MANAGEMENT INCENTIVE PLAN (MIP) Amended and Restated as of January 1, 2006

Exhibit 10.1

MANAGEMENT INCENTIVE PLAN (MIP)

Amended and Restated as of January 1, 2006

The purposes of this Amended and Restated Management Incentive Plan are: (a) to provide incentive for Participants to exert their best efforts to increase the profitability of the Company, (b) to attract and retain the best talent available, and (c) to further align the interests of the participants and shareholders. The awards made under the Plan are not a form of deferred regular compensation with respect to the Participants’ normal performance of their regular duties, but are instead intended to provide an incentive to achieve higher than expected levels of performance.

“Business” means one of the Business Groups reporting to an Executive Officer

“Committee” means the Management Development and Compensation Committee of

the Company’s Board of Directors.

“Company” means International Paper Company, a New York corporation, together

with its subsidiaries.

“Employees” means those persons who are full-time employees of the Company.

“Award Scale” means the conversion of the performance objective rating to a percent

of target award earned.

“Industry Financial Performance Peer Group” means that representative group of companies in the commodities and paper and forest products industries with which the Company competes, as determined from time to time by the Company, listed in Appendix A.

“Participant” means a person who has been designated as a participant in the Plan, according to Section V.

“Performance Objective Rating” means the percentage amount assigned to a

Performance Objective for a level of achievement which translates to a percentage of the Target Award.

“Performance Objectives” mean the measures developed around ROI, customer, operational excellence, and people or other objectives as identified by the Company

upon which awards may be earned.

“Plan” means this Amended and Restated Management Incentive Plan, as may be

amended from time to time.

“Plan Year” means the twelve month period corresponding to the Company’s fiscal

year.

“Return on Investment” or “ROI” means earnings before interest and after taxes

divided by capital employed, with or without the effect of cyclical product pricing.

“Target Award” means an amount equal to the percentage of salary range midpoint

applicable to the actual position level of each Participant, shown in Appendix B.

The Plan is an annual cash incentive plan developed around the achievement of pre-established Return on Investment (ROI) measures and appropriate key performance objectives promoting Customers, Operational Excellence, and People and funded by the Company’s level of performance against those objectives. Total awards cannot exceed the amount funded for the MIP pool generated by overall corporate performance and approved by the Committee.

The Plan operates at the discretion of the Committee. The Committee may exercise considerable discretion and judgment in interpreting the Plan, and adopting, from time to time, rules and regulations that govern the administration of the Plan.

The Committee delegates authority to the Chairman and Chief Executive Officer or his designee, for the day-to-day administration of the Plan, except for any participant considered an Officer/Insider of the Company or those designated as corporate Senior Vice President or higher.

Decisions of the Committee are final, conclusive and binding on all parties, including the Company, its shareholders, and employees.

Participants in the Plan are limited to employees of the Company, whose position level is 14—43 and are considered to have a meaningful impact on the Company’s performance as determined by the Chairman and Chief Executive Officer or his designee. They must be full-time, and actively employed during the plan year January 1 – December 31, 2006. If an employee moves into a MIP eligible position during the plan year then they will be eligible for a prorated award. If an employee moves from one MIP eligible position to another their full award is based on the PL as of December 31.

Employees who are eligible for participation in any other annual, recurring variable cash compensation plan of the Company are not eligible for participation in this Plan. Participation in this Plan, or receipt of an award under this Plan, does not give a Participant or Employee any right to a subsequent award, nor any right to continued employment by the Company for any period.

A. Pool

The Company must achieve at least a minimum level of performance in order to fund the award pool. The total corporate award pool will be determined by corporate performance defined as:

B. Business Objectives

C. Performance Objective Rating

Each performance objective will be evaluated at the end of the plan year and assigned a rating representing the level at which the objective was achieved. Ratings will be assigned by appropriate management levels for final review and approval by the Chairman and Chief Executive Officer before submitting to the Committee for final approval. In connection with Company ROI and Competitive ROI, the Committee may take into account, without limitation, such items as unforeseen changes in economic conditions. Overall MIP awards may be reduced for deteriorating safety performance, negative ROI results or insufficient corporate cash flow to fund the MIP pool.

Pool amounts available under the MIP for payment of individual awards will be earned and allocated to Corporate and Business Participants based upon:

A. Corporate Level Participants

Excutive Officers and all Corporate Staff members not specifically assigned to a business are considered corporate participants. As such, these participants’ award pool is based:

B. Business Level Participants

Participants other than Executive Officers or Corporate Staff members and whose primary responsibilities rest within a business unit are considered Business Participants. As such, these participants’ award pool is based:

A. Recommendations

The Chairman and Chief Executive Officer will submit to the Committee at the end of each Plan Year individual award recommendations for participants considered Elected Officers and an aggregate award amount for all other participants. The Committee will recommend to the independent members of the Board the award to the Chief Executive Officer and any other employee-director.

B. Granting of Awards

The Committee, in its sole discretion, may approve, revise or disapprove any recommended award to an Elected Officer as it deems appropriate. Any award to the Chief Executive Officer or any other employee-director will be subject to approval by the independent members of the Board of Directors of the Company.

C. Death, Disability or Retirement of a Participant

A Participant whose employment terminates during a Plan Year because of death, disability or retirement (or who is granted a leave of absence) may, at the discretion of the Committee and under such rules as the Committee may from time to time prescribe, be eligible for consideration for a pro-rata award based on the period of active employment during the Plan Year. If a Participant’s employment with the Company is terminated for any reason other than death, disability, retirement, signed severance agreement, or the grant of a leave of absence, prior to actual payment of an award, such award will be canceled and the Participant will have no right to receive payment.

A. Type of Payment

As soon as practical after an individual incentive award under this Plan has been approved by the Committee (or approved by the independent members of the Board of Directors with respect to an award to the Chief Executive Officer or any other employee-director), the award will be paid to the Participant in cash unless the Participant has elected to defer payment as described in Article IX(C).

B. Payment to Beneficiaries

If a Participant dies prior to receipt of an approved award under the Plan, the award will be paid to such beneficiary or beneficiaries as the Participant has designated in writing. The beneficiary designation will state whether payment will be made in a lump-sum or in quarterly installments over a specified period of time (not to exceed forty calendar quarters). If a Participant dies without having a filed a beneficiary designation, the award will be paid in a lump-sum to the Participant’s estate.

C. Deferral of Payment

Any Participant, PL18 or higher, may elect to defer payment, not to exceed 85%, of any award under this Plan by filing an irrevocable Election to Defer Payment with the Company by a date determined by the Company. Awards or portions elected to be deferred will be invested in accounts under the Company’s savings plans as directed by the participants.

The Committee may at any time suspend, terminate, modify or amend any or all of the provisions of this Plan.

The Plan is governed by the laws of the State of New York.

The Company will deduct from any award made under the Plan, a sufficient amount to cover withholding of any federal, state, local or foreign jurisdiction taxes required by law, or to take such other action as may be necessary to satisfy any such withholding obligations. Effective January 1, 2006, all supplemental income in excess of $1,000,000 will be taxed at a federal rate of 35%.

No award, under this Plan, and no rights or interests therein, will be assignable or transferable by a Participant (or legal representative).

This Plan is effective as of January 1, 2006 and continues until terminated, suspended, modified, or amended.

Appendix A

Industry Financial Performance

Peer Group

Appendix B

Management Incentive Plan (MIP)

Target Awards