20 General Yague

28020 Madrid

Espagne

Attn: Mr. Marc Van Lieshout

With a copy to:

INTERNATIONAL PAPER (EUROPE SA)

Chaussée de la Hulpe 166

1170 Brussels

Attn: General Counsel

Facsimile: +32 2 7741259

To the Sellers:

MAGHREB PRIVATE EQUITY FUND:

C/O MAROC INVEST

82, Angle boulevard Abdelmoumen et rue Soumaya

Residence Sherezade- Casablanca

Facsimile: +212 222259960

Email: brahi.eljai@marocinvest.com

CAPITAL MOROCCO:

C/O CAPITAL INVEST

30, Boulevard Moulay Youssef

Casablanca

Facsimile: +212 22273815

Email: m.tahiri@capitalinvest.co.ma

ACCESS CAPITAL:

199 Angle boulevard Zerktouni et rue Avignon

Casablanca

Facsimile: +212 22950953

Email: hlaaziri@acasa.ma

AFRIC INVEST:

C/O MAROC INVEST

82, Angle boulevard Abdelmoumen et rue Soumaya

15

Residence Sherezade- Casablanca

Facsimile: +212 222259960

Email: brahi.eljai@marocinvest.com

ATIJARIWAFA BANK

2, Boulevard Moulay Youssef

Casablanca

Facsimile:

Email:

HananeMECHAT:

C/O Groupe CMCP

BP 2595 Casablanca

Facsimile: +212.22 35 07 54

Email: azizqadiri@cofipac.com

7.5 Transfer

No Party may assign or transfer, in any way whatsoever, its rights and obligations under this Agreement without the prior written consent of all of the other Parties.

7.6 No Shop

From the date hereof through the Closing Date, the Sellers and each of them for its portion of the Transferred Shares, shall stop all discussions with third parties regarding the sale of the all or part of the Transferred Shares and shall abstain from any response to a third party solicitation in that regard.

7.7 Entire Agreement

This Agreement together embodies the entire agreement of the Parties hereto with respect to the subject matters hereof, and supersedes all prior agreements with respect thereto.

7.8 Modifications and Waivers

(a) This Agreement shall only be modified by a written agreement duly signed by all of the Parties hereto.

(b) Any waiver by a Party to one of its rights pursuant to this Agreement shall only take effect if made in writing, and shall be strictly interpreted.

(c) No waiver of any one of the provisions of this Agreement shall constitute a waiver of any other provision.

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7.9 Severability

If any of the provisions of this Agreement becomes null, illegal, unenforceable, or incapable of being performed in any manner whatsoever (hereinafter, “Disputed Provisions”):

(a) The validity and enforceability of the other provisions shall not be affected or compromised in any way; and

(b) the Parties shall negotiate in good faith in order to replace the Disputed Provisions with valid and enforceable provisions that are as close as possible to the Parties’ common intent or, if such common intent cannot be determined, the intent of those among the Parties which the Disputed Provisions is supposed to protect.

7.10 Governing Law

This Agreement shall be governed by, and construed in accordance with, the laws of France to the fullest extent compatible with a mandatory provision of Moroccan law.

7.11 Dispute Resolution

(a) The Parties shall seek to resolve amicably any dispute between them arising out of, or in connection with this Agreement (including, without limitation, in respect of the validity, interpretation, enforcement, breach or termination thereof), or any of the transactions contemplated hereby, through good faith negotiations for a period of ninety (90) days following written notice in reasonable detail of the existence of such dispute by either Party to the other Parties.

(b) If at the end of such ninety (90) day period, the Parties shall have been unable to resolve such dispute, either Party may submit the matter to international arbitration for final settlement under the Rules of Arbitration of the International Chamber of Commerce as in effect on the date of commencement of the arbitration. The arbitral tribunal shall be composed of three (3) arbitrators appointed in accordance with said Rules. The seat of arbitration shall be Paris, France. The arbitration proceeding shall be conducted in the French language, provided that the Parties may file their submissions in French or English and that evidentiary documents and testimonies may be submitted in their original language if such language is English.

(c) The arbitral tribunal shall not have the power to

(i) alter or modify any of the express terms, provisions, or conditions of this Agreement, or

(ii) act as “amiable compositeur”.

The arbitral award may include pre-award and/or post-award interest, at a rate of interest set in the discretion of the arbitral tribunal, but not in excess of the rates of pre-judgment or post-judgment interest, as the case may be, permitted by applicable Laws. The award granted by the arbitral tribunal

17

may be subject to a decision conferring authority to execute the award (exequatur) in any court having jurisdiction in the country in which assets of any liable Party is located. The Parties agree that such award shall be enforceable in any country or countries in which such assets are found and agree to submit to enforceability of such award in such country or countries.

(d) The Parties shall use their best efforts to cause arbitration proceedings arising under this Article 7.12 to proceed in a prompt and cost-effective manner, avoiding all undue delay and with the intention that the arbitration award is rendered not more than one hundred twenty (120) calendar days from the date of the confirmation by the ICC of all of the members of the arbitral tribunal.

(e) The foregoing provisions of this Article 7.12 shall not preclude either Party from applying for any preliminary or interim injunctive remedies available from any court of competent jurisdiction where necessary to protect its rights hereunder, including securing the subsequent enforcement of any arbitral award made pursuant to the procedures provided in this Article 7.12.

18

Done in Casablanca, and Brussels on September 15^th 2005,

in seven (7) original counterparts.

INTERNATIONAL PAPER CONTAINER HOLDINGS (Spain) S.L.

Mr. Marc Van Lieshout

President of the board of directors

Duly Authorized

MAGHREB PRIVATE EQUITY FUND LTD

Mr. Mohammed Ibrahim ELJAÏ

Duly Authorized

CAPITAL MOROCCO

Mr. Mehdi TAHIRI

Duly Authorized

ACCESS CAPITAL ATLANTIQUE MAROC

Mr. Hassan LAAZIRI

Duly Authorized

AFRIC-INVEST Limited

Mr. Mohamed Ibrahim EL JAI

Duly Authorized

ATIJARIWAFABANK

Mohamed El Kettani and Boubker Jai

Duly Authorized

19

Hanane MECHAT

Ms. Hanane MECHAT

20

EX-11

Exhibit 11

INTERNATIONAL PAPER COMPANY

STATEMENT OF COMPUTATION OF PER SHARE EARNINGS

(Unaudited)

(In millions, except per share amounts)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2005		2004			2005		2004
Earnings from continuing operations	$	742	$	215		$	941	$	300
Discontinued operations		281		(685	)		236		(504	)
Net earnings (loss)		1,023		(470	)		1,177		(204	)
Effect of dilutive securities		7		7			20		—
Net earnings (loss) - assuming dilution	$	1,030	$	(463	)	$	1,197	$	(204	)
Average common shares outstanding		486.0		486.4			486.0		485.5
Effect of dilutive securities
Performance share plan		1.0		—			1.1		—
Stock options		0.1		2.6			0.4		2.7
Zero coupon convertible debentures		20.0		20.0			20.0		—
Average common shares outstanding - assuming dilution		507.1		509.0			507.5		488.2
Earnings per common share from continuing operations	$	1.53	$	0.44		$	1.94	$	0.62
Discontinued operations		0.58		(1.41	)		0.48		(1.04	)
Net earnings (loss) per common share	$	2.11	$	(0.97	)	$	2.42	$	(0.42	)
Earnings per common share from continuing operations - assuming dilution	$	1.48	$	0.44		$	1.90	$	0.61
Discontinued operations		0.55		(1.35	)		0.46		(1.03	)
Net earnings (loss) per common share - assuming dilution	$	2.03	$	(0.91	)	$	2.36	$	(0.42	)

Note: If an amount does not appear in the above table, the security was antidilutive for the period presented.

EX-12

Exhibit 12

INTERNATIONAL PAPER COMPANY

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

AND PREFERRED STOCK DIVIDENDS

(Dollar amounts in millions)

(Unaudited)

		For the Years Ended December 31,															Nine Months Ended September 30,
		2000			2001			2002			2003			2004			2004			2005
	TITLE
A)	Earnings (loss) from continuing operations before income taxes and minority interest	$	592.2		$	(1,226.0	)	$	339.5		$	285.0		$	724.0		$	530.0		$	751.0
B)	Minority interest expense, net of taxes		(183.7	)		(144.0	)		(47.0	)		(83.5	)		(26.6	)		(20.9	)		(8.5	)
C)	Fixed charges excluding capitalized interest		1,066.6			1,171.2			1,007.5			949.6			865.6			653.0			561.6
D)	Amortization of previously capitalized interest		23.5			31.8			43.3			41.4			42.2			33.0			30.2
E)	Equity in undistributed earnings of affiliates		16.5			14.1			20.3			2.9			(13.4	)		(2.8	)		3.5
F)	Earnings (loss) from continuing operations before income taxes and fixed charges	$	1,515.1		$	(152.9	)	$	1,363.6		$	1,195.4		$	1,591.8		$	1,192.3		$	1,337.8
	Fixed Charges
G)	Interest and amortization of debt expense	$	857.2		$	970.5		$	811.5		$	803.7		$	782.1		$	591.6		$	507.3
H)	Interest factor attributable to rentals		68.8			71.7			81.0			78.8			68.0			51.3			48.8
I)	Preferred dividends of subsidiaries		140.6			129.0			115.0			67.1			15.5			10.1			5.5
J)	Capitalized interest		20.7			13.0			11.9			8.0			9.7			6.4			8.3
K)	Total fixed charges	$	1,087.3		$	1,184.2		$	1,019.4			957.6		$	875.3			659.4		$	569.9
L)	Ratio of earnings to fixed charges		1.39						1.34			1.25			1.82			1.81			2.35
M)	Deficiency in earnings necessary to cover fixed charges				$	(1,337.1	)

Note: Dividends on International Paper’s preferred stock are insignificant. As a result, for all periods presented, the ratios of earnings to fixed charges and preferred stock dividends are the same as the ratios of earnings to fixed charges.

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, John V. Faraci, certify that:

1. I have reviewed this quarterly report on Form 10-Q of International Paper Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: November 8, 2005

/s/ John V. Faraci

John V. Faraci

Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Marianne M. Parrs, certify that:

1. I have reviewed this quarterly report on Form 10-Q of International Paper Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: November 8, 2005

/s/ Marianne M. Parrs

Marianne M. Parrs

Executive Vice President and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The certifications set forth below are being submitted in connection with the Quarterly Report of International Paper Company (the “Company”) on Form 10-Q for the quarterly period ending September 30, 2005 for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code. John V. Faraci, Chief Executive Officer of the Company, and Marianne M. Parrs, Chief Financial Officer of the Company, each certify that, to the best of his or her knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ John V. Faraci

John V. Faraci

Chairman and Chief Executive Officer

November 8, 2005

/s/ Marianne M. Parrs

Marianne M. Parrs

Executive Vice President and Chief Financial Officer

November 8, 2005

This certification accompanies this Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to International Paper Company and will be retained by International Paper Company and furnished to the Securities and Exchange Commission or its staff upon request.