<PAGE>
As filed with the Securities and Exchange Commission on August 18, 2000
Registration No.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
--------------
GEORGIA-PACIFIC CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Georgia 2400 93-0432081
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification Number)
Incorporation or
Organization)
</TABLE>
133 Peachtree Street, N.E.
Atlanta, Georgia 30303
(404) 652-4000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
James F. Kelley, Esq.
Georgia-Pacific Corporation
133 Peachtree Street, N.E.
Atlanta, Georgia 30303
(404) 652-4000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
<TABLE>
<S> <C>
Creighton O. Condon, Esq. Patricia A. Vlahakis, Esq.
Shearman & Sterling Wachtell, Lipton, Rosen & Katz
599 Lexington Avenue 51 East 52nd Street
New York, NY 10022 New York, NY 10019
(212) 848-4000 (212) 403-1000
</TABLE>
Approximate date of commencement of proposed sale to the public: As promptly
as practicable after this Registration Statement becomes effective and upon
consummation of the transactions described in the enclosed prospectus.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
CALCULATION OF REGISTRATION FEE
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed
Proposed maximum
Title of each class of Amount to maximum aggregate Amount of
securities be offering price offering registration
to be registered registered(1) per unit price(2) fee(3)
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Georgia-Pacific
Corporation-Georgia-
Pacific Group Common
Stock, par value $0.80
per share (including
the associated rights
to purchase preferred
stock)................ 63,004,801 Not Applicable 691,438,688 $182,540
------------------------------------------------------------------------------
------------------------------------------------------------------------------
</TABLE>
<PAGE>
(1) Represents the maximum number of shares of common stock, par value $.80
per share, of Georgia-Pacific Corporation--Georgia-Pacific Group
("Georgia-Pacific Group common stock"), estimated to be issuable in
connection with (1) the offer by the registrant through Fenres Acquisition
Corp., a Virginia corporation and a wholly owned subsidiary of the
registrant, to exchange for each share of common stock, par value $.10 per
share, of Fort James Corporation, $29.60 in cash and .2644 shares of
Georgia-Pacific Group common stock (the "Exchange Ratio") and (2) the
merger of Fenres Acquisition Corp. with and into Fort James Corporation
for the same consideration per share of Fort James common stock as is paid
in the offer. The maximum number (63,004,801) equals the sum of (1) the
product of (a) 210,505,588, the total number of shares of Fort James
common stock outstanding and the maximum number of options expected to be
converted into Fort James common stock prior to the consummation of the
merger, and (b) the Exchange Ratio, and (2) the product of (x) 5,608,490,
the maximum number of securities convertible into Fort James common stock
expected to be exchanged solely for securities convertible into Georgia-
Pacific Group common stock, and (y) 1.31, the value of the total per share
consideration divided by the trading price of a share of Georgia-Pacific
Group common stock, in each case based on the closing price of Georgia-
Pacific Group common stock on August 17, 2000 (and calculated in
accordance with the terms of the merger agreement).
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rules 457(f)(1) and (3) and Rule 457(c) of the Securities Act
of 1933, as amended (the "Securities Act"), based on (1) the product of
(A) 32.03125, the average of the high and low sales prices of Fort James
common stock on the New York Stock Exchange Composite Tape on August 11,
2000 and (B) 216,523,961, the number of shares of Fort James common stock
outstanding at the close of business on August 15, 2000, assuming the
exercise of all securities convertible for shares of Fort James common
stock included in footnote (1) above and including 409,883 convertible
securities that will be cashed out entirely in connection with the offer
and the merger, less (2) $6,244,094,438, the amount of cash expected to be
paid by the registrant in connection with the exchange if all possible
shares of Fort James Corporation are exchanged.
(3) Computed in accordance with Rule 457(f) under the Securities Act to be
$182,540 which is equal to 0.000264 multiplied by the proposed maximum
aggregate offering price of $691,438,688.
--------------
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Securities and Exchange
Commission, acting pursuant to said Section 8(a), may determine.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<PAGE>
Georgia-Pacific Corporation
Offer to Exchange
$29.60
Net to the Seller in Cash
and
.2644
Shares of Common Stock
of
Georgia-Pacific Corporation-Georgia-Pacific Group
(Subject to the Limitation Described in this Prospectus)
for
Each Outstanding Share of Common Stock
(Including the Associated Rights to Purchase Preferred Stock)
of
Fort James Corporation
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON , 2000 UNLESS EXTENDED. SHARES TENDERED PURSUANT TO THE
OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION OF THE OFFER,
BUT NOT DURING ANY SUBSEQUENT OFFERING PERIOD.
On July 16, 2000, we entered into an Agreement and Plan of Merger with Fort
James. We are making this offer as part of the proposed merger with Fort
James. The Fort James board of directors has unanimously approved the merger
agreement, determined that the offer is in the best interests of Fort James
shareholders and recommends that Fort James shareholders accept the offer and
tender their shares pursuant to the offer.
Through Fenres Acquisition Corp., our wholly owned subsidiary, we are
offering to exchange $29.60 in cash and .2644 shares of Georgia-Pacific Group
common stock, subject to the limitation described in this prospectus, for each
outstanding share of Fort James common stock, including the associated rights
to purchase preferred stock, that is validly tendered and not properly
withdrawn.
Our obligation to exchange cash and shares of Georgia-Pacific Group common
stock for shares of Fort James common stock is subject to the conditions
listed under "The Offer--Conditions to the Offer." Georgia-Pacific Group
common stock is listed on the New York Stock Exchange under the symbol "GP"
and Fort James common stock is listed on the New York Stock Exchange under the
symbol "FJ."
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities to be issued under
this prospectus or determined if this prospectus is accurate or adequate. Any
representation to the contrary is a criminal offense.
See "Risk Factors" beginning on page 12 for a discussion of certain factors
that you should consider in connection with the offer.
WE ARE NOT ASKING FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY. Any solicitation of proxies will be made only pursuant to separate
proxy solicitation materials complying with the requirements of Section 14(a)
of the Securities Exchange Act of 1934.
The date of this prospectus is , 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE PROPOSED ACQUISITION...................... 1
WHERE YOU CAN FIND MORE INFORMATION....................................... 4
SUMMARY................................................................... 6
RISK FACTORS.............................................................. 12
GEORGIA-PACIFIC SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA........... 17
FORT JAMES SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA................ 19
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA...................... 21
RECENT DEVELOPMENTS....................................................... 23
COMPARATIVE PER SHARE DATA................................................ 24
CAPITALIZATION............................................................ 26
THE COMPANIES............................................................. 27
Georgia-Pacific Corporation and Purchaser............................... 27
Fort James Corporation.................................................. 27
REASONS FOR THE OFFER..................................................... 28
Reasons for the Georgia-Pacific's Board Recommendation; Factors
Considered............................................................. 28
Reasons for the Fort James' Board Recommendation; Factors Considered.... 29
BACKGROUND OF THE OFFER................................................... 32
THE OFFER................................................................. 35
Basic Terms............................................................. 35
Timing of the Offer..................................................... 36
Extension, Termination and Amendment.................................... 36
Exchange of Shares of Fort James Common Stock; Delivery of Cash and
Georgia-Pacific Group Common Stock..................................... 37
Cash Instead of Fractional Shares of Georgia-Pacific Group Common
Stock.................................................................. 38
Withdrawal Rights....................................................... 38
Procedure for Tendering................................................. 39
Guaranteed Delivery..................................................... 40
Certain Federal Income Tax Consequences................................. 41
Purpose of Our Offer; The Merger; Appraisal or Dissenters' Rights....... 42
Conditions to the Offer................................................. 43
Regulatory Approvals.................................................... 45
Certain Effects of the Offer............................................ 46
Opinion of Financial Advisor to Fort James.............................. 48
Source and Amount of Funds.............................................. 53
Relationships with Fort James........................................... 54
Accounting Treatment.................................................... 54
Fees and Expenses....................................................... 55
Stock Exchange Listing.................................................. 55
THE MERGER AGREEMENT...................................................... 56
The Offer............................................................... 56
The Merger.............................................................. 56
Fort James Board of Directors........................................... 57
Georgia-Pacific Board of Directors...................................... 58
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Treatment of Fort James Stock Options, Performance Shares and Restricted
or Performance Share Units.............................................. 58
Covenants and Representations and Warranties............................. 59
Conditions of the Offer.................................................. 62
Conditions of the Merger................................................. 62
Termination of the Merger Agreement...................................... 62
Termination Fees......................................................... 64
Amendments............................................................... 64
INTERESTS OF CERTAIN PERSONS............................................... 65
COMPARATIVE STOCK PRICES AND DIVIDENDS..................................... 67
Georgia-Pacific Dividend Policy.......................................... 67
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS...................... 68
DESCRIPTION OF GEORGIA-PACIFIC CAPITAL STOCK............................... 77
COMPARISON OF SHAREHOLDER RIGHTS........................................... 88
LEGAL MATTERS.............................................................. 91
EXPERTS.................................................................... 91
FORWARD-LOOKING STATEMENTS................................................. 92
</TABLE>
SCHEDULE I: DIRECTORS AND EXECUTIVE OFFICERS OF GEORGIA-PACIFIC AND
PURCHASER
ANNEX A: AGREEMENT AND PLAN OF MERGER
ANNEX B: OPINION OF MORGAN STANLEY & CO. INCORPORATED
ii
<PAGE>
THIS DOCUMENT INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION
ABOUT GEORGIA-PACIFIC AND FORT JAMES FROM DOCUMENTS FILED WITH THE SEC THAT
HAVE NOT BEEN INCLUDED IN OR DELIVERED WITH THIS DOCUMENT. THIS INFORMATION IS
AVAILABLE AT THE INTERNET WEB SITE THAT THE SEC MAINTAINS AT
HTTP://WWW.SEC.GOV, AS WELL AS FROM OTHER SOURCES. SEE "WHERE YOU CAN FIND
MORE INFORMATION" ON PAGE 4.
YOU ALSO MAY REQUEST COPIES OF THESE DOCUMENTS FROM US, WITHOUT CHARGE, UPON
WRITTEN OR ORAL REQUEST TO OUR INFORMATION AGENT, D.F. KING & CO., INC., 77
WATER STREET, NEW YORK, NEW YORK 10005, COLLECT AT 1-212-269-5550 OR TOLL-FREE
AT 1-888-460-7637. IN ORDER TO RECEIVE TIMELY DELIVERY OF THE DOCUMENTS, YOU
MUST MAKE YOUR REQUESTS NO LATER THAN , 2000.
iii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE PROPOSED ACQUISITION
Q: What are Georgia-Pacific and Fort James proposing?
A: We have entered into a merger agreement with Fort James pursuant to which
we are offering, through Fenres Acquisition Corp., our wholly owned
subsidiary ("Purchaser"), to exchange cash and shares of Georgia-Pacific
Group common stock as described in the next question for each outstanding
share of Fort James common stock and the associated preferred stock
purchase rights. After the offer is completed, Purchaser will merge with
Fort James. As a result of the offer and the merger, Fort James will become
our wholly owned subsidiary.
Q: What would I receive in exchange for my shares of Fort James common stock?
A: We are offering to exchange (1) $29.60 in cash and (2) .2644 shares of
Georgia-Pacific Group common stock, subject to the limitation described
below, for each outstanding share of Fort James common stock, including the
associated rights to purchase preferred stock, that is validly tendered and
not properly withdrawn. The number of shares of Georgia-Pacific Group
common stock into which each share of Fort James common stock will be
exchanged (the "exchange ratio") will be .2644; provided that, if the
average of the volume weighted averages of the trading prices of Georgia-
Pacific Group common stock on the New York Stock Exchange for the 10
consecutive trading days ending on the third trading day prior to the
acceptance date is greater than $39.33, the exchange ratio will be $10.40
divided by the average trading price of Georgia-Pacific Group common stock
for such 10 trading day period.
You will not receive any fractional shares of Georgia-Pacific Group
common stock in the offer. Instead, you will receive cash in an amount
equal to the market value of any fractional shares you would otherwise have
been entitled to receive.
The term "acceptance date" means the date on which Purchaser accepts for
payment all shares of Fort James common stock validly tendered and not
properly withdrawn.
For more information on how the exchange ratio works, please read the
detailed information set forth under "The Offer--Basic Terms" beginning on
page 35.
Q: How can I find out the final exchange ratio?
A: No later than two business days before the offer expires, we will notify
you by issuing a press release announcing the final exchange ratio and
filing that press release with the SEC. You can also call our information
agent, D.F. King & Co., Inc., collect at 1-212-269-5550 or toll-free at 1-
888-460-7637 to request information about the exchange ratio.
Q: How long will it take to complete the offer and the merger?
A: The offer is scheduled to expire on , 2000, the initial scheduled
expiration date; however, we currently intend to extend our offer from time
to time as necessary until the earlier of (1) the date on which all the
conditions to the offer have been satisfied or waived and (2) February 28,
2001. We expect to complete the merger shortly after we complete the offer.
Q: Will I have to pay any fees or commissions?
A: If you are the record owner of your shares of Fort James common stock and
you tender your shares directly to the exchange agent, you will not have to
pay brokerage fees or incur similar expenses. If you own your shares
through a broker or other nominee, and your broker tenders the shares on
your behalf, your broker may charge you a fee for doing so. You should
consult your broker or nominee to determine whether any charges will apply.
Q: Does Fort James support the offer and the merger?
A: Yes, Fort James' board of directors has unanimously determined that the
offer and the merger are in the best interests of Fort James and Fort
James' shareholders and recommends that Fort James' shareholders accept the
offer and tender their shares pursuant to the offer. Fort James' board of
directors has also approved the merger agreement and the merger.
Information about the recommendation of Fort James' board
1
<PAGE>
of directors is more fully set forth under "Reasons for the Offer--Reasons
for the Fort James' Board Recommendation; Factors Considered" beginning on
page 29.
Q: Has Fort James received a fairness opinion in connection with the offer and
the merger?
A: Yes. Fort James has received an opinion from Morgan Stanley & Co.
Incorporated, dated July 16, 2000, to the effect that, as of such date, the
consideration to be received by holders of shares of Fort James common
stock pursuant to the merger agreement was fair from a financial point of
view to such holders. The full text of such opinion, which sets forth
assumptions made, matters considered and limitations on the review
undertaken in connection with the opinion, is attached as Annex B to this
prospectus.
Q: What percentage of Georgia-Pacific Group common stock and Georgia-Pacific's
voting power will Fort James shareholders own after the offer and the
merger?
A: As more fully described in this prospectus, Georgia-Pacific has two
distinct classes of common stock: Georgia-Pacific Group common stock (which
will be issued to Fort James shareholders in the offer and the merger) and
The Timber Group common stock (which will not be issued to Fort James
shareholders in either the offer or the merger). After completion of the
merger, former shareholders of Fort James would own approximately % of the
outstanding shares of Georgia-Pacific Group common stock, assuming that the
average of the volume weighted averages of the trading prices of Georgia-
Pacific Group common stock during the pricing period prior to the
acceptance date is less than or equal to $39.33, which corresponds to an
exchange ratio of .2644 shares of Georgia-Pacific Group common stock for
each share of Fort James common stock. Immediately after completion of the
merger, Georgia-Pacific Group common stock will represent % of the
aggregate outstanding shares of common stock of Georgia-Pacific and, based
on the relative trading prices of Georgia-Pacific Group common stock and
The Timber Group common stock as of , 2000, Georgia-Pacific Group
common stock would, following the merger, represent approximately % of the
aggregate voting power of Georgia-Pacific. For more information about
Georgia-Pacific's capital stock, please refer to "Description of Georgia-
Pacific Capital Stock" beginning on page 77.
Q: What are the most significant conditions to the offer?
A: The offer is subject to several conditions, including:
. two-thirds of the outstanding shares of Fort James common stock, on a
fully-diluted basis, having been validly tendered and not properly
withdrawn (the "minimum condition"),
. all waiting periods under applicable antitrust laws having expired or
been terminated,
. the registration statement of which this prospectus is a part not being
subject to any stop order or proceedings seeking a stop order,
. the shares of Georgia-Pacific Group common stock to be issued in the
offer and the merger having been approved for listing on the New York
Stock Exchange, subject to official notice of issuance,
. Fort James not having breached any covenant, representation or warranty
in a material manner,
. no proceeding having been instituted or pending by a governmental
authority seeking:
--to prohibit or restrain the offer or the merger under applicable
antitrust laws,
--an order of divestiture that would have a material adverse effect on
Georgia-Pacific and Fort James and their subsidiaries, taken as a
whole, after giving effect to the offer and the merger, or
--to limit Georgia-Pacific's rights of ownership of Fort James common
stock under applicable antitrust laws, and
. no law having been enacted or order entered having the foregoing
consequences.
These conditions and other conditions to the offer are discussed in this
prospectus under "The Offer--Conditions to the Offer" beginning on page 43.
2
<PAGE>
Q: How do I accept the offer?
A: To tender your shares, you should do the following:
. If you hold shares of Fort James common stock in your own name, complete
and sign the enclosed letter of transmittal and return it with your
share certificates to EquiServe Trust Company, N.A., the exchange agent
for the offer, at the appropriate address specified on the back cover
page of this prospectus before the expiration date of the offer.
. If you hold your shares in "street name" through a broker, instruct your
broker to tender your shares before the expiration date.
For more information on the timing of the offer, extensions of the offer
period and your rights to withdraw your shares from the offer before the
expiration date, please refer to "The Offer" beginning on page 35.
Q: Will I be taxed on the cash and Georgia-Pacific Group common stock that I
receive?
A: Yes, the exchange of your shares of Fort James common stock for cash and
Georgia-Pacific Group common stock will be a taxable transaction for U.S.
federal income tax purposes. You will generally recognize gain or loss
equal to the difference between (1) the sum of the fair market value of the
Georgia-Pacific Group common stock on the acceptance date and cash received
and (2) the aggregate tax basis of the Fort James common stock that you
tendered. That gain or loss will be capital gain or loss (assuming you hold
your Fort James common stock as a capital asset) and any such capital gain
or loss will be long term if, as of such time, you have held the Fort James
common stock for more than one year. If you receive cash and Georgia-
Pacific Group common stock in the merger, you will have the same federal
income tax consequences, except that the fair market value of Georgia-
Pacific Group common stock will be determined as of the effective time of
the merger.
Q: Is Georgia-Pacific's financial condition relevant to my decision to tender
my shares in the offer?
A: Yes. Shares of Fort James common stock accepted in the offer will be
exchanged in part for shares of Georgia-Pacific Group common stock and so
you should consider our financial condition before you decide to become one
of our shareholders through the offer. In considering Georgia-Pacific's
financial condition, you should review the documents incorporated by
reference in this prospectus because they contain detailed business,
financial and other information about us.
Georgia-Pacific currently has two classes of common stock outstanding:
Georgia-Pacific Group common stock and The Timber Group common stock.
Georgia-Pacific has entered into an agreement pursuant to which it expects
to divest its timber business. While it is not certain that this
transaction will be completed, in the event that the divestiture of
Georgia-Pacific's timber business does occur, the only shares of common
stock of Georgia-Pacific outstanding will be shares of Georgia-Pacific
Group common stock. In such circumstances, the financial condition of
Georgia-Pacific will be determined solely by reference to the Georgia-
Pacific Group common stock. For a more complete description of the possible
divesture of Georgia-Pacific's timber business, please see "Recent
Developments--Georgia-Pacific--Disposition of The Timber Group" on page 23.
Q: If I decide not to tender, how will the offer affect my shares?
A: If you decide not to tender your shares in the offer and the merger occurs,
you will receive in the merger the same amount of cash and the same number
of shares of Georgia-Pacific Group common stock for each share of Fort
James common stock you own that you would have received had you tendered
your shares in the offer.
Q: Where can I find out more information about Georgia-Pacific and Fort James?
A: You can find out information about Georgia-Pacific and Fort James from
various sources described under "Where You Can Find More Information" on
page 4.
Q: Who can I call with questions about the offer?
A: You can contact our information agent, D.F. King & Co., Inc., collect at 1-
212-269-5550 or toll-free at 1-888-460-7637.
3
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Georgia-Pacific and Fort James file annual, quarterly and special reports,
proxy statements and other information with the Securities and Exchange
Commission under the Securities Exchange Act of 1934. You may read and copy
this information at the following locations of the SEC:
Public Reference Room North East Regional Midwest Regional Office
450 Fifth Street, N.W. Office 500 West Madison Street
Room 1024 7 World Trade Center Suite 1400
Washington, D.C. 20549 Suite 1300 Chicago, Illinois 60661-
New York, New York 10048 2511
You may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. You may also obtain copies of this
information by mail from the Public Reference Section of the SEC, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates.
The SEC also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, like Georgia-
Pacific and Fort James, who file electronically with the SEC. The address of
that site is http://www.sec.gov.
You can also inspect reports, proxy statements and other information about
Georgia-Pacific and Fort James at the offices of the New York Stock Exchange,
20 Broad Street, New York, New York 10005.
We filed a registration statement on Form S-4 to register with the SEC the
shares of Georgia-Pacific Group common stock to be issued pursuant to the
offer and the merger. This prospectus is a part of that registration
statement. As allowed by SEC rules, this prospectus does not contain all the
information you can find in the registration statement or the exhibits to the
registration statement. In addition, we also filed with the SEC a statement on
Schedule TO pursuant to Rule 14d-3 under the Securities Exchange Act of 1934
to furnish certain information about the offer. You may obtain copies of the
Form S-4 and the Schedule TO (and any amendments to those documents) in the
manner described above.
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this prospectus,
except for any information superseded by information contained directly in
this prospectus. This prospectus incorporates by reference the documents set
forth below that Georgia-Pacific and Fort James have previously filed with the
SEC. These documents contain important information about Georgia-Pacific and
Fort James and their financial condition.
The following documents listed below that Georgia-Pacific and Fort James
have previously filed with the SEC are incorporated by reference:
<TABLE>
<CAPTION>
Georgia-Pacific SEC Filings Period
--------------------------- ------
<S> <C>
Annual Report on Form 10-K........... Year ended January 1, 2000, as filed on
March 31, 2000
Quarterly Reports on Form 10-Q....... Quarters ended:
. April 1, 2000, as filed on May 8, 2000
. July 1, 2000, as filed on August 10,
2000
The description of Georgia-Pacific
Group common stock set forth in
Georgia-Pacific's registration
statements filed by Georgia-Pacific
pursuant to Section 12 of the
Securities Exchange Act of 1934,
including any amendment or report
filed for purposes of updating any Filed on June 23, 1999, November 7, 1997
such description..................... and October 29, 1997
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Georgia-Pacific SEC Filings Period
--------------------------- ------
<S> <C>
Current Reports on Form 8-K......... Filed on:
. March 23, 2000
. April 19, 2000
. July 18, 2000
. July 20, 2000
Proxy for Georgia-Pacific Annual
Meeting of Shareholders............. Filed on March 27, 2000
<CAPTION>
Fort James SEC Filings Period
---------------------- ------
<S> <C>
Annual Report on Form 10-K.......... Year ended December 26, 1999, as filed on
March 27, 2000
Quarterly Reports on Form 10-Q...... Quarters ended:
. March 31, 2000, as filed on May 2, 2000
. June 25, 2000, as filed on August 4,
2000
The description of Fort James common
stock set forth in Fort James'
registration statement filed by Fort
James pursuant to Section 12 of the
Securities Exchange Act of 1934,
including any amendment or report
filed with the SEC for the purpose
of updating any such description.... Filed on February 26, 1999
Current Reports on Form 8-K......... Filed on:
. July 17, 2000
. July 20, 2000
Proxy for Fort James Annual Meeting
of Shareholders..................... Filed on March 17, 2000
</TABLE>
All documents filed by Georgia-Pacific and Fort James pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 from the date
of this prospectus to the date that shares are accepted for exchange pursuant
to our offer (or the date that our offer is terminated) shall also be deemed
to be incorporated herein by reference.
DOCUMENTS INCORPORATED BY REFERENCE ARE AVAILABLE FROM US WITHOUT CHARGE
UPON REQUEST TO OUR INFORMATION AGENT, D.F. KING & CO., INC., 77 WATER STREET,
NEW YORK, NEW YORK 10005, COLLECT AT 1-212-269-5550 OR TOLL-FREE AT 1-888-460-
7637. IN ORDER TO ENSURE TIMELY DELIVERY, ANY REQUEST SHOULD BE SUBMITTED NO
LATER THAN , 2000. IF YOU REQUEST ANY INCORPORATED DOCUMENTS FROM US, WE
WILL MAIL THEM TO YOU BY FIRST CLASS MAIL, OR ANOTHER EQUALLY PROMPT MEANS,
WITHIN ONE BUSINESS DAY AFTER WE RECEIVE YOUR REQUEST.
We have not authorized anyone to give any information or make any
representation about our offer that is different from, or in addition to, that
contained in this prospectus or in any of the materials that we have
incorporated by reference into this prospectus. Therefore, if anyone does give
you information of this sort, you should not rely on it. If you are in a
jurisdiction where offers to exchange or sell, or solicitations of offers to
exchange or purchase, the securities offered by this document are unlawful, or
if you are a person to whom it is unlawful to direct these types of
activities, then the offer presented in this document does not extend to you.
The information contained in this document speaks only as of the date of this
document unless the information specifically indicates that another date
applies.
5
<PAGE>
SUMMARY
This brief summary does not contain all of the information that should be
important to you. You should carefully read this entire document and the other
documents to which this document refers you to fully understand the offer. See
"Where You Can Find More Information" on page 4.
The Offer and the Merger (Page 35)
We are proposing a business combination of Georgia-Pacific and Fort James. We
are offering to exchange $29.60 in cash and .2644 shares of Georgia-Pacific
Group common stock, subject to the limitation described in this prospectus, for
each outstanding share of Fort James common stock, including the associated
rights to purchase preferred stock, that is validly tendered and not properly
withdrawn.
We intend, promptly after completion of the offer, to seek to merge
Purchaser, our wholly owned subsidiary and the purchaser in the offer, with and
into Fort James. As a result, Fort James will become a wholly owned subsidiary
of Georgia-Pacific. Each share of Fort James common stock which has not been
exchanged or accepted for exchange in the offer would be converted in the
merger into the same amount of cash and the same number of shares of Georgia-
Pacific Group common stock as is paid in the offer.
Information about Georgia-Pacific and Fort James (Page 27)
GEORGIA-PACIFIC CORPORATION
133 Peachtree Street, N.E.
Atlanta, GA 30303
(404) 652-4000
Georgia-Pacific is one of the world's leading forest products companies. In
December 1997, we separated our timber business from our manufacturing and
distribution businesses, which we call the Georgia-Pacific Group. Georgia-
Pacific Group is one of the world's largest producers of structural and other
wood panels, lumber, communication papers, container board and market pulp. It
also is the second largest gypsum wallboard producer in North America and a
leading supplier of wholesale building products in the United States. Our
timber business is now operated as The Timber Group, and engages in the
business of growing and selling timber and wood fiber. It is one of the largest
owners of timberlands in the United States. The principal products sold by The
Timber Group are softwood sawtimber, softwood pulpwood, hardwood sawtimber and
hardwood pulpwood. Georgia-Pacific has entered into an agreement to merge The
Timber Group with Plum Creek Timber Co. If completed, the merger of The Timber
Group with Plum Creek will result in each outstanding share of The Timber Group
being converted into the right to receive 1.37 shares of Plum Creek common
stock and will cause Georgia-Pacific to cease to own any timberlands. For a
more complete description of the divestiture of The Timber Group by Georgia-
Pacific, please see "Recent Developments--Georgia-Pacific--Disposition of The
Timber Group" beginning on page 23.
FORT JAMES CORPORATION
1650 Lake Look Road
Deerfield, IL 60015
(847) 317-5000
Fort James was created by the merger of James River Corporation of Virginia
and Fort Howard Corporation in August 1997. Fort James manufactures and markets
consumer tissue products, including bath tissue, facial tissue, paper towels
and napkins, and disposable tabletop products, including cups, plates, bowls
and cutlery. Principal regions for Fort James' tissue products include North
America and Europe, while its disposable tabletop products are marketed
primarily in North America under the Dixie name. Additionally, Fort James
manufactures and markets business, office and printing papers, primarily in the
western United States. Fort James also sells market pulp and recycled paper to
the extent that its production exceeds internal needs.
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Dividend Policy of Georgia-Pacific (Page 67)
The holders of Georgia-Pacific Group common stock receive dividends if and
when declared by the Georgia-Pacific board of directors out of the lesser of
the funds legally available therefor and the available dividend amount (as
defined in Georgia-Pacific's articles of incorporation) with respect to the
Georgia-Pacific Group. For the last 10 fiscal quarters, we have paid a cash
dividend of $.125 per common share. Following completion of the offer and the
merger, we expect to continue paying quarterly cash dividends on a basis
consistent with our past practice. However, the declaration and payment of
dividends will depend upon our board's consideration of business conditions,
operating results and other relevant factors. No assurance can be given that we
will continue to pay dividends on our common stock in the future.
The Offer (Page 35)
Summary of the Offer
We are offering, upon the terms and subject to the conditions set forth in
this prospectus and in the related letter of transmittal, to exchange $29.60 in
cash and .2644 shares of Georgia-Pacific Group common stock (the "exchange
ratio"), subject to the limitations described below, for each outstanding share
of Fort James common stock, including the associated rights to purchase
preferred stock, that is validly tendered on or prior to the acceptance date
and not properly withdrawn.
The term "acceptance date" means the date on which Purchaser accepts for
payment all shares of Fort James common stock validly tendered and not properly
withdrawn.
We will reduce the exchange ratio in the event that the value of the shares
of Georgia-Pacific Group common stock that you would receive in exchange for
each share of Fort James common stock would exceed $10.40. This would occur if
the average of the volume weighted averages of the trading prices of Georgia-
Pacific Group common stock on the New York Stock Exchange for the 10
consecutive trading days ending on the third trading day prior to the
acceptance date (the "average price") exceeds $39.33. In that case, each share
of Fort James common stock will be exchanged for $29.60 in cash and a number of
shares of Georgia-Pacific Group common stock that equals $10.40 divided by the
average price.
We will announce the final exchange ratio by issuing a press release and
filing that press release with the SEC no later than two business days before
the offer expires. Fort James shareholders can call our information agent, D.F.
King & Co., Inc., at any time collect at 1-212-269-5550 or toll-free at 1-888-
460-7637 to request information about the exchange ratio and any adjustment to
the exchange ratio.
We are making this offer in order to acquire control of, and ultimately all
outstanding equity securities of, Fort James. We intend as soon as possible
after consummation of the offer to seek to have Fort James and Purchaser
consummate the merger. At the effective time of the merger, each share of Fort
James common stock, except for treasury shares and shares held by Georgia-
Pacific, Purchaser or any of Georgia-Pacific's or Purchaser's subsidiaries,
will be converted into the right to receive the same amount of cash and the
same number of shares of Georgia-Pacific Group common stock as is paid in the
offer.
Conditions to the Offer
Our obligation to exchange cash and shares of Georgia-Pacific Group common
stock for Fort James common stock pursuant to the offer is subject to several
conditions described under "The Offer--Conditions to the Offer," including
conditions that require a minimum number of shares of Fort James common stock
to be tendered, receipt of all required regulatory approvals and satisfaction
of other conditions that are discussed below.
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Timing of the Offer
Our offer is currently scheduled to expire at 12:00 midnight, New York City
time, on , 2000; however, we currently intend to extend our offer from
time to time as necessary until the earlier of (1) the date on which all the
conditions to the offer have been satisfied or waived and (2) February 28,
2001.
Extension, Termination and Amendment
We expressly reserve the right, in our sole discretion (subject to the
provisions of the merger agreement), at any time or from time to time, to
extend the period of time during which our offer remains open, and we can do so
by giving oral or written notice of such extension to the exchange agent. If we
decide to extend our offer, we will make an announcement to that effect no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled expiration date (defined below). We have agreed, pursuant
to the merger agreement, to extend the offer until the earlier of (1) the date
on which all the conditions to the offer have been satisfied or waived or (2)
February 28, 2001. During any such extension, all Fort James common stock
previously tendered and not properly withdrawn will remain subject to the
offer, subject to your right to withdraw your shares of Fort James common
stock.
Subject to the SEC's applicable rules and regulations and the terms of the
merger agreement, we also reserve the right, in our sole discretion, at any
time or from time to time, (1) to delay our acceptance for exchange or our
exchange of any shares of Fort James common stock pursuant to our offer,
regardless of whether we previously accepted shares of Fort James common stock
for exchange, (2) on or after February 28, 2001, to terminate our offer and not
accept for exchange or exchange any shares of Fort James common stock not
previously accepted for exchange or exchanged, upon the failure of any of the
conditions of the offer to be satisfied; provided that neither our failure to
fulfill our obligations under the merger agreement nor our material breach of
the merger agreement is the cause of the failure to satisfy any such condition
on or before February 28, 2001, and (3) to waive any condition (other than the
minimum condition, the conditions relating to regulatory approvals, and the
conditions relating to the absence of an injunction) or otherwise to amend the
offer in any respect, provided that we will not (a) make any change in the form
of consideration to be paid, (b) decrease the consideration payable in the
offer, (c) reduce the maximum number of shares of Fort James common stock to be
purchased in the offer, (d) impose conditions to the offer in addition to those
set forth in the merger agreement, or (e) make any other change that is adverse
to the holders of Fort James common stock.
We will give oral or written notice of such delay, termination or amendment
to the exchange agent and will follow any extension, termination, amendment or
delay, as promptly as practicable, with a public announcement. In the case of
an extension, any such announcement will be issued no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
expiration date. Subject to applicable law (including Rules 14d-4(c) and 14d-
6(d) under the Securities Exchange Act of 1934, which require that any material
change in the information published, sent or given to shareholders in
connection with the offer be promptly sent to shareholders in a manner
reasonably designed to inform shareholders of such change) and without limiting
the manner in which we may choose to make any public announcement, we assume no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by making a release to the Dow Jones News Service.
The term "expiration date" means 12:00 midnight, New York City time, on
, 2000, unless we extend the period of time for which this offer is open,
in which case the term "expiration date" means the latest time and date on
which the offer, as so extended, expires.
Exchange of Shares; Delivery of Cash and Georgia-Pacific Common Stock
Upon the terms and subject to the conditions of our offer (including, if the
offer is extended or amended, the terms and conditions of any extension or
amendment), we will accept for exchange, and will exchange, shares validly
tendered and not properly withdrawn as promptly as practicable after the
acceptance date and promptly after they are tendered during any subsequent
offering period.
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Withdrawal Rights
Shares of Fort James common stock tendered pursuant to the offer may be
withdrawn at any time prior to the acceptance date, and, unless we previously
accepted them pursuant to the offer, may also be withdrawn at any time after
, 2000. Once we have accepted shares for purchase pursuant to the offer,
all tenders become irrevocable.
Subsequent Offering Period
We may elect to provide a subsequent offering period of three to 20 business
days after the acceptance of shares of Fort James common stock pursuant to the
offer if the requirements under Rule 14d-11 of the Securities Exchange Act of
1934 have been met. You will not have the right to withdraw Fort James common
stock that you tender in any subsequent offering period.
Procedure for Tendering Shares
For you to validly tender Fort James common stock pursuant to our offer:
. you must properly complete and sign a letter of transmittal (or manually
executed facsimile of that document), and include any required signature
guarantees, or an agent's message, which is explained below, if you
tender through a book-entry transfer, and any other required documents,
. the Exchange Agent must have received all of these documents at one of
its addresses set forth on the back cover of this prospectus, and
. the Exchange Agent must have received your certificates for tendered
shares of Fort James common stock at such address, or those shares of
Fort James common stock must be tendered pursuant to the procedures for
book-entry tender set forth in "The Offer--Procedure for Tendering" (and
a confirmation of receipt of such tender received by the Exchange
Agent), or if you cannot comply with either of the two preceding
delivery procedures described in this bullet, you must comply with the
guaranteed delivery procedures set forth in "The Offer--Guaranteed
Delivery."
All of these procedures must be completed by the acceptance date. For more
information on how to exchange your shares in the offer, please see "The
Offer--Procedure for Tendering."
Risk Factors (Page 12)
In deciding whether to tender your shares of Fort James common stock pursuant
to the offer, you should read carefully this prospectus, the accompanying
Schedule 14D-9 of Fort James and the documents to which we refer you. You
should also carefully consider the following factors:
Risk Factors Relating to the Offer and the Merger:
. the exchange ratio could work to your disadvantage,
. benefits of the combination may not be realized,
. the trading price of Georgia-Pacific Group common stock may be affected
by factors different from those which affect the price of Fort James
common stock,
. the net earnings of the combined company may decrease if increases in
depreciation and amortization expense over the preliminary estimates
reflected in the pro forma financial information occur after the
purchase consideration is finally allocated to Fort James' assets,
. the need for governmental approval may delay consummation of the offer
and the merger, and
. companies in our industry are highly competitive.
Risk Factors Relating to Our Capital Structure that Includes Two Separate
Classes of Common Stock (which will not be applicable in the event we complete
the proposed divestiture of The Timber Group):
. you will be shareholders of one company, and therefore, financial
results of one group could adversely affect the other,
. holders of common stock have shareholder rights specific to their group
only in limited circumstances,
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. limits exist on the voting power of each class of common stock,
. shareholders may not have any remedies for breach of fiduciary duties if
any action by directors and officers has a disadvantageous effect on one
class of common stock compared to the other class of common stock,
. our board of directors may pay more or less dividends on one group's
common stock than if that group were a separate company,
. holders of either class of common stock may be adversely affected by a
conversion of one group's common stock,
. holders of one group's common stock may receive less consideration upon
a sale of assets than if the group were a separate company,
. decisions by directors and officers that affect market value could
adversely affect voting and conversion rights, and
. provisions governing Georgia-Pacific Group common stock and The Timber
Group common stock could discourage a change of control and the payment
of a premium for shares.
Risk Factor Relating to the Relationship between the Georgia-Pacific Group
and The Timber Group:
. provisions relating to our timber and wood fiber supply policy may not
reflect those that would have been negotiated between unaffiliated third
parties.
Approval of the Merger (Page 42)
If at the end of the offer we have received between two-thirds and 90% of the
outstanding shares of Fort James common stock, we will effect a long-form
merger as permitted under Virginia law, which would require notice to and
approval by Fort James shareholders. If at the end of the offer, however, we
have received 90% or more of the outstanding shares of Fort James common stock,
we will effect a short-form merger as permitted under Virginia law, which would
not require advance notice to or approval by Fort James shareholders.
Appraisal or Dissenters' Rights (Page 43)
The offer and the merger do not entitle you to appraisal or dissenters'
rights with respect to your Fort James common stock.
Certain Federal Income Tax Consequences (Page 41)
The receipt of cash and shares of Georgia-Pacific Group common stock in
exchange for your shares of Fort James common stock pursuant to the offer will
be a taxable transaction. You will generally recognize gain or loss equal to
the difference between (a) the sum of the fair market value of the shares of
Georgia-Pacific Group common stock on the acceptance date and cash received and
(b) the aggregate tax basis of the Fort James common stock that you tendered.
That gain or loss will be capital gain or loss (assuming you hold your Fort
James common stock as a capital asset) and any such capital gain or loss will
be long term if, as of that time, you have held the Fort James common stock for
more than one year. Fort James shareholders receiving cash and shares of
Georgia-Pacific Group common stock in the merger will have the same federal
income tax consequences, except that the fair market value of the shares of
Georgia-Pacific Group common stock will be determined as of the effective time
of the merger. See "The Offer--Certain Federal Income Tax Consequences."
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Opinion of Financial Advisor to Fort James (Page 48)
On July 16, 2000, Morgan Stanley & Co. Incorporated, financial advisor to
Fort James, delivered its opinion to the Fort James board of directors that, as
of such date, the consideration to be received by holders of Fort James common
stock pursuant to the merger agreement is fair from a financial point of view
to such holders. The full text of the opinion of Morgan Stanley, which sets
forth the assumptions made, matters considered and limitations on the review
undertaken in connection with such opinion, is attached to this prospectus as
Annex B and is incorporated herein by reference. FORT JAMES SHAREHOLDERS ARE
URGED TO, AND SHOULD, READ SUCH OPINION IN ITS ENTIRETY.
Georgia-Pacific will Account for the Acquisition of Fort James Using the
Purchase Method (Page 54)
Georgia-Pacific will account for the acquisition of Fort James as a purchase
for financial reporting purposes.
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RISK FACTORS
In deciding whether to tender your shares of Fort James common stock
pursuant to the offer, you should read carefully this prospectus, the
accompanying Schedule 14D-9 of Fort James and the documents to which we refer
you. You should also carefully consider the following factors:
Risk Factors Relating to the Offer and the Merger
The exchange ratio could work to your disadvantage
We are offering to exchange for each share of Fort James common stock,
$29.60 in cash and a number of shares of Georgia-Pacific Group common stock
based on a fixed exchange ratio of .2644 shares of Georgia-Pacific Group
common stock for each Fort James share, subject to reducing the exchange ratio
if the average of the volume weighted averages of the trading prices of
Georgia-Pacific Group common stock for the 10 consecutive trading days ending
on the third trading day immediately preceding the acceptance date exceeds
$39.33. The trading value of Georgia-Pacific Group common stock could
fluctuate depending upon any number of reasons, including those specific to
Georgia-Pacific and those that influence the trading prices of equity
securities generally. If the market price of Georgia-Pacific Group common
stock declines, the value of the total consideration you receive in exchange
for your shares of Fort James common stock will decline. If the market price
of Georgia-Pacific Group common stock increases, because the exchange ratio
may be adjusted, you may not receive the full benefit of the increase. To the
extent the average price of Georgia-Pacific Group common stock is in excess of
$39.33, the exchange ratio will be less than .2644 so that the value of the
stock component of the consideration you receive will be a maximum of $10.40
per share. This means the maximum value of the total consideration you can
receive in the offer is $40.00.
Benefits of the combination may not be realized
If we complete the proposed merger, we will integrate two companies that
have previously operated independently. Integrating our operations and
personnel with those of Fort James will be a complex process. We may not be
able to integrate the operations of Fort James with our operations rapidly or
without encountering difficulties. The successful integration of Georgia-
Pacific with Fort James will require, among other things, integration of Fort
James' and Georgia-Pacific's products, sales and marketing operations,
information and software systems, coordination of employee retention, hiring
and training operations and coordination of future research and development
efforts. The diversion of the attention of management to the integration
effort and any difficulties encountered in combining operations could
adversely affect the combined company's businesses. Further, the process of
combining Georgia-Pacific and Fort James could negatively impact employee
morale and the ability of Georgia-Pacific to retain some of Fort James' key
personnel after the merger.
The trading price of Georgia-Pacific Group common stock may be affected by
factors different from those which affect the price of Fort James common
stock
Upon completion of the offer and the merger, holders of Fort James common
stock will become holders of Georgia-Pacific Group common stock. Georgia-
Pacific's overall business differs from that of Fort James, and Georgia-
Pacific's results of operations, as well as the trading price of Georgia-
Pacific Group common stock, may be affected by factors different from those
affecting Fort James' results of operations and the price of Fort James common
stock. For a discussion of Georgia-Pacific's and Fort James' business and
information to consider in connection with such businesses, see Georgia-
Pacific's Annual Report on Form 10-K for the fiscal year ended
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January 1, 2000 and Fort James' Annual Report on Form 10-K for the fiscal year
ended December 26, 1999, which are incorporated by reference in this
prospectus.
The net earnings of the combined company may decrease if increases in
depreciation and amortization expense over the preliminary estimates
reflected in the pro forma financial information occur after the purchase
consideration is finally allocated to Fort James' assets
Pro forma results of operations reflect adjustments, which are based upon
preliminary estimates, relating to the allocation of the purchase
consideration to the acquired assets and liabilities of Fort James. The final
allocation of the purchase consideration will be determined after the
completion of the merger and will be based on appraisals and a comprehensive
final evaluation of the fair value of Fort James' tangible assets,
liabilities, identifiable intangible assets and goodwill at the time of the
merger. Accordingly, the final determination of tangible and intangible assets
may result in depreciation and amortization expense that is significantly
higher than the preliminary estimates of these amounts, which would cause
Georgia-Pacific's net earnings to be lower. See the Notes contained in
"Unaudited Pro Forma Consolidated Financial Statements" beginning on page 68.
The need for governmental approvals may delay consummation of the offer and
the merger
The offer is conditioned upon the expiration or termination of the
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"). In addition, other filings with,
notifications to and authorizations and approvals of, various governmental
agencies with respect to the offer, the merger and the other transactions
contemplated by the merger agreement relating primarily to antitrust issues,
must be made and received prior to the consummation of the offer and the
merger. Georgia-Pacific and Fort James are seeking to obtain all required
regulatory approvals prior to the scheduled completion of these transactions.
You should be aware that, among other things:
. all required regulatory approvals may not be obtained on that timetable,
. restrictions on the combined operations of Georgia-Pacific and Fort
James, including divestitures, may be sought by governmental agencies as
a condition to obtaining such approvals, and
. operating restrictions and divestitures could adversely affect the value
of the combined company.
Please refer to "The Offer--Conditions to the Offer" and "--Regulatory
Approvals" for more information.
Companies in our industry are highly competitive
The building products and pulp and paper industries are highly competitive
and we face intense competition in all of our customer markets. The combined
company may encounter competition from new competitors, including established
building products and pulp and paper companies with substantial resources.
Some of our competitors may have financial, technical, marketing or other
capabilities more extensive than ours and may be able to respond more quickly
than we can to new or emerging technologies and other competitive pressures.
We may not be able to compete successfully against our present or future
competitors, and competition may adversely affect our business, financial
condition or operating results.
Risk Factors Relating to Our Capital Structure that Includes Two Separate
Classes of Common Stock (which will not be applicable in the event we complete
the proposed divestiture of The Timber Group)
You will be shareholders of one company and, therefore, financial results of
one group could adversely affect the other
Holders of Georgia-Pacific Group common stock and The Timber Group common
stock are shareholders of a single company. As a result, shareholders are
subject to all of the risks of an investment in Georgia-Pacific and all of our
businesses, assets and liabilities. The assets we attribute to one group could
be subject to the liabilities
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of the other group, whether such liabilities arise from lawsuits, contracts or
indebtedness that we attribute to the other group. If we are unable to satisfy
one group's liabilities out of the assets we have attributed to it, we may be
required to satisfy those liabilities with assets we have attributed to the
other group.
Financial effects from one group that affect our consolidated results of
operations or financial condition could affect the results of operations or
financial condition of the other group and the market price of the other
group's common stock. In addition, net losses of either group, if any, and
dividends and distributions on, or repurchases of, either group's common
stock, or repurchases of preferred stock will reduce the funds we can pay on
each class of common stock under Georgia law. For these reasons, you should
read our consolidated financial information with the financial information we
provide for each group.
Holders of common stock will have shareholder rights specific to their group
only in limited circumstances
Holders of Georgia-Pacific Group common stock or The Timber Group common
stock generally do not have shareholder rights specific to their corresponding
groups. Instead, holders have customary shareholder rights relating to
Georgia-Pacific as a whole. For example, holders of Georgia-Pacific Group
common stock and The Timber Group common stock vote together as a single
voting group to approve a disposition of all or substantially all of the
assets of Georgia-Pacific.
Holders of Georgia-Pacific Group common stock and The Timber Group common
stock have only the following rights with respect to their particular group:
. an opportunity to receive dividends declared by our board of directors
based on the available dividend amount for their group;
. requirements for a mandatory dividend, redemption or conversion upon the
disposition of all or substantially all of the assets of their group;
and
. a right to vote on matters as a separate voting group under certain
circumstances, as described under "Description of Common Stock--Voting
Rights" in this prospectus.
Limits exist on the voting power of each class of common stock
In circumstances in which a separate voting group vote is required, the
class of common stock with less than majority voting power can block
action:
If Georgia law, New York Stock Exchange rules or our board of directors
requires a separate vote on a matter by holders of either Georgia-Pacific
Group common stock or The Timber Group common stock, those holders could
prevent approval of the matter (even if the holders of a majority of the total
number of votes cast, voting together as a voting group, were to vote in favor
of it).
In circumstances in which the two classes of common stock vote together as
a single voting group, holders of only one class of common stock cannot
ensure that their voting power will be sufficient to protect their
interests:
Since the relative voting power per share of Georgia-Pacific Group common
stock and The Timber Group common stock will fluctuate based on the relative
market values of the two classes of common stock, the relative voting power of
one class of common stock could decrease. As a result, holders of shares of
only one of the two classes of common stock cannot ensure that their voting
power will be sufficient to protect their interests where the holders of the
two classes of common stock vote together as a single voting group.
Decisions by directors and officers that affect market values could adversely
affect voting and conversion rights
The relative voting power per share of each class of common stock and the
number of shares of one class of common stock issuable upon the conversion of
the other class of common stock will vary depending upon the relative market
values of the Georgia-Pacific Group common stock and The Timber Group common
stock. The market value of either or both classes of common stock could be
adversely affected by market reaction to decisions by our board of directors
or our management that investors perceive to affect differently one class of
common stock compared to the other.
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Shareholders may not have any remedies for breach of fiduciary duties if any
action by directors and officers has a disadvantageous effect on one class of
common stock compared to the other class of common stock
If the members of our board of directors make a good faith business
determination in an informed and deliberate manner, carefully considering the
action to be taken, shareholders may not have any remedies if the action or
decision of our directors or officers has a disadvantageous effect on Georgia-
Pacific Group common stock or The Timber Group common stock compared to the
other class of common stock. However, we are not aware of any Georgia court
adjudicating such an action in the context of our capital structure.
Accordingly, a Georgia court hearing such a challenge by shareholders may
decide differently.
Our board of directors may pay more or less dividends on one group's common
stock than if that group were a separate company
Subject to the limitations referred to below, our board of directors has the
authority to declare and pay dividends on the Georgia-Pacific Group common
stock and The Timber Group common stock in any amount. Our board of directors
could, in its sole discretion, declare and pay dividends exclusively on the
Georgia-Pacific Group common stock, exclusively on The Timber Group common
stock, or on both, in equal or unequal amounts. The performance of one group
may cause our board of directors to pay more or less dividends on the other
group's common stock than if that other group were a stand-alone corporation.
Our board of directors will not be required to consider the amounts of
dividends previously declared on each class of common stock, the respective
voting or liquidation rights of each class of common stock or any other
factors. In addition, Georgia law and our restated articles of incorporation
impose limitations on the amount of dividends which may be paid on each class
of common stock. For additional information on these limitations, see
"Description of Georgia-Pacific Capital Stock--Description of Common Stock--
Dividends" and "Comparative Stock Prices and Dividends--Georgia-Pacific
Dividend Policy" in this prospectus.
Holders of either class of common stock may be adversely affected by a
conversion of one group's common stock
Our board of directors could, in its sole discretion and without shareholder
approval, determine to convert shares of Georgia-Pacific Group common stock
into shares of The Timber Group common stock, or vice versa, at a 15% premium
at any time or at a 10% premium in connection with a disposition of all or
substantially all of the assets of the group whose stock is being converted.
Any such determination could be made at a time when either or both classes of
common stock may be considered to be overvalued or undervalued. Any conversion
of one class of common stock at a premium would dilute the interest in
Georgia-Pacific of the holders of the other class of common stock. Any
conversion would also preclude holders of both classes of common stock from
retaining their investment in a security that is intended to reflect
separately the performance of the relevant group. It would also give holders
of shares of the class of common stock converted a greater or lesser premium
than any premium that might be paid by a third-party buyer of all or
substantially all of the assets of the group whose stock is converted. For
additional information on the terms and conditions of a conversion of one
class of common stock into the other, see "Description of Georgia-Pacific
Capital Stock--Description of Common Stock--Conversion and Redemption" in this
prospectus.
Holders of one group's common stock may receive less consideration upon a
sale of assets than if the group were a separate company
Our restated articles of incorporation provide that if we dispose of all or
substantially all of the assets of either group, we must, subject to certain
exceptions,
. distribute to holders of that group's common stock an amount equal to
the net proceeds of the disposition; or
. convert the outstanding shares of that group's common stock into shares
of the other group's common stock at a 10% premium.
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If the group whose assets are disposed were a separate, independent company
and its shares were acquired by another person, certain costs of that
disposition, including corporate level taxes, might not be payable in
connection with that acquisition. As a result, shareholders of the separate,
independent company might receive a greater amount than the net proceeds that
would be received by holders of either of our group's common stock. In
addition, we cannot assure you that the net proceeds per share of either of
our group's common stock will be equal to or more than the market value per
share of such common stock prior to or after announcement of a disposition.
For additional information on the terms and conditions of a conversion upon a
disposition of all or substantially all of the assets of a group, see
"Description of Georgia-Pacific Capital Stock--Description of Common Stock--
Conversion and Redemption--Mandatory Dividend, Redemption or Conversion of
Common Stock if Disposition of Group Assets Occurs" in this prospectus.
Provisions governing Georgia-Pacific Group common stock and The Timber Group
common stock could discourage a change of control and the payment of a
premium for shares
Our restated rights plan could prevent shareholders from profiting from an
increase in the market value of their shares as a result of a change in
control of Georgia-Pacific by delaying or preventing a change in control. The
existence of two classes of common stock could also present complexities and
could pose obstacles, financial and otherwise, to an acquiring person. In
addition, provisions of Georgia law, our restated articles of incorporation
and our bylaws may also deter hostile takeover attempts. For additional
information on these provisions, see "Description of Common Stock--Restated
Rights Agreement" in this prospectus.
Risk Factor Relating to the Relationship between the Georgia-Pacific Group and
The Timber Group
Provisions relating to our timber and wood fiber supply policy may not
reflect those that would have been negotiated between unaffiliated third
parties
Since the separation of our manufacturing and distribution businesses from
our timber business, the Georgia-Pacific Group and The Timber Group have
conducted their respective businesses pursuant to an operating policy. For
2000, the Georgia-Pacific Group has a right of first refusal to purchase up to
70% of The Timber Group's total annual harvest from its forest in Southeastern
Arkansas and Mississippi and up to 80% of its annual harvest from a majority
of The Timber Group's other forests. The Georgia-Pacific Group must purchase
at least 50% of the harvest from The Timber Group's Southeastern Arkansas and
Mississippi forests and at least 60% of the harvest from The Timber Group's
other Southern forests. The purchase price for such wood is set monthly on an
arm's-length basis.
The Georgia-Pacific Group and The Timber Group have negotiated a new timber
supply agreement, which will be effective for a 10 year period beginning
January 1, 2001. Under this agreement, the volume of timber to be offered by
The Timber Group to the Georgia-Pacific Group will be set on a forest-by-
forest basis. The prices for such timber will be negotiated between The Timber
Group and the Georgia-Pacific Group, and will be set by arbitration if the
parties cannot agree. Generally, it is anticipated that the quantities of
timber to be made available to the Georgia-Pacific Group under this new
agreement will be somewhat smaller than those purchased by the Georgia-Pacific
Group during the last three years. However, the Georgia-Pacific Group
historically has procured on average less than 25% of its wood from
timberlands now operated by The Timber Group. The Georgia-Pacific Group
believes it can continue to procure adequate wood supplies for its mills at
competitive prices despite sales by The Timber Group to third parties.
16
<PAGE>
GEORGIA-PACIFIC CORPORATION
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
The following selected financial data for each of the five years in the
period ended January 1, 2000 have been derived from Georgia-Pacific's audited
consolidated financial statements. The financial data as of July 1, 2000 and
July 3, 1999, and for the six-month periods then ended, have been derived from
Georgia-Pacific's unaudited condensed consolidated financial statements which
include, in management's opinion, all adjustments, consisting of normal
recurring adjustments, necessary to present fairly the results of operations
and financial position of Georgia-Pacific for the periods and dates presented.
This data should be read in conjunction with the respective audited and
unaudited consolidated financial statements of Georgia-Pacific, including the
notes thereto, incorporated herein by reference and the Unaudited Pro Forma
Consolidated Financial Statements appearing elsewhere in this prospectus.
<TABLE>
<CAPTION>
Six Months
Ended Fiscal Year Ended
--------------- -----------------------------------------
July 1, July 3,
2000 1999 1999 1998 1997 1996 1995
------- ------- ------- ------- ------- ------- -------
(in millions, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net sales.............. $10,912 $ 7,259 $17,977 $13,342 $13,094 $13,024 $14,313
Income from continuing
operations............ 474 457 1,116 289 129 161 1,018
PER SHARE DATA(a)
Georgia-Pacific
Corporation
Diluted
Income from continuing
operations........... 1.78 11.29
Cash dividend.......... 2.00 2.00 1.90
Book value(b).......... 38.52 38.54
Georgia-Pacific Group
Diluted
Income from continuing
operations........... 2.30 1.76 4.07 0.61 (0.47)
Cash dividends......... 0.25 0.25 0.50 0.50
Book value(b).......... 23.69 19.83 21.78 18.55 19.10
The Timber Group
Diluted
Income from continuing
operations........... 0.91 1.70 4.73 1.96 2.33
Cash dividends......... 0.50 0.50 1.00 1.00
Book value(b).......... 1.03 (0.84) 1.51 (0.98) (0.53)
BALANCE SHEET DATA:
Total assets........... $17,196 $15,347 $16,897 $12,700 $12,950 $12,818 $12,335
Long-term debt......... 4,612 4,588 4,621 4,125 3,713 4,371 4,704
Shareholders' equity... 4,128 3,341 3,875 3,124 3,470 3,511 3,519
OPERATING DATA:
EBITDA(c).............. $ 1,496 $ 1,309 $ 2,818 $ 1,760 $ 1,464 $ 1,632 $ 2,908
Property, plant and
equipment
investments........... 407 250 723 638 717 1,059 1,259
Depreciation and
amortization.......... 438 395 821 811 848 825 766
</TABLE>
17
<PAGE>
Notes to Georgia-Pacific Corporation Selected Consolidated Historical
Financial Data
(a) On December 16, 1997, shareholders of Georgia-Pacific approved the
creation of two classes of common stock intended to reflect separately the
performance of Georgia-Pacific's manufacturing and timber businesses.
Georgia-Pacific's articles of incorporation were amended and restated to
(1) create a new class of stock designated as Georgia-Pacific
Corporation--Timber Group common stock, $0.80 par value per share,
consisting of 250 million authorized shares; (2) redesignate each
authorized share of Georgia-Pacific's common stock, $0.80 par value per
share as, and convert each share into, one share of Georgia-Pacific Group
common stock (now two shares of Georgia-Pacific Group common stock after
giving effect to the May 14, 1999 two-for-one stock split), $0.80 par
value per share; (3) increase the number of shares of Georgia-Pacific
Group common stock authorized for issuance from 150 million shares to 400
million shares; and (4) authorize the distribution of one share of The
Timber Group common stock for each outstanding share of Georgia-Pacific
Group common stock.
(b) Book value per share represents shareholders' equity divided by shares of
common stock outstanding as of the end of the period.
(c) EBITDA represents income before extraordinary items and accounting
changes, interest, income taxes, other income or expense, depreciation and
amortization and the cost of timber harvested for The Timber Group. EBITDA
presented herein is not necessarily comparable to EBITDA presented by
other companies due to the fact that not all companies use the same
definition. Management believes that EBITDA provides an additional
indicator of the financial performance of Georgia-Pacific and aids in
comparing the cash-generating ability of companies with different capital
structures, depreciation schedules and goodwill amortization. EBITDA does
not represent cash flow from operations, investing and financing
activities as defined by generally accepted accounting principles
("GAAP"). Additionally, EBITDA does not measure whether cash flow is
sufficient to fund all cash flow needs, including principal amortization,
capital expenditures and dividends to shareholders, and should not be
considered as an alternative to net income for purposes of evaluating
Georgia-Pacific's operating performance or as an alternative to cash flow,
as defined by GAAP, as a measure of liquidity.
18
<PAGE>
FORT JAMES CORPORATION
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
The following selected financial data for each of the five years in the
period ended December 26, 1999 have been derived from Fort James' audited
consolidated financial statements. The financial data as of June 25, 2000 and
June 27, 1999, and for the six-month periods then ended, have been derived
from Fort James' unaudited condensed consolidated financial statements which
include, in management's opinion, all adjustments, including normal recurring
adjustments, necessary to present fairly the results of operations and
financial position of Fort James for the periods and dates presented. This
data should be read in conjunction with the respective audited and unaudited
consolidated financial statements of Fort James, including the notes thereto,
incorporated herein by reference and the Unaudited Pro Forma Consolidated
Financial Statements appearing elsewhere in this prospectus.
The consolidated financial statements of Fort James have been prepared to
give retroactive effect to the merger of a wholly owned subsidiary of James
River Corporation of Virginia with and into Fort Howard Corporation on August
13, 1997. The merger was accounted for as a pooling of interests. In
connection with the merger, James River was renamed Fort James.
<TABLE>
<CAPTION>
Six Months Ended Fiscal Year Ended
----------------- -----------------------------------
June 25, June 27,
2000 1999 1999 1998 1997 1996 1995(a)
-------- -------- ------ ------ ------ ------ -------
(in millions, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net sales............... $3,433 $3,388 $6,827 $6,803 $6,703 $6,820 $7,457
Income from continuing
operations............. 213 254 350 492 95 278 164
PER SHARE DATA:
Diluted
Income from continuing
operations............ 1.02 1.15 1.59 2.23 0.30 1.20 0.64
Cash dividend........... 0.30 0.30 0.60 0.60 0.60 0.60 0.60
Book value (b).......... 5.11 4.80 5.27 4.77 1.11 0.60 (1.89)
BALANCE SHEET DATA:
Total assets............ $7,106 $7,583 $7,258 $7,720 $7,666 $8,087 $8,807
Long-term debt.......... 3,449 3,659 3,432 3,646 4,155 4,305 5,406
Common shareholders'
equity................. 1,046 1,060 1,127 1,051 232 113 (325)
OPERATING DATA:
EBITDA (c).............. $ 675 $ 738 $1,207 $1,463 $1,027 $1,259 $1,305
Property, plant and
equipment investments.. 223 221 534 493 448 424 369
Depreciation and
amortization........... 242 230 463 448 454 466 517
</TABLE>
19
<PAGE>
Notes to Fort James Corporation
Selected Consolidated Historical Financial Data
(a) In 1995, Fort James completed the spin-off of Crown Vantage Inc. which had
annual net sales of approximately $1 billion.
(b) Book value per share represents common shareholders' equity (deficit)
divided by outstanding shares of common stock.
(c) EBITDA represents income from continuing operations before extraordinary
items, cumulative effect of accounting changes, interest, income taxes,
depreciation and amortization. Management believes that EBITDA is a
measure commonly used by analysts and investors. Accordingly, this
information has been provided to permit a more complete analysis of
operating performance. EBITDA should not be considered in isolation or as
a substitute for income from continuing operations, net income or other
consolidated statement of operations or cash flow data prepared in
accordance with generally accepted accounting principles as a measure of
profitability or liquidity. EBITDA does not take into account debt-service
requirements and other commitments and, accordingly, is not necessarily
indicative of amounts that may be available for discretionary uses.
20
<PAGE>
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The following selected unaudited pro forma combined financial data is based
on the historical financial statements of Georgia-Pacific and Fort James,
adjusted to give effect to the acquisition of Fort James by Georgia-Pacific.
The pro forma financial data is derived from the unaudited pro forma
consolidated financial information included elsewhere in this prospectus. This
pro forma financial data should be read in conjunction with the notes to the
unaudited pro forma consolidated financial information. The pro forma
financial data was prepared to illustrate the estimated effects of the
acquisition of Fort James, including acquisition-related debt and equity
transactions and debt repayments and certain assumptions. In addition, the pro
forma financial data includes an adjustment to reflect the divestiture of
approximately 250,000 tons of tissue manufacturing capacity. The pro forma
results of operations, per share data operating data for the year ended
January 1, 2000 and the six months ended July 1, 2000 give effect to the
acquisition of Fort James as if the acquisition of Fort James had occurred as
of January 1, 1999 and January 2, 2000, respectively. The pro forma balance
sheet data give effect to the acquisition of Fort James as if the acquisition
had occurred as of July 1, 2000. The pro forma financial data does not purport
to represent Georgia-Pacific's results of operations or financial position for
any future period or as of any date.
On July 18, 2000, Georgia-Pacific signed a definitive agreement pursuant to
which The Timber Group would merge with and into Plum Creek Timber Co. The
disposition of The Timber Group is subject to approval by the shareholders of
Plum Creek and the holders of The Timber Group common stock, and receipt of a
ruling from the Internal Revenue Service that the transaction is tax free to
Georgia-Pacific, Plum Creek and the holders of The Timber Group common stock.
The disposition of The Timber Group is also subject to receipt of applicable
governmental approvals and the satisfaction of customary closing conditions.
Georgia-Pacific will treat The Timber Group as a discontinued operation once
the significant contingencies surrounding the disposition of The Timber Group
are resolved. Closing on this transaction is expected by the end of the first
quarter of 2001. The following pro forma financial data also give effect to
the disposal of The Timber Group.
<TABLE>
<CAPTION>
Pro Forma Combined
Pro Forma Combined Excluding Timber Operations
---------------------------- ----------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
July 1, 2000 January 1, 2000 July 1, 2000 January 1, 2000
------------ --------------- ------------ ---------------
(in millions of dollars, except per share data)
<S> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net sales.............. $13,915 $23,892 $13,837 $23,711
Income from continuing
operations............ 468 984 394 584
PER SHARE DATA (a)
Georgia-Pacific Group
Diluted
Income from continuing
operations........... $ 1.73 $ 2.54 $ 1.73 $ 2.54
Cash dividends......... 0.25 0.50 0.25 0.50
Book value (b)......... 24.89 24.89
The Timber Group
Diluted
Income from continuing
operations........... 0.91 4.73
Cash dividends......... 0.50 1.00
Book value (b)......... 1.03
BALANCE SHEET DATA:
Total assets........... $30,925 $29,384
Long-term debt......... 14,191 13,526
Shareholders' equity... 5,680 5,598
OPERATING DATA:
EBITDA (c)............. $ 2,044 $ 3,848 $ 1,969 $ 3,435
Depreciation and
amortization.......... 658 1,186 655 1,180
</TABLE>
21
<PAGE>
NOTES TO GEORGIA PACIFIC CORPORATION
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
(a) On December 16, 1997, shareholders of Georgia-Pacific approved the
creation of two classes of common stock intended to reflect separately the
performance of Georgia-Pacific's manufacturing and timber businesses.
Georgia-Pacific's articles of incorporation were amended and restated to
(i) create a new class of stock designated as Georgia-Pacific
Corporation--Timber Group common stock, $0.80 par value per share,
consisting of 250 million authorized shares; (ii) redesignate each
authorized share of Georgia-Pacific's common stock, $0.80 par value per
share as, and convert each share into, one share of Georgia-Pacific Group
common stock (now two shares of Georgia-Pacific Group common stock after
giving effect to the May 14, 1999 two-for-one stock split), $0.80 par
value per share; (iii) increase the number of shares of Georgia-Pacific
Group stock authorized for issuance from 150 million shares to 400 million
shares; and (iv) authorize the distribution of one share of The Timber
Group stock for each outstanding share of Georgia-Pacific Group stock.
(b) Book value per share represents shareholders' equity divided by shares of
common stock outstanding as of the end of the period.
(c) EBITDA represents income from continuing operations before extraordinary
items and accounting changes, interest, income taxes, other income or
expense, depreciation and amortization and the cost of timber harvested
for The Timber Group. EBITDA presented herein is not necessarily
comparable to EBITDA presented by other companies due to the fact that not
all companies use the same definition. Management believes that EBITDA
provides an additional indicator of the financial performance of Georgia-
Pacific and aids in comparing the cash-generating ability of companies
with different capital structures, depreciation schedules and goodwill
amortization. EBITDA does not represent cash flow from operations,
investing and financing activities as defined by generally accepted
accounting principles ("GAAP"). Additionally, EBITDA does not measure
whether cash flow is sufficient to fund all cash flow needs, including
principal amortization, capital expenditures and dividends to
shareholders, and should not be considered as an alternative to net income
for purposes of evaluating Georgia-Pacific's operation performance or as
an alternative to cash flow, as defined by GAAP, as a measure of
liquidity.
22
<PAGE>
RECENT DEVELOPMENTS
Georgia-Pacific
Disposition of The Timber Group
On July 18, 2000, Georgia-Pacific announced that it had entered into an
Agreement and Plan of Merger with Plum Creek Timber Co. pursuant to which Plum
Creek would acquire The Timber Group, a separate operating group of Georgia-
Pacific. Under the terms of the agreement, prior to the merger with Plum
Creek, Georgia-Pacific will redeem each outstanding share of The Timber Group
common stock in exchange for one unit comprised of one share of common stock
of each subsidiary comprising The Timber Group. Following such redemption,
holders of The Timber Group common stock would receive 1.37 shares of Plum
Creek common stock for each unit held thereby in connection with the merger of
The Timber Group with and into Plum Creek. Such merger is expected to be
completed by the end of the first quarter of 2001. However, such merger is
subject to certain significant conditions, including the approval of
shareholders of Georgia-Pacific and Plum Creek and the receipt by Georgia-
Pacific of a ruling from the United States Internal Revenue Service indicating
that such merger will be tax-free to Georgia-Pacific, Plum Creek and the
holders of The Timber Group common stock. Accordingly, no assurances can be
given that such merger will be completed.
If the merger with Plum Creek is completed, all shares of The Timber Group
common stock will be converted into shares of Plum Creek common stock and, as
a result, shares of Georgia-Pacific Group common stock will be the only shares
of common stock of Georgia-Pacific outstanding. Georgia-Pacific will rename
the Georgia-Pacific Group common stock Georgia-Pacific common stock. See
"Description of Georgia-Pacific Capital Stock--Description of Common Stock"
and "Capitalization" beginning on page 78 and page 26, respectively.
Disposition of Certain Manufacturing Capacity
In connection with the announcement of Georgia-Pacific's offer to purchase
Fort James, Georgia-Pacific also announced its intention to sell approximately
250,000 tons of tissue manufacturing capacity (1) in order to generate a
portion of the funds required to effect the acquisition of Fort James and (2)
as part of its increased focus on paper and building products businesses that
are value-added and that fit Georgia-Pacific's strategic direction. When the
disposition plans are finalized, Georgia-Pacific may incur costs and charges
in future periods.
23
<PAGE>
COMPARATIVE PER SHARE DATA
UNAUDITED COMPARATIVE PER SHARE DATA
We have summarized below the per share information for Georgia-Pacific and
Fort James on a historical, pro forma combined and pro forma equivalent basis
for the periods and as of the dates indicated below. The pro forma information
gives effect to the acquisition accounted for as a purchase. You should read
this information in conjunction with our historical financial statements and
related notes contained in the reports and other information that we have
filed with the Securities and Exchange Commission. See "Where You Can Find
More Information" on page 4. You should also read this information in
conjunction with the pro forma financial information under the heading
"Unaudited Pro Forma Consolidated Financial Statements" on page 68. You should
not rely on the pro forma information as being indicative of the historical
result that we would have had if the merger had occurred before such periods
or the future results that we will experience after the merger.
<TABLE>
<CAPTION>
Six Months
Year Ended Ended
January 1, 2000 July 1, 2000
--------------- ------------
<S> <C> <C>
Statement of Operations Data:
Cash dividends declared per share (a):
Georgia-Pacific Group........................... $0.50 $ 0.25
The Timber Group................................ 1.00 0.50
Fort James...................................... 0.60 0.30
Georgia-Pacific Group pro forma................. 0.50 0.25
The Timber Group pro forma...................... 1.00 0.50
Fort James pro forma merger equivalent.......... 0.13 0.07
Income from continuing operations per diluted
share (b):
Georgia-Pacific Group........................... 4.07 2.30
The Timber Group................................ 4.73 0.91
Fort James...................................... 1.59 1.02
Georgia-Pacific Group pro forma................. 2.54 1.73
The Timber Group pro forma...................... 4.73 0.91
Fort James pro forma merger equivalent.......... 0.67 0.46
</TABLE>
<TABLE>
<CAPTION>
July 1, 2000
------------
<S> <C>
Balance Sheet Data:
Net book value per share (c):
Georgia-Pacific Group............................................ $23.69
The Timber Group................................................. 1.03
Fort James....................................................... 5.11
Georgia-Pacific Group pro forma.................................. 24.89
The Timber Group pro forma....................................... 1.03
Fort James pro forma merger equivalent........................... 6.58
</TABLE>
24
<PAGE>
Notes to Comparative Unaudited Per Share Data
(a) The pro forma combined dividends declared assume no changes in the
historical dividends declared per share of Georgia-Pacific Group common
stock. The pro forma merger equivalent dividends per share of Fort James
common stock represent the cash dividends declared on a share of Georgia-
Pacific Group common stock multiplied by the exchange ratio of .2644.
(b) The pro forma combined income from continuing operations per diluted share
has been computed based on the diluted average number of outstanding
shares and common equivalent shares of Georgia-Pacific Group, and the
diluted average number of outstanding shares and common equivalent shares
of Fort James as of July 1, 2000 adjusted for the exchange ratio of .2644.
The pro forma merger equivalent income from continuing operations per
diluted share of Fort James common stock represents the pro forma combined
income from continuing operations per diluted share, multiplied by the
exchange ratio of .2644.
(c) The pro forma combined book values per share of Georgia-Pacific Group
common stock are based upon the pro forma total common equity for Georgia-
Pacific Group and Fort James, divided by the total pro forma shares of
Georgia-Pacific Group common stock outstanding at July 1, 2000, assuming
conversion of the remaining outstanding shares of Fort James common stock
at the exchange ratio of .2644. The pro forma merger equivalent book value
per share represents the pro forma combined book value per share
multiplied by the exchange ratio of .2644.
25
<PAGE>
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
Georgia-Pacific at July 1, 2000 (1) on an actual basis, (2) as adjusted for
the acquisition of Fort James and (3) as adjusted for the acquisition of Fort
James and the disposition of The Timber Group. This table should be read in
conjunction with the consolidated financial statements incorporated by
reference herein.
<TABLE>
<CAPTION>
July 1, 2000
--------------------------------------------
As adjusted for the
Acquisition of Fort
As adjusted for James and the
the Acquisition Disposition of
Actual of Fort James The Timber Group
------- --------------- -------------------
(in millions)
<S> <C> <C> <C>
Long-term debt, excluding current
portion.......................... $ 4,612 $14,191 $13,526
======= ======= =======
Shareholders' equity:
Common stock
Georgia-Pacific Group, par
value $0.80; 400,000,000
shares authorized; shares
outstanding see (a) below.... 154 197 197
The Timber Group, par value
$0.80; 250,000,000 shares
authorized; shares
outstanding see (a) below.... 1 1 --
Treasury stock, at cost
Shares held as treasury stock
see (a) below................. (1,021) (1,021) (691)
Additional paid-in capital...... 1,521 3,030 3,004
Retained earnings............... 3,514 3,514 3,129
Long-term incentive plan
deferred compensation.......... (5) (5) (5)
Accumulated other comprehensive
income......................... (36) (36) (36)
------- ------- -------
Total shareholders' equity.... $ 4,128 $ 5,680 $ 5,598
======= ======= =======
--------
(a)The following represents share
information (in thousands):
Common shares outstanding:
Georgia-Pacific Group......... 170,750 224,950 224,950
The Timber Group.............. 79,616 79,616 --
Treasury stock:
Georgia-Pacific Group......... 21,501 21,501 21,501
The Timber Group.............. 14,387 14,387 --
</TABLE>
26
<PAGE>
THE COMPANIES
Georgia-Pacific Corporation and Purchaser
Georgia-Pacific was incorporated on December 16, 1927 under the laws of the
State of Georgia. Our principal offices are located at 133 Peachtree Street,
N.E., Atlanta, GA 30303 and our telephone number is (404) 652-4000. Our
homepage on the Internet is located at www.gp.com. You can learn more about us
by visiting us at that site.
Georgia-Pacific consists of two separate operating groups: the Georgia-
Pacific Group and The Timber Group. The performance of the two distinct
operating groups is reflected separately by two classes of common stock.
The Georgia-Pacific Group is comprised of all of Georgia Pacific's
manufacturing mills and plants, its building products distribution business
and its paper distribution business. Such facilities manufacture and sell a
wide variety of pulp and paper products (including pulp, communication papers,
container board, packaging and tissue) and building products (including
plywood, oriented strand board and industrial panels, lumber, gypsum products,
chemicals and other products).
The Timber Group consists of approximately 4.7 million acres of timberlands
owned or leased by Georgia-Pacific, together with related facilities and
equipment. In 1999, such timberlands supplied approximately 19% of the overall
timber requirements of Georgia-Pacific's manufacturing facilities. On July 18,
2000, Georgia-Pacific announced that it had entered into an agreement with
Plum Creek Timber Co. pursuant to which Plum Creek would acquire The Timber
Group. Information more fully describing the transaction is provided under
"Recent Developments."
Purchaser is a recently incorporated Virginia corporation with its principal
offices located at 133 Peachtree Street, N.E., Atlanta, GA 30303. The
telephone number of Purchaser is (404) 652-4000. Purchaser is a wholly owned
subsidiary of Georgia-Pacific. Since its incorporation, Purchaser has not
carried on any activities other than in connection with the offer and the
merger.
The name, citizenship, business address, business phone number, principal
occupation or employment and five-year employment history for each of the
directors and executive officers of Georgia-Pacific and Purchaser are set
forth in Schedule I.
Fort James Corporation
Fort James was created by the merger of James River Corporation of Virginia
and Fort Howard Corporation in August 1997. Fort James manufactures and
markets consumer tissue products, including bath tissue, facial tissue, paper
towels and napkins, and disposable tabletop products, including cups, plates,
bowls and cutlery. Principal regions for Fort James' tissue products include
North America and Europe, while its disposable tabletop products are marketed
primarily in North America under the Dixie name. Additionally, Fort James
manufactures and markets business, office and printing papers, primarily in
the western United States. Fort James also sells market pulp and recycled
paper to the extent that its production exceeds internal needs. Fort James is
incorporated under the laws of the Commonwealth of Virginia. The principal
offices of Fort James are located at 1650 Lake Cook Road, Deerfield, IL 60015.
Fort James' telephone number is (847) 317-5000.
27
<PAGE>
REASONS FOR THE OFFER
Reasons for the Georgia-Pacific's Board Recommendation; Factors Considered
In approving the merger agreement, the offer, the merger and the other
transactions contemplated by the merger agreement, Georgia-Pacific's board of
directors considered a number of factors, which include, among others, the
following:
1. Georgia-Pacific's Long-Term Strategy. The Georgia-Pacific board of
directors considered the acquisition of Fort James in light of Georgia-
Pacific's long-term strategy to improve its portfolio of businesses by
divesting or exiting commodity and non-strategic businesses, and by
acquiring businesses which are high value-added and that position Georgia-
Pacific closer to its customers. For several years, improving its tissue
business has been a key component of that strategy. The Georgia-Pacific
board of directors believes that the acquisition of Fort James will
directly facilitate this strategy.
2. Opportunities for Cost Savings and Efficiencies. The Georgia-Pacific
board of directors considered the strategic fit between Georgia-Pacific and
Fort James and believes that the acquisition of Fort James by Georgia-
Pacific will present a number of opportunities for increasing profitability
through cost savings, efficiencies in production, marketing, product
branding and other operating areas. The combination of the tissue
businesses of Georgia-Pacific and Fort James is expected to provide the
combined company with economies of scale, improved market position by the
integration into the Georgia-Pacific product line of Fort James' products
and brands and other synergies stemming from the combination of the tissue
businesses of Georgia-Pacific and Fort James.
3. Industry Trends. The Georgia-Pacific board of directors considered the
competitive nature of the paper industry in general, and the tissue
industry in particular, including the likelihood of industry consolidation
and increased competition.
4. Increased Market Penetration. The Georgia-Pacific board of directors
considered that, post-acquisition, Georgia-Pacific would become a leading
supplier in the North American tissue market. Also, the Georgia-Pacific
board of directors considered that the acquisition of Fort James would
immediately provide Georgia-Pacific with a significant presence in several
European countries, where Georgia-Pacific currently has no operations. The
Georgia-Pacific board of directors believes that Fort James' European
operations would, in addition to providing immediate access to the European
tissue market and the ability to develop new customer relationships for its
existing tissue products, provide an attractive platform for Georgia-
Pacific's non-tissue businesses to penetrate the European markets.
5. Terms of the Merger Agreement. The Georgia-Pacific board of directors
took into consideration the terms of the merger agreement, including the
representations and warranties, covenants, termination provisions and
conditions to the offer and the merger, which Georgia-Pacific believes are
fair and in the best interests of Georgia-Pacific and Georgia-Pacific's
shareholders.
6. Financial Considerations. The Georgia-Pacific board of directors
considered certain financial issues, the most significant of which are as
follows:
. The cash flows of the combined company are expected to be more
stable than those of Georgia-Pacific at present, which should
enhance Georgia-Pacific's ability to pursue its financial strategy
of returning excess capital to its shareholders.
. Georgia-Pacific would pay Fort James' shareholders a total price of
$11.3 billion, which is approximately 8.2 times Fort James LTM
EBITDA; such amount is believed to compare favorably to acquisition
prices paid by other companies for tissue manufacturing businesses.
. Information with respect to the financial condition, results of
operations and businesses of Fort James, on both a historical and
prospective basis, and Georgia-Pacific's expectation that the
acquisition will result in cost savings and incremental revenues.
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7. Pro Forma Impact on Georgia-Pacific. The Georgia-Pacific board of
directors considered the effect of issuing the shares of Georgia-Pacific
Group common stock pursuant to the acquisition and the likely effect of
such issuance on its earnings-per-share. The Georgia-Pacific board of
directors expects the acquisition to be accretive to earnings-per-share in
the second full year of the transaction.
8. Alternative Transactions. The Georgia-Pacific board of directors
believes that the acquisition of Fort James was preferable to any other
available strategic transaction to enhance shareholder value.
9. Risk Factors. The Georgia-Pacific board of directors considered the
matters set forth under "Risk Factors Relating to the Offer and the
Merger."
The foregoing discussion of the information and factors considered by the
Georgia-Pacific board of directors is not intended to be exhaustive, but
includes the material factors considered by the Georgia-Pacific board. In view
of the variety of factors considered in connection with its evaluation of the
offer and the merger, the Georgia-Pacific board did not find it practicable
to, and did not, quantify or otherwise assign relative weights to the specific
factors considered in reaching its determination and recommendation. In
addition, individual directors may have given differing weights to different
factors. After weighing all of the different factors, the Georgia-Pacific
board of directors unanimously approved the merger agreement.
Reasons for the Fort James' Board Recommendation; Factors Considered
In reaching its recommendation described below, the board of directors
considered a number of factors, including the following:
1. Transaction Financial Terms/Premium to Market Price. The relationship
of the consideration to be paid in the offer and the merger to recent and
historical market prices of Fort James common stock. Based on the closing
price of Georgia-Pacific common stock of $28.625 on July 14, 2000 (the last
trading day prior to the announcement of the merger agreement), the per
share consideration totaled $37.17 per share of Fort James common stock,
representing a 51% premium over the $24.56 closing price of such shares on
July 14, 2000. The Fort James board also considered the form of
consideration to be paid to holders of shares of Fort James common stock in
the offer and the merger, taking into account the certainty of the value of
the cash component of the offer as compared to the stock component, as well
as the fact that the stock component permits Fort James shareholders to
become holders of Georgia-Pacific common stock and participate in the
future prospects of the combined businesses of Georgia-Pacific and Fort
James. The Fort James board further believed that the total consideration
was the highest per share consideration that could be negotiated with
Georgia-Pacific. The board was aware that the consideration received by
holders of shares of Fort James common stock in the offer and the merger
would be taxable to such holders for federal income tax purposes.
2. Morgan Stanley Analyses. Presentations from Morgan Stanley and the
opinion thereof dated July 16, 2000, that, based upon and subject to
certain considerations and assumptions, the consideration to be received by
holders of shares of Fort James common stock pursuant to the merger
agreement is fair from a financial point of view to such holders. The
analyses performed by Morgan Stanley are described under "--Opinion of
Financial Advisor to Fort James." A copy of the opinion delivered by Morgan
Stanley to the Fort James board of directors, setting forth the procedures
followed, the matters considered and the assumptions made by Morgan Stanley
in arriving at its opinion, is attached hereto as Annex B and incorporated
herein by reference. Shareholders are urged to read this opinion in its
entirety. The Fort James board was aware that Morgan Stanley becomes
entitled to certain fees described under "--Opinion of Financial Advisor to
Fort James" upon the consummation of the offer.
3. Fort James Operating and Financial Condition. The current and
historical financial condition and results of operations of Fort James, as
well as the prospects and strategic objectives of Fort James, including the
risks involved in achieving those prospects and objectives, and the current
and expected conditions in the industries in which Fort James' businesses
operate.
4. Georgia-Pacific Operating and Financial Condition. The current and
historical financial condition and results of operations of Georgia-
Pacific, as well as the prospects and strategic objectives of Georgia-
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Pacific, including the risks involved in achieving those prospects and
objectives, and the current and expected conditions in the industries in
which Georgia-Pacific's businesses operate.
5. Benefits of the Combination. The fact that the combination of the
businesses of Fort James with those of Georgia-Pacific are expected to lead
to potential cost savings and other synergies.
6. No Financing Condition. The fact that the offer would not be subject
to a financing condition and that Georgia-Pacific has the financial
capacity to consummate the offer and the merger.
7. Strategic Alternatives. The presentations of Fort James' management,
Morgan Stanley and the Fort James board of directors' review with respect
to trends in the industries in which Fort James' businesses operate and the
strategic alternatives available to Fort James, including Fort James'
remaining an independent public company, the possibility of acquisitions or
mergers with other companies in such industries and other transactions, as
well as the risks and uncertainties associated with such alternatives. The
Fort James board of directors considered management's belief that Fort
James and Georgia-Pacific have similar corporate cultures, the
complementary nature of the two companies' products, and the experience,
reputation and financial strength of Georgia-Pacific.
8. Timing and Manner of Completion. The anticipated timing of
consummation of the transactions contemplated by the merger agreement,
including the structure of the transactions as an exchange offer for all of
the shares of Fort James common stock, followed by a merger in which
shareholders will receive the same consideration as received by
shareholders who tender their shares in the offer.
9. Conditions to Consummation. Georgia-Pacific's obligation to consummate
the offer and the merger is subject to customary conditions, with no
financing condition. The Fort James board of directors also considered the
likelihood of obtaining required regulatory approvals, and Georgia-
Pacific's commitment in the merger agreement to use its best efforts to
obtain the required regulatory approvals for the offer and the merger,
except to the extent that such actions would have a material adverse effect
on the combined companies.
10. Alternative Transactions. The Fort James board of directors
considered that under the terms of the merger agreement, while Fort James
is prohibited from soliciting acquisition proposals from third parties,
Fort James may furnish information to and participate in negotiations with
third parties in response to an unsolicited written acquisition proposal if
a majority of the Fort James board of directors (a) reasonably determines
in good faith, after consultation with its financial advisors, that taking
such action would be reasonably likely to lead to the delivery to Fort
James of a superior proposal and (b) determines in good faith, after
receiving the advice of outside legal counsel, that it is necessary to take
such actions in order to comply with its fiduciary duties under applicable
law.
11. Ability to Terminate for a Superior Proposal. The fact that the Fort
James board of directors is permitted, subject to the payment to Georgia-
Pacific of a $125 million termination fee, to terminate the merger
agreement if, prior to consummation of the offer, a superior proposal is
received by Fort James and the Fort James board of directors reasonably
determines in good faith, after receiving the advice of outside legal
counsel, that it is necessary to terminate the merger agreement and enter
into a new agreement to effect the superior proposal in order to comply
with its fiduciary duties under applicable law.
12. Reverse Termination Fee. The fact that Fort James has the protection
of a $125 million reverse termination fee in the event that the merger
agreement is terminated primarily due to the required regulatory approvals
not being received prior to February 28, 2001.
13. Potential Conflicts of Interests. The Fort James board of directors
was aware of the potential conflicts of interest between Fort James on the
one hand, and, on the other hand, certain of Fort James' officers,
directors or affiliates in the offer and the merger, all as described under
"Interests of Certain Persons."
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<PAGE>
The foregoing discussion of the information and factors considered by the
Fort James board of directors is not intended to be exhaustive, but includes
the material factors considered by the Fort James board of directors. In view
of the variety of factors considered in connection with its evaluation of the
offer and the merger, the Fort James board of directors did not find it
practicable to, and did not, quantify or otherwise assign relative weights to
the specific factors considered in reaching its determination and
recommendation. In addition, individual directors may have given differing
weights to different factors. After weighing all of the different factors, the
Fort James board of directors unanimously determined to recommend that Fort
James' shareholders tender their shares of Fort James common stock in the
offer.
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BACKGROUND OF THE OFFER
As part of its long-term strategy to strengthen its portfolio of businesses
by divesting or exiting commodity and non-strategic businesses and by
acquiring businesses which are high value-added and that position Georgia-
Pacific closer to its customers, and to continue to build and strengthen its
tissue business, Georgia-Pacific has, from time to time, considered various
strategic transactions with various parties, including Fort Howard Corporation
(a predecessor to Fort James).
Similarly, from time to time over the past several years, Fort James'
management and board of directors have reviewed strategic alternatives,
including remaining an independent public company, the possibility of
acquisitions or mergers with other companies and other transactions.
On May 1, 2000, Alston D. Correll, Georgia-Pacific's Chairman, Chief
Executive Officer and President, approached Miles L. Marsh, Fort James'
Chairman and Chief Executive Officer, to request a meeting to discuss the
merits of a possible transaction between Georgia-Pacific and Fort James. Such
a meeting was scheduled for May 4, 2000.
On May 4, 2000, Mr. Correll and Mr. Marsh met in Chicago, Illinois. During
that meeting, Mr. Correll indicated that Georgia-Pacific would be interested
in acquiring Fort James on friendly terms provided that the acquisition was
given the full support of Mr. Marsh and the Fort James board of directors. Mr.
Correll explained the potential value and strategic benefits that he believed
would be recognized by the shareholders of Fort James and the shareholders of
Georgia-Pacific as a result of the combination of Fort James and Georgia-
Pacific. Following that meeting Mr. Correll and Mr. Marsh briefed members of
their respective senior management teams and each management team began a more
detailed review.
During May, 2000, Georgia-Pacific retained the investment banking firm of
Merrill Lynch and the law firm of Shearman & Sterling to advise on the
transaction. During May 2000, Fort James also retained outside financial and
legal advisors.
On May 5, 2000, during a special telephonic meeting of the Fort James board
of directors, Mr. Marsh informed the board as to the status of the discussions
with Georgia-Pacific.
On May 12, 2000, Fort James and Georgia-Pacific executed a Confidentiality
Agreement to facilitate the exchange of information.
On May 14, 2000, during a special telephonic meeting of the Georgia-Pacific
board of directors, Mr. Correll updated the Georgia-Pacific board of directors
with respect to the proposed acquisition of Fort James and Fort James'
business and operations and explained the merits of an acquisition of Fort
James by Georgia-Pacific. The Georgia-Pacific board of directors strongly
supported the proposed acquisition and authorized Mr. Correll to continue
negotiating with Fort James.
Throughout mid-to late May, management of each company met periodically with
their respective financial and legal advisors to review the merits of and
issues regarding a possible transaction between the companies.
On June 1, 2000, senior officers of Georgia-Pacific and Fort James and their
respective financial and legal advisers met in New York, New York to begin
discussing the terms of a possible transaction. On June 8, 2000, Mr. Correll,
Mr. Marsh, and senior officers of both Georgia-Pacific and Fort James, met in
Chicago, Illinois to continue discussing the terms of a possible transaction.
On June 9, 2000, at a special meeting of the Fort James board of directors,
Mr. Marsh briefed the Fort James board of directors on the status of
discussions with Georgia-Pacific. Later that day, Mr. Marsh contacted Mr.
Correll to further discuss the potential terms of the proposed transaction.
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<PAGE>
On June 15, 2000, the Fort James board of directors held a regularly
scheduled meeting at which members of its senior management and its outside
financial and legal advisors provided the Fort James board of directors with
advice on the financial and legal issues presented by the transaction.
On June 16, 2000, Mr. Correll, Mr. Marsh and members of their senior
management teams met in New York, and Fort James' officers made due diligence
presentations of its Dixie and European lines of businesses. An additional due
diligence meeting that included officers of the two companies and
representatives of Morgan Stanley and Merrill Lynch was held on June 20, 2000
during which further operational, legal and financial due diligence was
conducted.
On June 29, 2000, at a special meeting of the Georgia-Pacific board of
directors, Mr. Correll updated the Georgia-Pacific board of directors on the
status of discussions with Fort James. Georgia-Pacific's senior management and
Merrill Lynch made presentations to the Georgia-Pacific board of directors
concerning various financial aspects of the transaction and the Georgia-
Pacific board of directors discussed the business, financial and legal issues
which would be presented by an acquisition of Fort James. The Georgia-Pacific
board of directors authorized Mr. Correll to continue to seek to reach an
agreement with Fort James.
On June 30, 2000, Mr. Correll contacted Mr. Marsh and indicated that
Georgia-Pacific proposed to acquire all outstanding shares of Fort James
common stock for a price of $36 per share, representing a 54% premium over the
then-current market price for Fort James common stock. Mr. Correll proposed
that such price would be paid 80% in cash and 20% in shares of Georgia-Pacific
Group common stock, subject to a collar on the stock portion of the
consideration. Mr. Correll also proposed that the transaction would be
structured as an exchange offer by Georgia-Pacific for all outstanding shares
of Fort James common stock, to be followed by a merger of Fort James with a
subsidiary of Georgia-Pacific and discussed other terms of the proposed
transaction.
Mr. Marsh immediately convened a telephonic meeting of the board of
directors of Fort James and fully summarized Georgia-Pacific's proposal. Mr.
Marsh indicated that the proposal would be discussed further at a special
meeting of the board on July 6, 2000. From July 2, 2000 through July 5, 2000,
Mr. Marsh and members of the Fort James management team reviewed Georgia-
Pacific's proposal with Morgan Stanley and representatives of Morgan Stanley
and Merrill Lynch discussed various aspects of Georgia-Pacific's proposal.
On July 5, 2000, Messrs. Correll and Marsh discussed the proposed
transaction by telephone. During this conversation, Mr. Correll and Mr. Marsh
discussed a price consisting of $29.00 in cash and .2861 shares of Georgia-
Pacific Group common stock, subject to a cap on the value of the total
consideration of $40 per share of Fort James common stock.
On July 6, 2000, the Fort James board of directors met in Chicago, Illinois
to discuss the proposed business combination. Present at that meeting were
representatives of Fort James' outside legal advisors and Morgan Stanley,
which provided financial analyses relating to the proposed transaction.
On July 7, 2000 representatives of Georgia-Pacific and Fort James met in
Northbrook, Illinois to discuss financial and business information about both
companies and to continue their due diligence examination of the business and
operations of both companies. Fort James' officers made a presentation of its
North American tissue business. Representatives of Morgan Stanley and Merrill
Lynch were present at such meetings.
On July 11, 2000, senior officers of Fort James and Georgia-Pacific met in
New York City to continue discussions with respect to the proposed
transaction.
On July 12, 2000, Merrill Lynch, acting on instructions from Georgia-
Pacific, contacted Morgan Stanley to indicate that Georgia-Pacific was
proposing to adjust the proportion of cash and stock consideration to $29.60
in cash and .2644 shares of Georgia-Pacific stock for each outstanding share
of Fort James, subject to the same cap on the total value of the consideration
of $40 per share of Fort James common stock.
During the period from July 11 to July 16, 2000, representatives of Georgia-
Pacific and Fort James and their respective outside counsels negotiated the
terms of the proposed transaction.
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<PAGE>
On July 16, 2000, the Georgia-Pacific board of directors met telephonically.
After discussion, which included updates regarding the financial and legal
aspects of the proposed transaction from members of the senior management of
Georgia-Pacific and representatives of Georgia-Pacific's outside legal and
financial advisors, the Georgia-Pacific board of directors unanimously
approved the merger agreement.
Also on July 16, 2000, Fort James held a special meeting of its board of
directors. After discussion, which included updates regarding the financial
and legal aspects of the proposed transaction from members of the senior
management of Fort James and its outside legal advisers, Morgan Stanley
delivered its opinion to the effect that as of that date the consideration to
be received by holders of shares of Fort James common stock pursuant to the
merger agreement was fair from a financial point of view to such holders and
the Fort James board of directors unanimously approved the merger agreement.
Later that day, Georgia-Pacific and Fort James executed the merger agreement.
On July 17, 2000, the companies issued a joint press release announcing the
transaction.
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THE OFFER
Basic Terms
Exchange of Shares; Exchange Ratio. We are offering to exchange $29.60 in
cash and .2644 shares of Georgia-Pacific Group common stock (the "exchange
ratio"), subject to the limitation described below, for each outstanding share
of Fort James common stock, including the associated rights to purchase
preferred stock, validly tendered and not properly withdrawn.
You will not receive any fractional shares of Georgia-Pacific Group common
stock. Instead, you will receive cash in an amount equal to the market value
of any fractional shares you would otherwise have been entitled to receive.
Adjustments to Exchange Ratio. We will reduce the exchange ratio in the
event that the value of the share of Georgia-Pacific Group common stock you
would receive in exchange for a share of Fort James common stock would exceed
$10.40. This would occur if the average (rounded to the nearest 1/10,000) of
the volume weighted averages (rounded to the nearest 1/10,000) of the trading
prices of Georgia-Pacific Group common stock on the New York Stock Exchange
for the 10 consecutive trading days ending on the third trading day prior to
the acceptance date (the "average price") exceeds $39.33. In that case, the
stock portion of the consideration for each share of Fort James common stock
will consist of a number of shares of Georgia-Pacific Group common stock equal
to $10.40 divided by the average price. In the event that the exchange ratio
is adjusted, the value of the Georgia-Pacific Group common stock received in
the offer would be $10.40 and the total value of the consideration received
for each share of Fort James common stock would be $40.00.
The term "acceptance date" means the date on which Purchaser accepts for
payment all shares of Fort James common stock validly tendered and not
properly withdrawn.
No later than two business days before the offer expires, we will notify you
by issuing a press release announcing the final exchange ratio and filing that
press release with the SEC. Fort James shareholders can call our information
agent, D.F. King & Co., Inc., at any time collect at 1-212-269-5550 or toll-
free at 1-888-460-7637 to request information about the exchange ratio and any
adjustment to the exchange ratio.
Illustrative Table of Exchange Ratios and Value of Offer/Merger
Consideration. The columns in the following table present:
. illustrative values of the average price of Georgia-Pacific Group common
stock with a range of $20.00 to $45.00 per share,
. the exchange ratio illustrating the number of shares of Georgia-Pacific
Group common stock that would be issued for one share of Fort James
common stock at each of the average prices of Georgia-Pacific Group
common stock presented in the table, and
. illustrative values of the total consideration that would be issued in
connection with the offer and the merger for one share of Fort James
common stock.
<TABLE>
<CAPTION>
Value of
Offer/Merger
Average Consideration
Price of --------------------
Georgia-Pacific Group Value
Common Stock Exchange of
--------------------- Ratio Shares Cash Total
-------- ------ ------ ------
<S> <C> <C> <C> <C>
$20.00............................... .2644 $5.29 $29.60 $34.89
25.00............................... .2644 6.61 29.60 36.21
30.00............................... .2644 7.93 29.60 37.53
35.00............................... .2644 9.25 29.60 38.85
40.00............................... .2600 10.40 29.60 40.00
45.00............................... .2311 10.40 29.60 40.00
</TABLE>
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The values of Georgia-Pacific Group common shares in the table above are
illustrative only and do not represent the actual amounts per share of Fort
James common stock that might be realized by any Fort James shareholder on or
after consummation of the offer or the merger. The amount any Fort James
shareholder might realize upon sale in the market of Georgia-Pacific Group
common shares received by such shareholder in the offer or the merger will
depend upon the market price of Georgia-Pacific Group common shares at the
time of sale, which will fluctuate depending upon any number of reasons,
including those specific to Georgia-Pacific Group and those that influence the
trading prices of equity securities generally.
Preferred Share Purchase Rights. Our offer to acquire Fort James common
stock is also an offer to acquire Fort James preferred stock purchase rights
and when we refer to the shares of Fort James common stock, we are also
referring to the associated Fort James rights. In addition, all references to
the Fort James rights include the benefits to holders of those rights pursuant
to the Fort James rights agreement, as amended. The number of shares of
Georgia-Pacific Group common stock and amount of cash receivable by holders of
Fort James common stock in the offer and the merger includes payment for the
associated preferred share purchase rights, and under no circumstances will
additional consideration be paid for the Fort James rights. Also, the shares
of Georgia-Pacific Group common stock to be issued in the offer and the merger
include the associated Georgia-Pacific Group preferred share purchase rights.
When we refer to shares of Georgia-Pacific Group common stock, we are also
referring to these associated rights, unless we indicate otherwise.
Transfer Charges. If you are the record owner of your shares and you tender
your shares directly to the Exchange Agent, you will not be obligated to pay
any charges or expenses of the exchange agent or any brokerage commissions. If
you own your shares through a broker or other nominee, and your broker tenders
the shares on your behalf, your broker may charge you a fee for doing so. You
should consult your broker or nominee to determine whether any changes will
apply. Except as set forth in the instructions to the letter of transmittal,
transfer taxes on the exchange of Fort James common stock pursuant to our
offer will be paid by us or on our behalf.
Interest. We will not pay interest on any cash amount payable for Fort James
common stock in the offer or in the merger regardless of any delay in making
such payment.
Merger. We are making this offer in order to acquire all of the outstanding
shares of Fort James common stock. We intend, as soon as possible after
completion of the offer, to have Purchaser merge with Fort James. For a more
detailed description of our purpose, please read "--Purpose of Our Offer; The
Merger; Appraisal or Dissenters' Rights" below.
Conditions to the Offer. Our obligation to exchange cash and shares of
Georgia-Pacific Group common stock for Fort James common stock pursuant to the
offer is subject to several conditions referred to below under "Conditions to
the Offer," including the minimum tender condition, the regulatory approvals
condition and other conditions that are discussed below.
Timing of the Offer
Our offer is currently scheduled to expire at 12:00 midnight, New York City
time on , 2000, however, we currently intend to extend our offer from
time to time as necessary until the earlier of (1) the date on which all the
conditions to the offer have been satisfied or waived and (2) February 28,
2001. For more information, you should read the discussion under the caption
"Extension, Termination and Amendment."
Extension, Termination and Amendment
We expressly reserve the right, in our sole discretion (subject to the
provisions of the merger agreement), at any time or from time to time, to
extend the period of time during which our offer remains open, and we can do
so by giving oral or written notice of the extension to the exchange agent. If
we decide to extend our offer, we will make an announcement to that effect no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled expiration date. We have agreed, pursuant to the merger
agreement, to extend the offer until the earlier of the date on which all the
conditions to the offer have been satisfied or waived or February 28, 2001.
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<PAGE>
During any such extension, all shares of Fort James common stock previously
tendered and not properly withdrawn will remain subject to the offer, subject
to your right to withdraw your shares of Fort James common stock. You should
read the discussion under the caption "Withdrawal Rights" for more details.
Subject to the SEC's applicable rules and regulations and the terms of the
merger agreement, we also reserve the right in our sole discretion, at any
time or from time to time, (1) to delay acceptance for exchange, or our
exchange of any shares of Fort James common stock pursuant to our offer,
regardless of whether we previously accepted shares of Fort James common stock
for exchange, (2) on or after February 28, 2001, to terminate our offer and
not accept for exchange, or exchange, any shares of Fort James common stock
not previously accepted for exchange, or exchanged, upon the failure of any of
the conditions of the offer to be satisfied; provided that neither our failure
to fulfill our obligations under the merger agreement nor our material breach
of the merger agreement is the cause of the failure to satisfy any such
condition on or before February 28, 2001, and (3) to waive any condition
(other than the minimum condition, the conditions relating to regulatory
approvals, and the conditions relating to the absence of an injunction) or
otherwise amend the offer in any respect, provided that we will not (a) make
any change in the form of consideration to be paid, (b) decrease the
consideration payable in the offer, (c) reduce the maximum number of shares of
Fort James common stock to be purchased in the offer, (d) impose conditions to
the offer in addition to those set forth in the merger agreement, or (e) make
any other change that is adverse to the holders of Fort James.
We will give oral or written notice of such delay, termination or amendment
to the exchange agent and will make a public announcement of any such
extension, termination, amendment or delay as promptly as practicable. In the
case of an extension, any announcement will be issued no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
expiration date. Subject to applicable law (including Rules 14d-4(c) and 14d-
6(d) under the Exchange Act, which require that any material change in the
information published, sent or given to shareholders in connection with the
offer be promptly sent to shareholders in a manner reasonably designed to
inform shareholders of the change) and without limiting the manner in which we
may choose to make any public announcement, we assume no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service.
If we make a material change in the terms of our offer or the information
concerning the offer, or if we waive a material condition of the offer, we
will extend the offer to the extent required under the Exchange Act. If, prior
to the expiration date, we change the percentage of shares of Fort James
common stock being sought or the consideration we are offering, that change
will apply to all holders whose shares of Fort James common stock are accepted
for exchange pursuant to our offer. If at the time notice of that change is
first published, sent or given to you, the offer is scheduled to expire at any
time earlier than the 10th business day from and including the date that the
notice is first so published, sent or given, we will extend the offer until
the expiration of that 10 business-day period. For purposes of our offer, a
"business day" means any day other than a Saturday, Sunday or federal holiday
and consists of the time period from 12:01 a.m. through 12:00 midnight, New
York City time. We may, although we do not currently intend to, elect to
provide a subsequent offering period of three to 20 business days after the
acceptance of shares of Fort James common stock in the offer if the
requirements under Exchange Act Rule 14d-11 have been met. You will not have
the right to withdraw shares of Fort James common stock that you tender in any
subsequent offering period.
Exchange of Shares of Fort James Common Stock; Delivery of Cash and Georgia-
Pacific Group Common Stock
Upon the terms and subject to the conditions of our offer (including, if the
offer is extended or amended, the terms and conditions of the extension or
amendment), we will accept for exchange, and will exchange, shares of Fort
James common stock validly tendered and not properly withdrawn as promptly as
practicable after the acceptance date. In addition, subject to applicable
rules of the SEC, we expressly reserve the right to delay acceptance for
exchange, or the exchange of, shares of Fort James common stock in order to
comply with any applicable law. In all cases, exchange of shares of Fort James
common stock tendered and accepted for exchange pursuant to the offer will be
made only after timely receipt by the exchange agent of certificates for those
shares of Fort James common stock (or a confirmation of a book-entry transfer
of those shares of Fort James common stock in the exchange agent's account at
The Depository Trust Company (which we refer to as the "DTC")), a
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properly completed and duly executed letter of transmittal (or a manually
signed facsimile of that document) and any other required documents.
For purposes of the offer, we will be deemed to have accepted for exchange
Fort James common stock validly tendered and not properly withdrawn as, if and
when we notify the exchange agent of our acceptance of the tenders of those
shares of Fort James common stock pursuant to the offer. The exchange agent
will deliver cash and Georgia-Pacific Group common stock in exchange for Fort
James common stock pursuant to the offer and cash instead of fractional shares
of Georgia-Pacific Group common stock as soon as practicable after receipt of
our notice. The exchange agent will act as agent for tendering shareholders
for the purpose of receiving Georgia-Pacific Group common stock and cash
(including cash to be paid instead of fractional shares of Georgia-Pacific
Group common stock) from us and transmitting such stock and cash to you. You
will not receive any interest on any cash that we pay you, even if there is a
delay in making the exchange.
If we do not accept any tendered shares of Fort James common stock for
exchange pursuant to the terms and conditions of the offer for any reason, or
if certificates are submitted for more shares of Fort James common stock than
are tendered, we will return certificates for such unexchanged shares of Fort
James common stock without expense to the tendering shareholder or, in the
case of shares of Fort James common stock tendered by book-entry transfer
pursuant to the procedures set forth below under the discussion entitled
"Procedure for Tendering," such shares of Fort James common stock will be
credited to an account maintained within DTC, as soon as practicable following
expiration or termination of the offer.
Cash Instead of Fractional Shares of Georgia-Pacific Group Common Stock
We will not issue certificates representing fractional shares of our common
stock pursuant to the offer. Instead, each tendering shareholder who would
otherwise be entitled to a fractional share of our common stock will receive
cash in an amount equal to that fraction (expressed as a decimal and rounded
to the nearest 0.01 of a share) multiplied by the average (rounded to the
nearest 1/10,000) of the volume weighted averages (rounded to the nearest
1/10,000) of the trading prices of Georgia-Pacific Group common stock on the
New York Stock Exchange for the 10 trading days ending on the third trading
day preceding the expiration date.
Withdrawal Rights
Shares of Fort James common stock tendered pursuant to the offer may be
withdrawn at any time prior to the acceptance date, and, unless we have
previously accepted them pursuant to the offer, may also be withdrawn at any
time after , 2000. Once we accept shares of Fort James common stock
pursuant to the offer, your tender is irrevocable. If we elect to provide a
subsequent offering period under Exchange Act Rule 14d-11, you will not have
the right to withdraw Fort James common stock that you tender in the
subsequent offering period.
For your withdrawal to be effective, the exchange agent must receive from
you a written, telex or facsimile transmission notice of withdrawal at one of
its addresses set forth on the back cover of this prospectus, and your notice
must include your name, address, social security number, the certificate
number(s) and the number of shares of Fort James common stock to be withdrawn
as well as the name of the registered holder, if it is different from that of
the person who tendered those shares of Fort James common stock.
A financial institution must guarantee all signatures on the notice of
withdrawal. Most banks, savings and loan associations and brokerage houses are
able to effect these signature guarantees for you. The financial institution
must be a participant in the Securities Transfer Agents Medallion Program or
an "eligible institution," unless those shares of Fort James common stock have
been tendered for the account of any eligible institution. If shares of Fort
James common stock have been tendered pursuant to the procedures for book-
entry tender discussed under the caption entitled "Procedure for Tendering,"
any notice of withdrawal must specify the name and number of the account at
DTC to be credited with the withdrawn shares of Fort James common stock and
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must otherwise comply with DTC's procedures. If certificates have been
delivered or otherwise identified to the exchange agent, the name of the
registered holder and the serial numbers of the particular certificates
evidencing the shares of Fort James common stock withdrawn must also be
furnished to the exchange agent, as stated above, prior to the physical
release of the certificates. We will decide all questions as to the form and
validity (including time of receipt) of any notice of withdrawal, in our sole
discretion, and our decision shall be final and binding.
Neither we, the exchange agent, the Information Agent nor any other person
will be under any duty to give notification of any defects or irregularities
in any notice of withdrawal or will incur any liability for failure to give
any notification. Any shares of Fort James common stock properly withdrawn
will be deemed not to have been validly tendered for purposes of our offer.
However, you may retender withdrawn shares of Fort James common stock by
following one of the procedures discussed under "Procedure for Tendering" or
"Guaranteed Delivery" at any time prior to the expiration date.
Procedure For Tendering
For you to validly tender shares of Fort James common stock pursuant to the
offer:
. you must properly complete and sign a letter of transmittal (or manually
executed facsimile of that document), and include any required signature
guarantees, or an agent's message which is explained below, if you
tendered through a book-entry transfer, and any other required
documents,
. the Exchange Agent must have received all of these documents at one of
its addresses set forth on the back cover of this prospectus, and
. the Exchange Agent must have received your certificates for tendered
shares of Fort James common stock at such address or those shares of
Fort James common stock must be tendered pursuant to the procedures for
book-entry tender set forth below (and a confirmation of receipt of such
tender received by the Exchange Agent (we refer to this confirmation
below as a "book-entry confirmation")), or if you cannot comply with
either of the two preceeding delivery procedures described in this
bullet, you must comply with the guaranteed delivery procedures set
forth below.
All of these procedures must be completed by the acceptance date.
The term "agent's message" means a message, transmitted by DTC to, and
received by, the exchange agent and forming a part of a book-entry
confirmation, which states that DTC has received an express acknowledgment
from the participant in DTC tendering the shares of Fort James common stock
which are the subject of the book-entry confirmation, that the participant has
received and agrees to be bound by the terms of the letter of transmittal and
that we may enforce that agreement against the participant.
The exchange agent will establish accounts with respect to the shares of
Fort James common stock at DTC for purposes of the offer within two business
days after the date of this prospectus, and any financial institution that is
a participant in DTC may make book-entry delivery of the shares of Fort James
common stock by causing DTC to transfer such shares of Fort James common stock
into the exchange agents account in accordance with DTC's procedure for the
transfer. However, although delivery of shares of Fort James common stock may
be effected through book-entry at DTC, the letter of transmittal (or a
manually signed facsimile thereof), with any required signature guarantees, or
an agent's message in connection with a book-entry transfer, and any other
required documents, must, in any case, be transmitted to and received by the
exchange agent at one or more of its addresses set forth on the back cover of
this prospectus prior to the expiration date, or the guaranteed delivery
procedures described below must be followed.
Signatures on all letters of transmittal must be guaranteed by an eligible
institution, except in cases in which shares of Fort James common stock are
tendered either by (1) a registered holder of shares of Fort James common
stock who has not completed the box entitled "Special Issuance Instructions"
on the letter of transmittal, or (2) for the account of an eligible
institution.
If the certificates for shares of Fort James common stock are registered in
the name of a person other than the person who signs the letter of
transmittal, or if certificates for unexchanged shares of Fort James common
stock are to be issued to a person other than the registered holder(s), the
certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered owner or
owners appear on the certificates, with the signature(s) on the certificates
or stock powers guaranteed in the manner we have described above.
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We will determine questions as to the validity, form, eligibility (including
time of receipt) and acceptance for exchange of any tender of shares of Fort
James common stock, in our sole discretion, and our determination shall be
final and binding. We reserve the absolute right to reject any and all tenders
of shares of Fort James common stock that we determine are not in proper form
or the acceptance of or exchange for which may, in the opinion of our counsel,
be unlawful. We also reserve the absolute right to waive any defect or
irregularity in the tender of any shares of Fort James common stock. No tender
of shares of Fort James common stock will be deemed to have been validly made
until all defects and irregularities in tenders of shares of Fort James common
stock have been cured or waived. Neither we, the exchange agent, the
Information Agent nor any other person will be under any duty to give
notification of any defects or irregularities in the tender of any shares of
Fort James common stock or will incur any liability for failure to give any
such notification. Subject to the terms of the merger agreement, our
interpretation of the terms and conditions of our offer (including the letter
of transmittal and instructions thereto) will be final and binding.
THE METHOD OF DELIVERY OF FORT JAMES SHARE CERTIFICATES AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH DTC, IS AT YOUR OPTION AND
RISK, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, WE RECOMMEND REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED. IN ALL CASES, YOU SHOULD ALLOW
SUFFICIENT TIME TO ENSURE TIMELY DELIVERY.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO CASH
RECEIVED PURSUANT TO OUR OFFER, YOU MUST PROVIDE THE EXCHANGE AGENT WITH YOUR
CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY WHETHER YOU ARE SUBJECT TO
BACKUP WITHHOLDING OF FEDERAL INCOME TAX BY COMPLETING THE SUBSTITUTE FORM W-9
INCLUDED IN THE LETTER OF TRANSMITTAL. SOME SHAREHOLDERS (INCLUDING, AMONG
OTHERS, ALL CORPORATIONS AND SOME FOREIGN INDIVIDUALS) ARE NOT SUBJECT TO
THESE BACKUP WITHHOLDING AND REPORTING REQUIREMENTS. IN ORDER FOR A FOREIGN
INDIVIDUAL TO QUALIFY AS AN EXEMPT RECIPIENT, THE SHAREHOLDER MUST SUBMIT A
FORM W-8, SIGNED UNDER PENALTIES OF PERJURY, ATTESTING TO THAT INDIVIDUAL'S
EXEMPT STATUS.
Guaranteed Delivery
If you wish to tender shares of Fort James common stock pursuant to our
offer and your certificates are not immediately available or you cannot
deliver the certificates and all other required documents to the exchange
agent prior to the expiration date or cannot complete the procedure for book-
entry transfer on a timely basis, your shares of Fort James common stock may
nevertheless be tendered, so long as all of the following conditions are
satisfied:
. you make your tender by or through an eligible institution;
. a properly completed and duly executed notice of guaranteed delivery,
substantially in the form made available by us, is received by the
exchange agent as provided below on or prior to the expiration date; and
. the certificates for all tendered shares of Fort James common stock (or
a confirmation of a book-entry transfer of such securities into the
exchange agent's account at DTC as described above), in proper form for
transfer, together with a properly completed and duly executed letter of
transmittal (or a manually signed facsimile thereof), with any required
signature guarantees (or, in the case of a book-entry transfer, an
agent's message) and all other documents required by the letter of
transmittal are received by the exchange agent within three New York
Stock Exchange trading days after the date of execution of such notice
of guaranteed delivery.
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You may deliver the notice of guaranteed delivery by hand or transmit it by
facsimile transmission or mail to the exchange agent and you must include a
guarantee by an eligible institution in the form set forth in that notice.
In all cases, we will exchange shares of Fort James common stock tendered
and accepted for exchange pursuant to our offer only after timely receipt by
the exchange agent of certificates for shares of Fort James common stock (or
timely confirmation of a book-entry transfer of such securities into the
exchange agent's account at DTC as described above), properly completed and
duly executed letter(s) of transmittal (or a manually signed facsimile(s)
thereof), or an agent's message in connection with a book-entry transfer, and
any other required documents.
The tender of shares of Fort James common stock pursuant to any of the
procedures described above will constitute a binding agreement between us and
you upon the terms and subject to the conditions of the offer.
Certain Federal Income Tax Consequences
The following is a general summary of certain United States federal income
tax consequences to Fort James shareholders that exchange Fort James common
stock for Georgia-Pacific Group common stock and cash pursuant to the offer
and the merger. This discussion is based on provisions of the Internal Revenue
Code of 1986, as amended, Treasury regulations promulgated thereunder, and
administrative and judicial interpretations thereof, all as in effect as of
the date hereof and all of which are subject to change, possibly with
retroactive effect. This discussion does not address all aspects of United
States federal income taxation that may be applicable to Fort James
shareholders in light of their particular circumstances or to Fort James
shareholders subject to special treatment under United States federal income
tax law (including, without limitation, partnerships, foreign persons, certain
financial institutions, insurance companies, tax-exempt entities, dealers in
securities, traders in securities that elect to apply a mark-to-market method
of accounting, certain U.S. expatriates, persons that hold Fort James common
stock as part of a straddle, hedge, conversion transaction or other integrated
investment, Fort James shareholders whose functional currency is not the
United States dollar and Fort James shareholders who acquired Fort James
common stock through the exercise of employee stock options or otherwise as
compensation).
This discussion is limited to Fort James shareholders that hold their Fort
James common stock as capital assets and does not consider the tax treatment
of Fort James shareholders that hold Fort James common stock through a
partnership or other pass-through entity. Furthermore, this summary does not
discuss any aspect of state, local or foreign taxation or any aspect of United
States federal tax law other than income taxation.
A Fort James shareholder that receives cash and Georgia-Pacific Group common
stock in exchange for that shareholder's Fort James common stock pursuant to
the offer and the merger will recognize capital gain or loss equal to the
difference between (a) the sum of the fair market value of the Georgia-Pacific
Group common stock (on the acceptance date of the offer or at the effective
time of the merger, as the case may be) and the amount of cash received, and
(b) that shareholder's adjusted tax basis in the Fort James common stock
exchanged therefor. Any such capital gain or loss will constitute long-term
capital gain or loss if the Fort James shareholder's holding period for the
Fort James common stock exchanged is greater than one year as of the
acceptance date of the offer or at the effective time of the merger, as the
case may be. Certain non-corporate U.S. holders (including individuals) are
eligible for preferential rates of U.S. federal income taxation in respect of
long-term capital gains. Fort James shareholders that recognize a loss on the
exchange of their Fort James common stock pursuant to the offer or the merger
should consult their tax advisors regarding allowance of such loss. The
Georgia-Pacific Group common stock received by Fort James shareholders in
exchange for shares of Fort James common stock pursuant to the offer or the
merger will generally have a tax basis equal to the fair market value of such
Georgia-Pacific Group common stock on the acceptance date of the offer or at
the effective time of the merger, as the case may be, and a new holding period
beginning on the day following the applicable valuation date.
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THE FOREGOING DISCUSSION IS INTENDED ONLY AS A SUMMARY AND DOES NOT PURPORT
TO BE A COMPLETE ANALYSIS OR LISTING OF ALL POTENTIAL UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES OF THE OFFER AND THE MERGER. FORT JAMES SHAREHOLDERS
ARE URGED TO CONSULT THEIR TAX ADVISORS CONCERNING THE UNITED STATES FEDERAL,
STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM.
Purpose of Our Offer; The Merger; Appraisal or Dissenters' Rights
Purpose. We are making the offer in order to acquire all of the outstanding
shares of Fort James common stock. We intend, as soon as practicable after
completion of the offer, to have Purchaser merge with Fort James. The purpose
of the merger is to acquire all shares of Fort James common stock not tendered
and exchanged pursuant to the offer. In the merger, each then outstanding Fort
James share (except for shares of Fort James common stock held in Fort James'
treasury and shares of Fort James common stock that we or any of our
subsidiaries hold for our own account) would be converted into the right to
receive the same amount of cash and the same number of shares of Georgia-
Pacific Group common stock as is paid in the offer.
Approval of the Merger. Under Section 13.1-718 of the Virginia Stock
Corporation Act (the "VSCA") and Fort James' articles of incorporation, the
approval of the board of directors of Fort James and the affirmative vote of
the holders of more than two-thirds of the outstanding shares of Fort James
common stock are required to approve the merger agreement. The Fort James
board of directors has previously approved the merger. Accordingly, if we
complete the offer, we would have a sufficient number of shares of Fort James
common stock to approve the merger without the affirmative vote of any other
holder of shares of Fort James common stock. Therefore, unless the merger is
consummated in accordance with the short-form merger provisions under the VSCA
described below (in which case no action by the shareholders of Fort James,
other than Georgia-Pacific, will be required to consummate the merger), the
only remaining corporate action of Fort James will be the approval of the
merger agreement by the affirmative vote of the holders of more than two-
thirds of the outstanding shares of Fort James common stock.
Possible Short-Form Merger. Section 13.1-719 of the VSCA would permit the
merger to occur without any vote of Fort James' shareholders (a "short-form
merger") if Georgia-Pacific were to acquire at least 90% of the outstanding
shares of Fort James common stock in the offer or otherwise (including as a
result of purchases by Georgia-Pacific during any subsequent offering period).
If, however, Georgia-Pacific does not acquire at least 90% of the then
outstanding shares of Fort James common stock pursuant to the offer or
otherwise, and a vote of Fort James' shareholders is required under the VSCA,
a longer period of time will be required to effect the merger. Georgia-Pacific
has agreed in the merger agreement to effect the merger at the earliest
practicable time, and if it obtains ownership of at least 90% of the
outstanding shares of Fort James common stock in the offer or otherwise, to
effect the merger as a short-form merger.
Appointment of Attorneys-In-Fact and Proxies. By executing a letter of
transmittal as set forth above, you irrevocably appoint our designees as your
attorneys-in-fact and proxies, each with full power of substitution, to the
full extent of your rights with respect to your shares of Fort James common
stock tendered and accepted for exchange by us and with respect to any and all
other shares of Fort James common stock and other securities issued or
issuable in respect of the shares of Fort James common stock on or after
, 2000. That appointment is effective, and voting rights will be
affected, when and only to the extent that we deposit the shares of Georgia-
Pacific Group common stock and the cash consideration for shares of Fort James
common stock that you have tendered with the exchange agent. All such proxies
shall be considered coupled with an interest in the tendered shares of Fort
James common stock and therefore shall not be revocable. Upon the
effectiveness of such appointment, all prior proxies that you have given will
be revoked, and you may not give any subsequent proxies (and, if given, they
will not be deemed effective). Our designees will, with respect to the shares
of Fort James common stock for which the appointment is effective, be
empowered, among other things, to exercise all of your voting and other rights
as they, in their sole discretion, deem proper at any annual, special or
adjourned meeting of Fort James' shareholders or otherwise. We reserve the
right to require that, in order for shares of Fort James common stock to be
deemed validly tendered, immediately upon our exchange of those shares of Fort
James common stock, we must be able to exercise full voting rights with
respect to such shares of Fort James common stock.
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Appraisal or Dissenters' Rights. Fort James shareholders do not have
appraisal or dissenters' rights in connection with the offer or the merger.
Conditions to the Offer
The offer is subject to a number of conditions, which we describe below.
Minimum Condition
There must be validly tendered and not properly withdrawn prior to the
expiration of the offer the number of shares of Fort James common stock which,
together with the shares of Fort James common stock then owned by Georgia-
Pacific and Purchaser, will constitute at least two-thirds of the total number
of outstanding shares of Fort James common stock on a fully diluted basis (as
though all options or other securities convertible into or exercisable or
exchangeable for shares of Fort James common stock had been so converted,
exercised or exchanged) as of the date that we accept the shares of Fort James
common stock pursuant to our offer. Based on information supplied by Fort
James, the number of shares of Fort James common stock needed to satisfy the
minimum condition would have been as of , 2000.
Antitrust Condition
All waiting periods under the HSR Act and any material European antitrust
laws must have expired or been terminated.
Registration Statement Effectiveness Condition
The registration statement on Form S-4 of which this prospectus is a part
must not be the subject of any stop order or proceedings seeking a stop order.
NYSE Listing Condition
The shares of Georgia-Pacific Group common stock issuable to Fort James
shareholders in the offer and the merger must have been approved for listing
on the New York Stock Exchange, subject to official notice of issuance.
Other Conditions of the Offer
The offer is also subject to the conditions that, at the acceptance date,
there shall not be existing and continuing any of the following events or
circumstances:
(1) there shall have been instituted or pending any litigation or
proceeding before any federal or state court of the United States of
America by any United States federal or state government or governmental
authority or agency (A) restraining or prohibiting (in each case, under
antitrust laws) the making of the offer, the acceptance for payment of any
shares of Fort James common stock by Georgia-Pacific, Purchaser or any
affiliate of Georgia-Pacific, or the consummation of any other transaction
contemplated by the merger agreement; (B) seeking an order of divestiture
that, if complied with, would, in Georgia-Pacific's reasonable judgment, be
expected to have a material adverse effect on the business, results of
operations or financial condition of Georgia-Pacific and Fort James and
their subsidiaries, taken as a whole, after giving effect to the offer and
the merger; or (C) seeking (under antitrust laws) to impose or confirm any
limitation on the ability of Georgia-Pacific, Purchaser or any other
subsidiary of Georgia-Pacific to exercise effectively full rights of
ownership of any shares of Fort James common stock on all matters properly
presented to the Fort James' shareholders (other than any such action (i)
in which a motion for a temporary restraining order, a preliminary
injunction or a permanent injunction has been denied or has expired, or a
judicial order granting any such temporary restraining order, preliminary
injunction or permanent injunction has been reversed on
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appeal and not reinstated, (ii) in which the United States Department of
Justice, or the Federal Trade Commission or any applicable state authority
does not file within 10 business days after commencement of such action a
motion seeking injunctive relief of the type referred to in clauses (A)
through (C) above, or (iii) filed with consent of Purchaser); provided that
no such litigation or proceeding will constitute a condition to Purchaser's
obligations under the offer to the extent Georgia-Pacific or Purchaser is
in breach of its obligations under "The Merger Agreement--Covenants and
Representations and Warranties--Antitrust Laws" below;
(2) there shall have been (i) any law enacted or deemed applicable to (A)
Georgia-Pacific, Fort James or any of their respective subsidiaries or (B)
any transaction contemplated by the merger agreement or (ii) entered or
enforced by any court or governmental authority, any order which prohibits,
restrains, restricts or enjoins the consummation of the offer, or has the
effect of making the offer illegal, in which case, by any governmental
authority that would result, directly or indirectly, in any of the
consequences referred to in clauses (A) through (C) of paragraph (1) above;
provided that no such law or order will constitute a condition to
Purchaser's obligations under the offer to the extent Georgia-Pacific or
Purchaser is in breach of its obligations under "The Merger Agreement--
Covenants and Representations and Warranties--Antitrust Laws" below;
(3) other than with respect to any order that is the subject of paragraph
(1) or paragraph (2) above, there shall have been enacted, entered,
promulgated or enforced by any court or governmental authority any order
which prohibits, restrains, restricts or enjoins the consummation of the
offer or has the effect of making the offer illegal;
(4) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the New York Stock Exchange
(other than a shortening of trading hours or any coordinated trading halt
triggered solely as a result of a specified increase or decrease in a
market index), (ii) a declaration of a banking moratorium or any suspension
of payments in respect of banks in the United States, (iii) any material
limitation (whether or not mandatory) by any government or governmental
authority, on the extension of credit by banks or other lending
institutions, (iv) a commencement of a war or armed hostilities or other
national or international calamity directly or indirectly involving the
United States or (v) in the case of any of the foregoing existing on the
date hereof, a material acceleration or worsening thereof;
(5) Fort James shall have breached or failed to perform in all material
respects any of its obligations under the merger agreement;
(6) (i) the representations and warranties of Fort James contained in the
merger agreement that are qualified by reference to a material adverse
effect on Fort James and its subsidiaries, taken as a whole, shall not be
true when made or at any time prior to the consummation of the offer as if
made at and as of that time, or (ii) the representations and warranties of
Fort James contained in the merger agreement that are not so qualified
shall not be true when made or at any time prior to the consummation of the
offer as if made at and as of that time, except, in the case of clause (ii)
only, for such inaccuracies as are not reasonably likely to, individually
or in the aggregate, result in a material adverse effect on Fort James and
its subsidiaries, taken as a whole; and
(7) the merger agreement shall have been terminated.
The conditions of the offer described above are solely for our benefit and
we may assert them regardless of the circumstances giving rise to any such
conditions. We may, in our sole discretion, waive these conditions in whole or
in part, other than the minimum condition (which may only be waived with Fort
James' consent), the conditions relating to regulatory approvals, and the
conditions relating to the absence of an injunction. The determination as to
whether any condition has been satisfied shall be in our reasonable judgment.
The failure by us at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right and each such right shall be deemed a
continuing right which may be asserted at any time and from time to time.
Notwithstanding anything to the contrary in this prospectus, we cannot and
will not assert any of the conditions to the offer, other than certain
regulatory conditions as, and to the extent, permitted by applicable rules and
regulations of the SEC, at any time after the expiration date of the offer.
Notwithstanding the fact that we reserve
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the right to assert the failure of a regulatory condition following acceptance
for exchange but prior to exchange in order to delay exchange or cancel our
obligation to exchange properly tendered shares of Fort James common stock, we
will either promptly exchange such shares of Fort James common stock or
promptly return such shares of Fort James common stock.
Regulatory Approvals
Except as set forth herein, we are not aware of any licenses or regulatory
permits that appear to be material to the business of Fort James and its
subsidiaries, taken as a whole, and that might be adversely affected by our
acquisition of shares of Fort James common stock in the offer. In addition,
except as set forth herein, we are not aware of any filings, approvals or
other actions by or with any governmental authority or administrative or
regulatory agency that would be required for our acquisition or ownership of
the shares of Fort James common stock. Should any such approval or other
action be required, we expect to seek such approval or action, except as
described under "State Takeover Laws." Should any such approval or other
action be required, we cannot be certain that we would be able to obtain any
such approval or action without substantial conditions or that adverse
consequences might not result to Fort James' or its subsidiaries' businesses,
or that certain parts of Fort James', Georgia-Pacific's or any of their
respective subsidiaries' businesses might not have to be disposed of or held
separate in order to obtain such approval or action. In that event, we may not
be required to purchase any shares of Fort James common stock in the offer.
State Takeover Laws. A number of states have adopted takeover laws and
regulations that purport to be applicable to attempts to acquire securities of
corporations that are incorporated in those states or that have substantial
assets, shareholders, principal executive offices or principal places of
business in those states. To the extent that these state takeover statutes
purport to apply to the offer or the merger, we believe that those laws
conflict with U.S. federal law and are an unconstitutional burden on
interstate commerce. In 1982, the Supreme Court of the United States, in Edgar
v. Mite Corp., invalidated on constitutional grounds the Illinois Business
Takeovers Statute, which, as a matter of state securities law, made takeovers
of corporations meeting certain requirements more difficult. The reasoning in
that decision is likely to apply to certain other state takeover statutes. In
1987, however, in CTS Corp. v. Dynamics Corp. Of America, the Supreme Court of
the United States held that the State of Indiana could as a matter of
corporate law and, in particular, those aspects of corporate law concerning
corporate governance, constitutionally disqualify a potential acquiror from
voting on the affairs of a target corporation without the prior approval of
the remaining shareholders, as long as those laws were applicable only under
certain conditions. Subsequently, in TLX Acquisition Corp. v. Telex Corp., a
federal district court in Oklahoma ruled that the Oklahoma statutes were
unconstitutional insofar as they apply to corporations incorporated outside
Oklahoma, because they would subject those corporations to inconsistent
regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a federal district
court in Tennessee ruled that four Tennessee takeover statutes were
unconstitutional as applied to corporations incorporated outside Tennessee.
This decision was affirmed by the United States Court of Appeals for the Sixth
Circuit. In December 1988, a federal district court in Florida held, in Grand
Metropolitan Plc v. Butterworth, that the provisions of the Florida Affiliated
Transactions Act and Florida Control Share Acquisition Act were
unconstitutional as applied to corporations incorporated outside of Florida.
Section 13.1-725 through Section 13.1-727 of the VSCA prohibit a Virginia
corporation from engaging in an "affiliated transaction" (defined to include a
variety of transactions, including mergers, share exchanges, transactions not
in the ordinary course involving sales of assets, sales of voting shares,
dissolution of the corporation or any reclassifications of securities) with an
"interested shareholder" (defined generally as any person who is the
beneficial owner of more than 10% of any class of outstanding voting shares of
a Virginia corporation or any affiliate thereof) for a period of three years
following the date the interested shareholder became an interested shareholder
unless the transaction is approved by a majority of the disinterested
directors and two-thirds of the shares not owned by the interested
shareholder. After such three-year period, an affiliated transaction between a
Virginia corporation and such interested shareholder is prohibited unless (1)
it is approved by a majority of disinterested directors, (2) it is approved by
two-thirds of the shares not owned by the interested shareholder or (3) the
affiliated transaction complies with certain "fair price" provisions. The
foregoing restrictions do not apply when the transaction pursuant to which the
interested shareholder becomes an interested shareholder has been approved in
advance by a majority of the disinterested directors.
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A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations that are incorporated, or have
substantial assets, shareholders, or whose business operations otherwise have
substantial economic effects, in such states. Fort James, directly or through
subsidiaries, conducts business in a number of states throughout the United
States, some of which may have enacted takeover laws as described above.
Except for those provisions of the VSCA set forth above, Georgia-Pacific and
the Purchaser do not believe that any such takeover statutes are applicable to
the offer or the merger and have not attempted to comply with any such state
takeover statutes in connection therewith.
Fort James has taken all actions necessary to ensure that Section 13.1-725
through Section 13.1-727 of the VSCA will not apply in connection with the
offer or the merger. We reserve the right to challenge the validity or
applicability of any state law allegedly applicable to the offer or the
merger, and nothing herein nor any action that we take in connection with the
offer is intended as a waiver of that right. In the event that it is asserted
that one or more takeover statutes apply to the offer or the merger, and it is
not determined by an appropriate court that the statutes in question do not
apply or are invalid as applied to the offer or the merger, as applicable, we
may be required to file certain documents with, or receive approvals from, the
relevant state authorities, and we might be unable to accept for payment or
purchase shares of Fort James common stock tendered in the offer or be delayed
in continuing or consummating the offer. In that case, we may not be obligated
to accept for purchase, or pay for, any shares of Fort James common stock
tendered.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the
"Antitrust Division") and the FTC and certain waiting period requirements have
been satisfied. The purchase of shares of Fort James common stock pursuant to
the offer is subject to such requirements.
Private parties (including individual states) may also bring legal actions
under the antitrust laws. We do not believe that the consummation of the offer
will result in a violation of any applicable antitrust laws. However, there
can be no assurance that a challenge to the offer on antitrust grounds will
not be made, or if such a challenge is made, what the result will be. For a
description of certain conditions to the offer, including conditions with
respect to litigation and certain governmental actions and for certain
termination rights in connection with antitrust suits, see "Conditions to the
Offer."
Foreign Approvals. Fort James owns assets and conducts business in a number
of foreign countries and jurisdictions. In connection with the acquisition of
the shares of Fort James common stock in the offer or the merger, the laws of
certain of those foreign countries and jurisdictions may require the filing of
information with, or the obtaining of the approval or consent of, governmental
authorities in such countries and jurisdictions. The governments in those
countries and jurisdictions might attempt to impose additional conditions on
Fort James' operations conducted in those countries and jurisdictions as a
result of the acquisition of the shares of Fort James common stock in the
offer or the merger. If such approvals or consents are found to be required,
we intend to make the appropriate filings and applications. In the event such
a filing or application is made for the requisite foreign approvals or
consents, we cannot be certain that such approvals or consents will be granted
and, if such approvals or consents are received, we cannot be certain as to
the date of those approvals or consents. In addition, we cannot be certain
that we will be able to cause Fort James or its subsidiaries to satisfy or
comply with those laws or that compliance or noncompliance will not have
adverse consequences for Fort James or any subsidiary of Fort James after
purchase of the shares of Fort James common stock pursuant to the offer or the
merger.
Certain Effects of the Offer
Reduced Liquidity; Possible Delisting. The tender of shares of Fort James
common stock pursuant to the offer will reduce the number of holders of shares
of Fort James common stock, and the number of shares of Fort
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James common stock that might otherwise trade publicly, and could adversely
affect the liquidity and market value of the remaining shares of Fort James
common stock held by the public. Shares of Fort James common stock are listed
and principally traded on the NYSE. Depending on the number of shares of Fort
James common stock acquired pursuant to the offer, following consummation of
the offer shares of Fort James common stock may no longer meet the
requirements of the NYSE for continued listing. For example, published
guidelines of the NYSE indicate that the NYSE would consider delisting the
outstanding shares of Fort James common stock if, among other things, (1) the
number of publicly held shares of Fort James common stock (exclusive of
holdings of officers, directors and members of their immediate families and
other concentrated holdings of 10 percent or more) should fall below 600,000,
(2) the number of record holders of 100 or more shares of Fort James common
stock should fall below 1,200 or (3) the aggregate market value of publicly
held shares should fall below $5 million.
If the NYSE were to delist the shares of Fort James common stock, including
after the exchange of shares in the offer but prior to the merger, the market
for them could be adversely affected. It is possible that shares of Fort James
common stock would be traded on other securities exchanges or in the over-the-
counter market, and that price quotations would be reported by such exchanges,
or through The Nasdaq Stock Market (which we refer to as "NASDAQ") or by other
sources. The extent of the public market for the shares of Fort James common
stock and the availability of such quotations would, however, depend upon the
number of holders and/or the aggregate market value of the shares of Fort
James common stock remaining at such time, the interest in maintaining a
market in the shares of Fort James common stock on the part of securities
firms, the possible termination of registration of shares of Fort James common
stock under the Securities Exchange Act of 1934, as described below, and other
factors. We cannot predict whether the reduction in the number of shares of
Fort James common stock that might otherwise trade publicly would have an
adverse or beneficial effect on the market price for, or marketability of,
Fort James common stock.
Georgia-Pacific intends to cause the delisting of Fort James common stock
from the NYSE following consummation of the offer and the merger.
According to Fort James, there were, as of , 2000, approximately Fort
James common shares outstanding held by holders of record.
Status as "Margin Securities." The shares of Fort James common stock are
presently "margin securities" under the regulations of the Federal Reserve
Board, which, among other things, allows brokers to extend credit on the
collateral of shares of Fort James common stock. Depending on the factors
similar to those described above with respect to listing and market
quotations, following consummation of the offer, the shares of Fort James
common stock may no longer constitute "margin securities" for the purposes of
the Federal Reserve Board's margin regulations, in which event the shares of
Fort James common stock would be ineligible as collateral for margin loans
made by brokers.
Going Private Transactions. The SEC has adopted Rule 13e-3 under the
Exchange Act which is applicable to certain "going private" transactions and
which may under certain circumstances be applicable to the merger or another
business combination following the purchase of Fort James common stock
pursuant to the offer in which we seek to acquire the remaining shares of Fort
James common stock not held by us. We believe that Rule 13e-3 will not be
applicable to the merger. Rule 13e-3 requires, among other things, that
certain financial information concerning Fort James and certain information
relating to the fairness of the proposed transaction and the consideration
offered to minority shareholders in such transaction be filed with the SEC and
disclosed to shareholders prior to consummation of the merger or other
business combination.
Registration Under the Exchange Act. Shares of Fort James common stock are
currently registered under the Exchange Act. Fort James can terminate that
registration upon application to the SEC if the outstanding shares are not
listed on a national securities exchange and if there are fewer than 300
holders of record of shares of Fort James common stock. Termination of
registration of the shares of Fort James common stock under the Exchange Act
would reduce the information that Fort James must furnish to its shareholders
and to the SEC and
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would make certain provisions of the Exchange Act, such as the short-swing
profit recovery provisions of Section 16(b) and the requirement of furnishing
a proxy statement in connection with shareholders meetings pursuant to Section
14(a) and the related requirement of furnishing an annual report to
shareholders, no longer applicable with respect to all shares of Fort James
common stock. In addition, if shares of Fort James common stock are no longer
registered under the Exchange Act, the requirements of Rule 13e-3 under the
Exchange Act with respect to "going-private" transactions would no longer be
applicable to Fort James. Furthermore, the ability of "affiliates" of Fort
James and persons holding "restricted securities" of Fort James to dispose of
such securities pursuant to Rule 144 under the Securities Act may be impaired
or eliminated. If registration of the shares under the Exchange Act were
terminated, they would no longer be eligible for NYSE listing or for continued
inclusion on the Federal Reserve Board's list of "margin securities."
Opinion of Financial Advisor to Fort James
Fort James engaged Morgan Stanley to provide it with financial advisory
services and a financial fairness opinion in connection with the offer and the
merger. The Fort James board of directors selected Morgan Stanley based on
Morgan Stanley's qualifications, expertise and reputation and its knowledge of
the business and affairs of Fort James. At the meeting of the Fort James board
on July 16, 2000, Morgan Stanley rendered its oral opinion, subsequently
confirmed in writing, that as of July 16, 2000, and based on and subject to
the considerations in its opinion, the consideration to be received by the
holders of shares of Fort James common stock pursuant to the merger agreement
is fair from a financial point of view to such holders.
The full text of Morgan Stanley's opinion, dated July 16, 2000, which sets
forth, among other things, the assumptions made, procedures followed, matters
considered and limitations on the review undertaken by Morgan Stanley in
rendering its opinion, is attached as Annex B to this prospectus and
incorporated herein by reference. We urge you to read this opinion carefully
and in its entirety. Morgan Stanley's opinion is directed to the board of
directors of Fort James, addresses only the fairness of the consideration to
be received by the holders of the shares of Fort James common stock pursuant
to the merger agreement from a financial point of view to such holders and it
does not address any other aspect of the offer or the merger or constitute a
recommendation as to whether holders of Fort James common stock should tender
their shares in the offer or as to how holders of Fort James common stock
should vote at any shareholders' meeting held in connection with the merger.
This summary is qualified in its entirety by reference to the full text of the
opinion.
In connection with rendering its opinion, Morgan Stanley, among other
things:
. reviewed certain publicly available financial statements and other
information of Fort James and Georgia-Pacific;
. reviewed certain internal financial statements and other financial and
operating data concerning Fort James prepared by the management of Fort
James;
. reviewed certain internal financial statements and other financial and
operating data concerning Georgia-Pacific prepared by the management of
Georgia-Pacific;
. reviewed certain financial projections prepared by the management of
Fort James;
. reviewed certain financial projections prepared by the management of
Georgia-Pacific;
. discussed the past and current operations and financial condition and
the prospects of Fort James, including information relating to certain
strategic, financial and operational benefits anticipated from the offer
and the merger, with senior executives of Fort James;
. discussed the past and current operations and financial condition and
the prospects of Georgia-Pacific, including information relating to
certain strategic, financial and operational benefits anticipated from
the offer and the merger, with senior executives of Georgia-Pacific;
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. reviewed the pro forma impact of the offer and the merger on Georgia-
Pacific's earnings per share, cash flow, consolidated capitalization and
financial ratios;
. reviewed the reported prices and trading activity for Fort James common
stock and Georgia-Pacific common stock;
. compared the financial performance of Fort James and the prices and
trading activity of Fort James common stock with that of certain other
comparable publicly-traded companies and their securities;
. compared the financial performance of Georgia-Pacific and the prices and
trading activity of Georgia-Pacific common stock with that of certain
other comparable publicly-traded companies and their securities;
. reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
. participated in discussions and negotiations among representatives of
Fort James, Georgia-Pacific and their financial and legal advisors;
. reviewed the merger agreement, and certain related documents; and
. performed such other analyses and considered such other factors as
Morgan Stanley deemed appropriate.
Morgan Stanley assumed and relied upon, without independent verification,
the accuracy and completeness of the information reviewed by it for the
purposes of its opinion. With respect to the financial projections, including
information relating to certain strategic, financial and operational benefits
anticipated from the offer and the merger, Morgan Stanley assumed that they
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the future financial performance of Fort James and
Georgia-Pacific. In addition, Morgan Stanley assumed that the offer and the
merger will be consummated in accordance with the terms set forth in the
merger agreement. Morgan Stanley assumed that, in connection with the receipt
of all the necessary regulatory approvals for the offer and the merger, no
restrictions will be imposed that would have a material adverse effect on the
contemplated benefits expected to be derived in the offer and the merger.
Morgan Stanley has not made any independent valuation or appraisal of the
assets or liabilities of Fort James, nor has it been furnished with any such
appraisals. Morgan Stanley's opinion is necessarily based on financial,
economic, market and other conditions as in effect on, and the information
made available to it as of, July 16, 2000.
The following is a summary of the material financial analyses performed by
Morgan Stanley in connection with its oral opinion and the preparation of its
written opinion. These summaries of financial analyses include information
presented in tabular format. To fully understand the financial analyses used
by Morgan Stanley, the tables must be read together with the text of each
summary. The tables alone do not constitute a complete description of the
financial analyses.
Historical Share Price Performance. Morgan Stanley noted that the purchase
price per share of Fort James common stock of $29.60 in cash and .2644 shares,
subject to adjustment in certain circumstances as provided for in the merger
agreement, of Georgia-Pacific common stock (collectively, the
"Consideration"), equated to $37.17 per share, based on the closing price of
Georgia-Pacific common stock as of Friday, July 14, 2000 (the last full
trading day prior to the announcement of the merger agreement), representing a
51.3% premium to the closing price of Fort James common stock of $24.56.
Morgan Stanley reviewed the historical performance of Fort James common
stock and Georgia-Pacific common stock based on a historical analysis of
closing prices and trading volumes for the last twelve months ending July 3,
2000. The table below shows the twelve-month high and low closing prices
during that period,
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compared with a closing price on July 14, 2000 of $24.56 per share of Fort
James common stock and $28.63 per share of Georgia-Pacific common stock:
<TABLE>
<CAPTION>
June 30, 1999 June 30, 1999
through through
July 3, 2000 July 3, 2000
High Low
------------- -------------
<S> <C> <C>
Fort James....................................... $42.00 $16.94
Georgia-Pacific.................................. $52.13 $26.06
</TABLE>
Morgan Stanley compared the historical trading performance of Fort James
common stock with that of a group of selected paper and forest product
companies. The group of selected paper and forest product companies included
Boise Cascade Corporation, Bowater Incorporated, Champion International
Corporation, Georgia-Pacific, International Paper Company, The Mead
Corporation, Smurfit-Stone Container Corporation, Westvaco Corporation and
Weyerhaeuser Company. None of the companies utilized in this analysis as a
comparison is identical to Fort James.
This analysis showed that the closing market prices during the period from
July 12, 1999 through July 13, 2000 depreciated as follows:
<TABLE>
<CAPTION>
Depreciation
------------
<S> <C>
Fort James.................................................... (39.2%)
Georgia-Pacific............................................... (43.1%)
Selected paper and forest products companies (including
Georgia-Pacific):
Mean........................................................ (25.8%)
</TABLE>
Morgan Stanley also reviewed the distribution of the closing prices of
shares of Fort James common stock from January 1, 1996 through July 5, 2000.
Morgan Stanley noted that the Consideration, based on a range of closing share
prices for Georgia-Pacific common stock, exceeded most of the closing share
prices of Fort James common stock over the period.
<TABLE>
<CAPTION>
% of Shares Traded
within Price Range
Fort James Common from 1/1/1996--
Stock Price Range 7/5/2000
----------------- ------------------
<S> <C>
$28.75--
41.13 50%
25.94--44.56 75%
16.94--52.25 100%
32.75 Median
</TABLE>
Discounted Cash Flow Analysis of Fort James. Morgan Stanley analyzed certain
financial projections prepared by the management of Fort James for the fiscal
year 2000 (the "Fort James Management Projections") and contained in certain
publicly available Morgan Stanley research estimates for the fiscal year 2001
(the "Fort James Research Estimates"). Projections for 2002 and beyond were
extrapolated by assuming annual revenue growth of 3.5% and flat EBITDA
margins. Morgan Stanley performed a discounted cash flow analysis of Fort
James based on those projections. Morgan Stanley discounted the unlevered free
cash flows of Fort James at a range of discount rates of 10.0% to 11.0%,
representing an estimated weighted average cost of capital range for Fort
James, and terminal values based on a range of multiples of 6.0--7.0 times
estimated 2009 earnings before interest, taxes, depreciation and amortization
("EBITDA") to arrive at a range of present values for Fort James. Such present
values were then adjusted for Fort James' debt (net of cash), preferred stock
and proceeds from the exercise of outstanding options to arrive at an implied
equity value per share. Based on this analysis, Morgan Stanley calculated
values representing an implied equity value per share of Fort James common
stock ranging from approximately $27 to $31.
Discounted Cash Flow Analysis of Georgia-Pacific. Morgan Stanley analyzed
certain financial projections contained in certain publicly available Morgan
Stanley research estimates for the fiscal years 2000 and 2001 (the "Georgia-
Pacific Research Estimates"). Projections for 2002 and beyond were
extrapolated by assuming annual revenue growth of 2.5% and mid-cycle EBITDA
margins. Morgan Stanley performed a discounted cash flow
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analysis of Georgia-Pacific based on those projections. Morgan Stanley
discounted the unlevered free cash flows of Georgia-Pacific at a range of
discount rates of 10.0% to 11.0%, representing an estimated weighted average
cost of capital range for Georgia-Pacific, and terminal values based on a
range of multiples of 5.0--6.0 times estimated 2009 EBITDA to arrive at a
range of present values for Georgia-Pacific. Such present values were then
adjusted for Georgia-Pacific's debt (net of cash), preferred stock and
proceeds from the exercise of outstanding options to arrive at an implied
equity value per share. Based on this analysis, Morgan Stanley calculated
values representing an implied equity value per share of Georgia-Pacific
common stock ranging from approximately $45 to $53.
Comparable Company Analysis of Fort James and Georgia-Pacific. Morgan
Stanley reviewed the current valuation of publicly traded companies in the
paper and forest products sector and the consumer products sector considered
to be comparable to Fort James and Georgia-Pacific. Morgan Stanley reviewed
measures of valuation including historical and projected price to earnings
ratios and historical and projected aggregate value to EBITDA ratios. The
group of selected paper and forest products companies included Boise Cascade
Corporation, International Paper Company, Svenska Cellulosa Aktiebolaget SCA
("SCA"), Weyerhaeuser Company and Willamette Industries, Inc. Morgan Stanley
observed a price to 2000 estimated earnings multiple mean of 9.3 times and an
aggregate value to 2000 estimated EBITDA multiple mean of 5.4 times for
comparable publicly traded paper and forest products companies. The group of
selected consumer products companies included The Procter & Gamble Company and
Kimberly-Clark Corporation. Morgan Stanley observed a price to 2000 estimated
earnings multiple mean of 17.7 times and an aggregate value to 2000 estimated
EBITDA multiple mean of 9.3 times for comparable publicly traded consumer
products companies.
Morgan Stanley selected a multiple range of 5.5--6.5 times 2000 estimated
EBITDA for Fort James. Applying this multiple to the forecast of 2000 EBITDA
in Fort James Management Projections implied a range of equity value per share
of Fort James common stock between approximately $22 and $29.
Morgan Stanley selected a multiple range of 4.5--5.5 times 2000 estimated
EBITDA for Georgia-Pacific. Applying this multiple to the forecast of 2000
EBITDA in Georgia-Pacific Research Estimates implied a range of equity value
per share of Georgia-Pacific common stock between approximately $29 and $44.
No company utilized in the publicly traded comparable company analysis is
identical to Fort James or Georgia-Pacific. Morgan Stanley made judgments and
assumptions with regard to industry performance, general business, economic,
market and financial conditions and other matters, many of which are beyond
the control of Fort James and Georgia-Pacific. Mathematical analysis (such as
determining the mean or median) is not itself a meaningful method of using
publicly traded comparable company data.
Precedent Transactions Analysis of Fort James and Georgia-Pacific. Using
publicly available information, Morgan Stanley reviewed recent precedent
transactions that were considered to be comparable to this transaction. These
transactions included (but were not limited to):
. SCA / Metsa-Tissue (Metsa-Serla Oyj's stake)
. SCA / AM Paper Group
. SCA / Metsa-Tissue (11% stake)
. Kimberly-Clark Corporation / Attisholtz Tissue Business
. Plainwell Inc. / Pope & Talbot Inc.--Tissue
. Wausau Paper Mills Company / Mosinee Paper Corporation
. The Procter & Gamble Company / Ssangyong Paper Co.
. Copamex Industries SA / Kimberly-Clark de MX-Regio Tissue
. Kruger Inc. / Scott Paper Ltd.
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<PAGE>
Morgan Stanley observed the following precedent transactions to be most
comparable to this transaction:
. Georgia-Pacific Corporation / Wisconsin Tissue Mills Inc.
. James River Corporation / Fort Howard Corporation
. Kimberly-Clark Corporation / Scott Paper Company
Morgan Stanley reviewed publicly available financial information including
the aggregate value to the latest twelve-month ("LTM") EBITDA. Morgan Stanley
observed an aggregate value to LTM EBITDA range of approximately 6.4--11.3
times and a mean of 8.6 times for the precedent transactions.
Based on Fort James' management estimates of 1999 EBITDA, and using a
multiple range of 7.5--9.5 times 1999 EBITDA, a range of implied equity values
per share of Fort James common stock was between approximately $31 and $44.
Based on Georgia-Pacific Research Estimates of 1999 EBITDA, and using a
multiple range of 7.0--8.0 times 1999 EBITDA, a range of implied equity values
per share of Georgia-Pacific common stock was between approximately $58 and
$72.
Segment Break-up Analysis. Morgan Stanley performed segment valuation
analysis, which included the tax impact of the divestiture of certain Fort
James operations on the value of Fort James. The analysis incorporated certain
assumptions regarding tax bases and the corporate tax rate. Based on Fort
James' management estimates of 1999 EBITDA, and using a multiple range of
8.0--10.0 times 1999 EBITDA for Fort James' European tissue operations and a
multiple range of 7.5--9.5 times 1999 EBITDA for the rest of Fort James, a
range of implied equity values per share of Fort James common stock was
between approximately $28 and $39.
Leveraged Buyout Analysis. Morgan Stanley analyzed a scenario, using Fort
James Management Projections, Fort James Research Estimates and extrapolated
projections, whereby Fort James common stock was purchased at a price that
would result in a five-year internal rate of return of approximately 27.5%
upon disposition assuming a five-year EBITDA exit multiple of 5.5--6.5 times.
This analysis implied an equity price of $21 to $24 per share.
Stand-alone Equity Value. Morgan Stanley evaluated the implied current stock
price by estimating the stock price in 2000 based on a multiple of 2001
earnings of 12.0--13.0 times. Morgan Stanley used 2001 earnings estimates
based on Fort James Research Estimates and Fort James Management Projections.
The implied stock price in 2001 was then discounted to a current price at an
equity discount rate of 13.9%. This analysis implied a valuation of
approximately $26 to $32 per share.
Pro Forma Combination Analysis. Morgan Stanley analyzed the pro forma impact
of the offer and the merger on Georgia-Pacific's cash and book earnings per
share, consolidated capitalization and financial ratios, using Fort James
Management Projections, Fort James Research Estimates, Georgia-Pacific
Research Estimates and extrapolated projections. Incorporating certain
assumptions with respect to various structural considerations, transaction
costs and Fort James management estimated synergies, the combination was
accretive to Georgia-Pacific's cash earnings per share and dilutive to its
book earnings per share in 2000, 2001 and 2002.
In connection with the review of the offer and the merger by Fort James'
board of directors, Morgan Stanley performed a variety of financial and
comparative analyses for purposes of rendering its opinion. The preparation of
a fairness opinion is a complex process and is not necessarily susceptible to
partial analysis or summary description. In arriving at its opinion, Morgan
Stanley considered the results of all of its analyses as a whole and did not
attribute any particular weight to any analysis or factor considered by it.
Morgan Stanley believes that the summary provided and the analyses described
above must be considered as a whole and that selecting portions of these
analyses, without considering all of them, would create an incomplete view of
the process underlying its analyses and opinion. In addition, Morgan Stanley
may have given various analyses and factors
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<PAGE>
more or less weight than other analyses or factors, and may have deemed
various assumptions more or less probable than other assumptions, so that the
range of valuations resulting from any particular analysis described above
should therefore not be taken to be Morgan Stanley's view of the actual value
of Fort James.
In arriving at its opinion, Morgan Stanley was not authorized to solicit,
and did not solicit, interest from any party with respect to the acquisition
of Fort James or any of its assets, nor did Morgan Stanley negotiate with any
party other than Georgia-Pacific.
In performing its analyses, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Fort James and Georgia-
Pacific. Any estimates contained in Morgan Stanley's analysis are not
necessarily indicative of future results or actual values, which may be
significantly more or less favorable than those suggested by these estimates.
The analyses performed were prepared solely as a part of Morgan Stanley's
analysis of the fairness of the consideration to be received by holders of
shares of Fort James common stock pursuant to the merger agreement from a
financial point of view to such holders and were conducted in connection with
the delivery of its opinion dated July 16, 2000, to the board of directors of
Fort James. Morgan Stanley's analyses do not purport to be appraisals or to
reflect the prices at which shares of Fort James common stock might actually
trade. The consideration in the offer and the merger was determined through
arm's length negotiations between Fort James and Georgia-Pacific and was
approved by Fort James' board of directors. Morgan Stanley did not recommend
the consideration to be paid by Georgia-Pacific or that any consideration to
be paid by Georgia-Pacific constituted the only appropriate consideration for
the offer and the merger.
In addition, Morgan Stanley's opinion and presentation to the Fort James
board of directors was one of the many factors taken into consideration by the
board in making its determination to recommend the offer and the merger.
Consequently, the analyses described above should not be viewed as
determinative of the opinion of the Fort James board with respect to the
consideration paid in connection with the offer and the merger or of whether
Fort James' board would have been willing to agree to a different
consideration.
Morgan Stanley is an internationally recognized investment banking and
advisory firm. Morgan Stanley, as part of its investment banking and financial
advisory business, is continuously engaged in the valuation of businesses and
their securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for corporate and other
purposes. In the past, Morgan Stanley and its affiliates have provided
financial advisory and financing services for Fort James and Georgia-Pacific
and have received fees for the rendering of these services. In connection with
the offer and the merger, Morgan Stanley may provide certain financing
services for Georgia-Pacific. In addition, Miles L. Marsh, Chairman and Chief
Executive Officer of Fort James serves on the board of directors of the parent
of Morgan Stanley.
Pursuant to the engagement letter, upon the consummation of the offer,
Morgan Stanley will receive a fee of $30 million for its services. In the
event the offer is not consummated, Morgan Stanley will receive an advisory
fee estimated between $200,000 and $300,000. Fort James has also agreed to
indemnify Morgan Stanley and its affiliates, their respective directors,
officers, agents and employees and each person, if any, controlling Morgan
Stanley, or any of its affiliates against certain liabilities and expenses,
including liabilities under federal securities laws, related to or arising out
of Morgan Stanley's engagement.
Source and Amount of Funds
We expect to obtain funds necessary to finance the offer and the merger
partially from our internal resources and also from borrowings under the
credit facility described below. Neither the offer nor the merger is
conditioned upon any financing being obtained. In addition, subject to market
conditions, we may elect to sell debt securities with various maturities in
the capital markets.
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<PAGE>
We have received the commitment of Banc of America Securities LLC, Merrill
Lynch Capital Corporation and Morgan Stanley Senior Funding, Inc. to arrange
financing that will be, together with our existing cash resources, sufficient
to consummate the offer and the merger, to pay related costs and expenses and
to refinance certain indebtedness of Fort James and Georgia-Pacific.
Pursuant to a commitment letter, Banc of America Securities, Merrill Lynch
and Morgan Stanley have committed to structure, arrange, syndicate and
administer a senior financing arrangement in the principal amount of
$10,000,000,000, of which Banc of America Securities, Merrill Lynch and Morgan
Stanley have committed to provide, in the aggregate, $6,325,000,000. Under the
terms of the commitment letter, all amounts available to Georgia-Pacific under
such senior financing arrangement would be used to finance all or a portion of
(1) the cash consideration paid in the offer, (2) on the date of the merger,
the remaining cash consideration payable in respect to the merger, if any, (3)
the existing indebtedness of Fort James (to the extent required to be
refinanced in connection with the offer and the merger), (4) certain existing
indebtedness of Georgia-Pacific and (5) the related fees and expenses. Any
remaining amount would be used for general corporate purposes.
Georgia-Pacific currently expects to repay the senior financing arrangement
through a combination of possible sales in the capital markets, subject to
market conditions, of capital securities, revenues from operations and
potential asset sales.
Relationships with Fort James
Except as set forth herein, neither we nor, to the best of our knowledge,
any of our directors, executive officers or other affiliates has any contract,
arrangement, understanding or relationship with any other person with respect
to any securities of Fort James, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the
voting of any such securities, joint ventures, loan or option arrangements,
puts or calls, guaranties of loans, guaranties against loss or the giving or
withholding of proxies. Except as described herein, there have been no
contacts, negotiations or transactions since January 1, 1997, between us or,
to the best of our knowledge, any of our directors, executive officers or
other affiliates on the one hand, and Fort James or its affiliates, on the
other hand, concerning a merger, consolidation or acquisition, a tender offer
or other acquisition of securities, an election of directors, or a sale or
other transfer of a material amount of assets. Except as set forth herein,
neither we, nor, to the best of our knowledge, any of our directors, executive
officers or other affiliates has since January 1, 1997 had any transaction
with Fort James or any of its executive officers, directors or affiliates that
would require disclosure under the rules and regulations of the SEC applicable
to the offer.
In the ordinary course of business, Georgia-Pacific and Fort James engage in
a number of commercial transactions. These transactions primarily involve (1)
the purchase by Fort James from Georgia-Pacific of maintenance supplies,
packaging supplies, straw paper, paper products, corrugated products and
strength resins and (2) the purchase by Georgia-Pacific from Fort James,
through its Unisource subsidiary, of a range of tissue products primarily for
the commercial markets, including bath tissue, facial tissue, paper towels and
napkins and disposable tabletop products. The aggregate amount of Fort James'
purchases from Georgia-Pacific represented less than 1% of Fort James' total
consolidated revenues for its most recent fiscal year and the aggregate of
Georgia-Pacific's purchases from Fort James represented less than 1% of
Georgia-Pacific's total consolidated revenues for its most recent fiscal year.
Accounting Treatment
The acquisition of Fort James will be accounted for as a "purchase," as such
term is used under generally accepted accounting principles, commonly referred
to as "GAAP," for accounting and financial reporting purposes. Fort James will
be treated as the acquired corporation for such purposes. Fort James' assets,
liabilities and other items will be adjusted to their estimated fair value as
of the closing date of the merger and combined with the historical book values
of the assets and liabilities of Georgia-Pacific. Applicable income tax
effects of such adjustments will be included as a component of the combined
company's deferred tax asset or liability. The difference between the
estimated fair value of the assets, liabilities and other items (adjusted as
discussed above)
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and the purchase price will be recorded as an intangible asset and amortized
against the combined company's earnings over a 40-year period following
completion of the merger. For further information concerning the amount of
goodwill to be recorded in connection with the merger and the amortization
thereof, see Note (c) of Notes to the Unaudited Pro Forma Consolidated Balance
Sheet Data.
Georgia-Pacific has prepared the unaudited pro forma financial information
contained in this prospectus using the purchase accounting method to account
for the offer and the merger. See "Pro Forma Consolidated Financial
Statements."
Fees and Expenses
Georgia-Pacific has retained Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Banc of America Securities LLC to provide certain financial
advisory services to Georgia-Pacific in connection with the offer and the
merger. Merrill Lynch and Banc of America Securities will receive, in the
aggregate, fees of $25 million for these services and will be reimbursed for
out-of-pocket expenses, including reasonable expenses of counsel and other
advisors. We have agreed to indemnify Merrill Lynch and Banc of America
Securities and related persons against certain liabilities and expenses in
connection with their services as financial advisors, including certain
liabilities and expenses under the federal securities laws. From time to time,
Merrill Lynch, Banc of America Securities and their affiliates may actively
trade the debt and equity securities of Fort James for their own account or
for the accounts of customers and, accordingly, may hold a long or short
position in such securities.
We have retained D.F. King & Co., Inc. as information agent in connection
with the offer. The Information Agent may contact holders of shares of Fort
James common stock by mail, telephone, telex, telegraph and personal interview
and may request brokers, dealers and other nominee shareholders to forward
material relating to the offer to beneficial owners of shares of Fort James
common stock. We will pay the Information Agent reasonable and customary
compensation for these services in addition to reimbursing the Information
Agent for its reasonable out-of-pocket expenses. We have agreed to indemnify
the Information Agent against certain liabilities and expenses in connection
with the offer, including certain liabilities under the U.S. federal
securities laws.
In addition, we have retained EquiServe Trust Company, N.A. as the exchange
agent. We will pay the Exchange Agent reasonable and customary compensation
for its services in connection with the offer, will reimburse the Exchange
Agent for its reasonable out-of-pocket expenses and will indemnify the
Exchange Agent against certain liabilities and expenses, including certain
liabilities under the U.S. federal securities laws.
Except as set forth above, we will not pay any fees or commissions to any
broker, dealer or other person for soliciting tenders of shares of Fort James
common stock pursuant to the offer. We will reimburse brokers, dealers,
commercial banks and trust companies and other nominees, upon request, for
customary clerical and mailing expenses incurred by them in forwarding
offering materials to their customers.
Stock Exchange Listing
Our common stock is listed on the NYSE under the symbol "GP." We will make
an application to list on the NYSE the shares of Georgia-Pacific Group common
stock that we will issue pursuant to the offer and the merger.
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THE MERGER AGREEMENT
The following description of the merger agreement describes the material
terms of the agreement but does not purport to describe all the terms thereof.
The complete text of the merger agreement is attached as Annex A to this
prospectus. All shareholders are urged to read the merger agreement in its
entirety because it is the legal document that governs the offer and the
merger.
The Offer
Terms of the Offer. The merger agreement provides for the commencement by
Purchaser of this offer to exchange $29.60 in cash and .2644 shares of
Georgia-Pacific Group common stock, subject to the limitation described below,
for each outstanding share of Fort James common stock that is validly tendered
and not properly withdrawn. The merger agreement also provides that the number
of shares of Georgia-Pacific Group common stock into which each share of Fort
James common stock will be converted in the offer (the "exchange ratio") will
be adjusted in the event that the average (rounded to the nearest 1/10,000) of
the volume weighted averages (rounded to the nearest 1/10,000) of the trading
prices of Georgia-Pacific Group common stock on the New York Stock Exchange
for the 10 consecutive trading days ending on the third trading day prior to
the expiration date (the "average price") exceeds $39.33. In that case, the
exchange ratio will equal $10.40 divided by the average price.
The merger agreement prohibits Purchaser from amending or waiving the
minimum condition, without the consent of Fort James, or amending the offer to
change the form of consideration to be paid, decreasing the consideration
payable per share of Fort James common stock or the number of shares of Fort
James common stock sought in the offer, imposing additional conditions to the
offer or making any other change which is adverse to the holders of the shares
of Fort James common stock.
Mandatory Extensions of the Offer. If any of the conditions to the offer is
not satisfied or waived on the initial or any subsequent scheduled expiration
date, Purchaser will, unless the merger agreement is terminated pursuant to
its terms, extend the offer, until such conditions are satisfied or waived;
provided that Purchaser is not required to extend the offer beyond February
28, 2001.
Optional Extensions of the Offer. Purchaser will have the right to extend
the offer (a) for one or more periods (not in excess of 10 business days each)
but in no event ending later than February 28, 2001 if, at the scheduled or
extended expiration date of the offer, any of the conditions to the offer has
not been satisfied or waived, until such conditions are satisfied or waived,
(b) for any period required by any rule, regulation, interpretation or
position of the SEC or its staff applicable to the offer or any period
required by applicable law or (c) for an aggregate period of not more than 10
business days if, as of such date, all of the conditions to the offer have
been satisfied or waived but the number of shares of Fort James common stock
validly tendered and not withdrawn equals 80% or more, but less than 90%, of
the outstanding shares of Fort James common stock on a fully diluted basis.
Prompt Payment for Shares of Fort James Common Stock after the Closing of
the Offer. Subject to the conditions of the offer, Purchaser will accept for
payment and pay for, as promptly as practicable after the expiration of the
offer, all shares of Fort James common stock validly tendered and not properly
withdrawn pursuant to the offer.
The Merger
The merger agreement provides that Purchaser will be merged with and into
Fort James as soon as practicable following the satisfaction or waiver of the
conditions to the merger set forth in the merger agreement. Under the terms of
the merger agreement, at the effective time of the merger each share of Fort
James common stock will be canceled and converted into the right to receive
from Purchaser the same per share consideration received by holders of Fort
James common stock who exchanged their shares of Fort James common stock in
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the offer. Notwithstanding the foregoing, the merger consideration will not be
payable in respect of shares of Fort James common stock held by Fort James as
treasury shares or by Georgia-Pacific, Purchaser or any of Georgia-Pacific's
or Purchaser's subsidiaries.
Effective Time of the Merger. The merger will become effective upon the
filing of articles of merger with the State Corporation Commission of Virginia
or such later time as is agreed by Fort James and Georgia-Pacific and
specified in the articles of merger. The filing of the articles of merger will
take place as soon as practicable after satisfaction or waiver of the
conditions described below under "The Merger Agreement--Conditions of the
Merger."
Articles of Incorporation: By-Laws; Directors and Officers. The articles of
incorporation of Purchaser in effect at the effective time shall be the
articles of incorporation of the surviving corporation until thereafter
amended in accordance with the provisions of the articles of incorporation and
as provided under Virginia law. The by-laws of Purchaser in effect at the
effective time shall be the by-laws of the surviving corporation until
thereafter amended in accordance with the provisions of the by-laws, the
articles of incorporation of the surviving corporation and the VSCA.
From and after the effective time and until their respective successors are
duly elected or appointed and qualified, or until their earlier death,
resignation or removal in accordance with the surviving corporation's articles
of incorporation and by-laws, (1) the directors of Purchaser at the effective
time shall be the directors of the surviving corporation and (2) the officers
of Fort James at the effective time shall be the officers of the surviving
corporation.
Fort James Board of Directors
Upon the acceptance for payment of shares of Fort James common stock
pursuant to the offer, Georgia-Pacific will be entitled to designate a number
of directors (rounded up to the next whole number) that equals the product of
(1) the total number of directors on Fort James' board of directors and (2)
the percentage that the number of shares beneficially owned by Georgia-Pacific
and Purchaser bears to the total number of outstanding shares of Fort James
common stock. At the same time, Fort James will use its best efforts to cause
individuals designated by Georgia-Pacific to constitute the same percentage of
members on each committee of Fort James' board of directors as well as on each
board of directors (and each committee thereof) of each subsidiary of Fort
James identified by Georgia-Pacific. Until the merger has become effective,
Fort James and Georgia-Pacific will use their best efforts to cause Fort
James' board of directors to consist of at least two members who were
directors of Fort James prior to the consummation of the offer. The merger
agreement provides that, prior to the effective time of the merger, the
affirmative vote of a majority of the continuing Fort James directors (i.e.,
those directors not designated by Georgia-Pacific) will be required to:
. terminate the agreement on behalf of Fort James,
. amend the agreement when such amendment requires approval of Fort James'
board of directors,
. extend the time for performance of Georgia-Pacific or Purchaser's
obligations under the merger agreement,
. waive compliance with any agreement or condition contained in the merger
agreement for the benefit of Fort James,
. consent to or approve any action to be taken by Fort James' board of
directors under the merger agreement, or
. approve any other action of Fort James which adversely affects the
holders of Fort James common stock.
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Georgia-Pacific Board of Directors
At the effective time of the merger, each class of Georgia-Pacific board of
directors will be increased in size by one and three individuals from Fort
James' current board of directors will be appointed to Georgia-Pacific's board
of directors to fill the vacancies.
Treatment of Fort James Stock Options, Performance Shares and Restricted or
Performance Share Units
The merger agreement provides that not less than five business days prior to
the occurrence of a change of control, each holder of an option to purchase
shares of Fort James common stock shall have the right to elect either of the
following alternatives with respect to such options by delivering a written
election to Fort James: (i) that their options be cashed-out, in whole or in
part, or (ii) that their options be exchanged, in whole or in part, for
options to purchase shares of Georgia-Pacific Group common stock. In the event
that any optionee does not make an election, such optionee shall be deemed to
have elected to cash-out such options.
In the event an optionee makes a cash-out election, on the acceptance date
Fort James shall terminate or cancel all options to which the cash-out
election relates that are outstanding and unexercised. The holder of each such
cashed-out option shall receive, in exchange for the cancellation of such
option, an amount in cash equal to (i) the excess, if any, of (1) the value of
the total consideration per share paid in the offer and the merger to holders
of Fort James common stock, over (2) the per share exercise price of such
option, multiplied by (ii) the number of shares of Fort James common stock
subject to such option as of the acceptance date. Any such payment shall be
subject to all applicable federal, state and local tax employee withholding
requirements. In the event that an optionee elects the cash-out election with
respect to a portion of the options held thereby, the remaining options held
by such optionee shall be exchanged for options of Georgia-Pacific Group
common stock.
In the event an optionee makes the conversion election, prior to the
effective time of the merger Georgia-Pacific and Fort James shall take such
action as may be necessary to cause each option to which the conversion
election relates to be automatically converted at the effective time of the
merger into an option to purchase a number of shares of Georgia-Pacific Group
common stock equal to the product of (i) the number of shares of Fort James
common stock that could have been purchased (assuming full vesting) under such
option immediately prior to the effective time of the merger multiplied by
(ii) the quotient of (1) the value in cash of the total consideration per
share paid in the offer and the merger to holders of Fort James common stock
divided by (2) the average of the volume weighted trading price for the 10
consecutive trading days ending on the third trading day immediately preceding
the expiration date (rounded up to the nearest whole number of shares of
Georgia-Pacific Group common stock), at a price per share of Georgia-Pacific
common stock equal to the quotient of (x) the per-share option exercise price
specified in the option divided by (y) (1) the value of the total
consideration per share paid in the offer and the merger to holders of Fort
James common stock divided by (2) the average of the volume weighted averages
of the trading price for the 10 consecutive trading days ending on the third
trading day immediately preceding the expiration date (rounded down to the
nearest whole cent). Except as otherwise provided in the merger agreement,
such substituted option shall be subject to the same terms and conditions as
the option. Such substituted options shall be subject to any other rights
which arise under the Fort James employee benefit plans, the option agreements
evidencing awards thereunder as a result of the transactions contemplated by
the merger agreement or otherwise, including the full vesting of such options
to the extent provided in such plans or agreements. As promptly as reasonably
practicable after the effective time of the merger, Georgia-Pacific shall
issue to each holder of a substituted option a document evidencing the
foregoing assumption by Georgia-Pacific. In the event that an optionee makes
the conversion election with respect to a portion of the options held thereby,
the remaining options held by such optionee shall be cashed-out as described
above.
The merger agreement provides that prior to the effective time of the
merger, Fort James will amend each outstanding option to acquire Fort James
common stock to provide that in the event the option holder's employment is
involuntarily terminated following the acceptance date other than for cause or
in the event that an employee terminates his employment for "good reason," as
defined in such employee's employment agreement,
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the exercise period for such option will end on the earlier of the three year
anniversary of the acceptance date or the last day of the original term of the
option.
On the acceptance date, Fort James shall terminate or cancel all performance
shares and restricted or performance share units and, to the extent provided
for in the award agreement, all restricted stock, and each holder of such
stock or units that are outstanding, whether or not such stock or units are
free of restrictions, shall be entitled to receive on the acceptance date, in
exchange for the cancellation of such stock or units, an amount in cash equal
to the product of (1) the mean of the high and low sales price of Fort James
common stock on the acceptance date and (2) the number of shares or units
subject to such award. Any such payment shall be subject to all applicable
federal, state and local tax employee withholding requirements.
Covenants and Representations and Warranties
Access to Information. Until the consummation of the merger, each of Fort
James and Georgia-Pacific will, upon reasonable notice, afford the other
reasonable access during normal business hours to its and its subsidiaries'
employees, properties, books and records in order that Fort James or Georgia-
Pacific may have an opportunity to make reasonable investigations. Fort James
and Georgia-Pacific agree that they will promptly furnish to the other such
information as the other shall from time to time reasonably request.
Reasonable Best Efforts. The merger agreement provides that each of Georgia-
Pacific and Fort James will use its reasonable best efforts to take all
actions necessary to close the offer and the merger.
Conduct of Business of Fort James Pending Merger. The merger agreement
obligates Fort James, until the closing of the merger, to conduct its
operations in all material respects only according to the ordinary and usual
course of business consistent with its past practice. The merger agreement
expressly restricts the ability of Fort James to engage in certain material
transactions, such as certain purchases and sales of assets or the sale or
redemption of outstanding securities of Fort James, without the prior written
consent of Georgia-Pacific, which consent will not be unreasonably withheld or
delayed.
Conduct of Business of Georgia-Pacific Pending Merger. The merger agreement
obligates Georgia-Pacific, until the closing of the merger, to conduct its
operations in all material respects only according to the ordinary and usual
course of business consistent with its past practice. The merger agreement
expressly restricts the ability of Georgia-Pacific to engage in certain
material transactions, such as repurchases of Georgia-Pacific Group common
stock or any purchases that would impose any delay in obtaining antitrust
clearance.
No Solicitation of Alternative Transactions. The merger agreement provides
that, except in the circumstances described below, Fort James will not (1)
directly or indirectly solicit, facilitate, initiate or encourage the making
or submission of, any Takeover Proposal (as defined below), (2) enter into any
agreement, arrangement or understanding with respect to any Takeover Proposal
or enter into any agreement, arrangement or understanding requiring it to
abandon, terminate or fail to consummate the offer or the merger, (3) initiate
or participate in any way in any discussions or negotiations regarding, or
furnish or disclose to any person any information with respect to, or take any
other action to facilitate or in furtherance of any inquiries or the making of
any proposal that constitutes, or could reasonably be expected to lead to, any
Takeover Proposal, or (4) grant any waiver or release under any standstill or
similar agreement with respect to any class of Fort James' equity securities.
However, the merger agreement provides that prior to the acceptance date, in
response to an unsolicited Takeover Proposal that did not result from a breach
by Fort James of its obligations not to solicit alternative transactions and
following delivery to Georgia-Pacific of notice of such Takeover Proposal,
Fort James may participate in discussions or negotiations with or furnish
information (pursuant to a confidentiality agreement with customary terms) to
any third party which makes a bona fide written Takeover Proposal if a
majority of Fort James' board of directors (1) reasonably determines in good
faith (after consultation with its financial advisors) that taking such action
would be reasonably likely to lead to the delivery to Fort James of a Superior
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Proposal (as defined below) and (2) determines in good faith (after receiving
the advice of outside legal counsel) that it is necessary to take such
action(s) in order to comply with its fiduciary duties under applicable law.
"Takeover Proposal" means any inquiry, proposal or offer from any person
relating to (1) any direct or indirect acquisition or purchase of 20% or more
of the assets of Fort James or any of its subsidiaries or 20% or more of any
class of equity securities of Fort James or any of its subsidiaries, (2) any
tender offer or exchange offer that, if consummated, would result in any
person beneficially owning all or any portion of any class of equity
securities of Fort James or any of its subsidiaries or (3) any merger,
consolidation, business combination, sale of all or any substantial portion of
the assets, recapitalization, liquidation or a dissolution of, or similar
transaction of Fort James or any of its subsidiaries other than the offer or
the merger.
"Superior Proposal" means a bona fide written Takeover Proposal made by a
third party to purchase at least two-thirds of the outstanding equity
securities of Fort James pursuant to a tender offer, exchange offer, merger or
other business combination (1) on terms which a majority of Fort James' board
of directors determines in good faith (after consultation with its financial
advisors) to be superior to Fort James and its shareholders from a financial
point of view (taking into account, among other things, all legal, financial,
regulatory and other aspects of the proposal and identity of the offeror) as
compared to the transactions contemplated by the merger agreement and any
alternative proposed by Georgia-Pacific in accordance with the termination
right described below under "--Termination of the Merger Agreement--
Termination by Fort James" below and (2) which is reasonably capable of being
consummated.
Duty to Recommend the Offer and the Merger. The merger agreement provides
that, unless the Fort James board of directors otherwise determines (based
upon a majority vote thereof in its good faith judgment that such other action
is necessary to comply with its fiduciary duty to shareholders under
applicable law after receiving advice from outside legal counsel), prior to
approval by the shareholders of Fort James, (1) the Fort James board of
directors will recommend approval by Fort James shareholders of the merger
agreement, (2) neither the Fort James board of directors nor any committee
thereof shall amend modify or withdraw such recommendation in a manner adverse
to Georgia-Pacific or take any action or make any statement inconsistent with
such recommendation and (3) Fort James shall take all lawful action to secure
the Fort James shareholder approval of the merger agreement. The merger
agreement prohibits Fort James' board of directors from approving or
recommending, or proposing to approve or recommend, any Takeover Proposal or
approving, recommending or causing Fort James to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar
agreement related to any Takeover Proposal. However, the merger agreement
provides that prior to the closing of the offer Fort James may take any of
such actions in connection with the termination of the merger agreement as
described below under "--Termination of the Merger Agreement--Termination by
Fort James" if a third party makes a Superior Proposal.
Antitrust Laws. Georgia-Pacific and Fort James will together discuss and
formulate the approach to be taken with respect to antitrust authorities,
provided that Georgia-Pacific shall have the right to determine the overall
strategy with respect to any filings, submissions of information or
documentary materials to, proceedings or negotiations with, or any other
discussions, meetings, consultations, conversations or interactions with any
Antitrust Authority (as defined below). Without limiting the generality of the
foregoing, but subject to the immediately succeeding sentence, prior to any
contacts with any Antitrust Authority by Georgia-Pacific or any of its
subsidiaries or by Fort James or any of its subsidiaries, Georgia-Pacific and
Fort James shall each have the right to (1) in the case of filings,
submissions of information or documentary materials, review such contacts
prepared by the other party and comment with respect thereto and the other
party shall be required to incorporate into such contacts all reasonable
comments of Georgia-Pacific or Fort James, as the case may be, and (2) discuss
prior to any contacts the appropriate approach to be taken with respect
thereto. As part of its overall strategy, Georgia-Pacific shall determine the
timing of any contacts with any Antitrust Authority and Georgia-Pacific shall
be entitled to act as the spokesperson in connection therewith, but to the
extent permitted by such governmental authority Georgia-Pacific shall afford
Fort James a reasonable opportunity to participate in any such contacts. Fort
James shall not initiate any material contacts with any Antitrust Authority
regarding the transaction
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contemplated hereby without Georgia-Pacific's prior consent, but Fort James
may respond to any such contacts or requests for contacts which are initiated
by any Antitrust Authority, or as otherwise required by applicable law. The
parties hereto agree to provide to each other copies of all correspondence
between it (or its advisors) and any Antitrust Authority relating to the
merger agreement or any of the matters described in this paragraph.
Each party to the merger agreement shall use its best efforts to resolve
such objections, if any, as may be asserted with respect to the transactions
contemplated by the merger agreement under any Antitrust Law (as defined
below). Without limiting the generality of the foregoing, "best efforts" shall
include, without limitation:
(1) in the case of each of Georgia-Pacific and Fort James:
(A) promptly filing with the appropriate Antitrust Authorities a
Notification and Report Form or other applicable notification with
respect to the transactions contemplated by the merger agreement;
(B) if Georgia-Pacific or Fort James receives a formal request for
information and documents from an Antitrust Authority, substantially
complying with such formal request at the earliest practicable date
following the date of its receipt thereof; and
(C) opposing vigorously any litigation relating to the offer, the
merger or the other transactions contemplated by the merger agreement,
including, without limitation, promptly appealing any adverse court
order.
(2) in the case of Georgia-Pacific only, negotiating with respect to, and
accepting at such time as permits consummation of the offer no later than
February 28, 2001, a consent decree with an Antitrust Authority requiring
any of Georgia-Pacific, Purchaser or Fort James to agree or commit to
divest, hold separate or offer for sale any assets (tangible or intangible)
or any business interest of it or any of its subsidiaries (including,
without limitation, the surviving corporation after consummation of the
merger) as are necessary to permit Georgia-Pacific and Purchaser to
otherwise fully consummate the offer and the merger. However, the merger
agreement provides that Georgia-Pacific or any of its subsidiaries need not
comply with or accept any consent decree which, if complied with, would, in
Georgia-Pacific's reasonable judgment, be expected to have a material
adverse effect on the business, results of operations or financial
condition of Georgia-Pacific, Fort James and their subsidiaries, taken as a
whole, after giving effect to the offer and the merger.
"Antitrust Authorities" means the Federal Trade Commission, the Antitrust
Division of the Department of Justice, the attorneys general of the several
states of the United States and any other governmental authority having
jurisdiction with respect to the transactions contemplated hereby pursuant to
applicable Antitrust Laws.
"Antitrust Law" means the Sherman Act, as amended, the Clayton Act, as
amended, the HSR Act, the Federal Trade Commission Act, as amended, and all
other federal, state and foreign statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines, and other laws that are
designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade.
Directors' and Officers' Insurance. See "Interests of Certain Persons."
Employee Benefits. The merger agreement provides that Georgia-Pacific and
the surviving corporation in the merger will honor all Fort James employee
benefit plans and compensation arrangements and agreements. For a period of at
least one year following the effective time, Georgia-Pacific will provide, or
cause to be provided, to current and former employees of Fort James and its
subsidiaries who are not collectively bargained employees, compensation and
benefits that are, in the aggregate for all such employees taken as a whole
(and not on an individual basis), not less favorable than those provided to
them under the material Fort James employee benefit plans immediately before
the effective time of the merger. In addition, the merger agreement provides,
among other things, that each such employee (1) will be credited with his or
her years of service with Fort James and its affiliates before the effective
time of the merger for purposes of determining benefits under
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Georgia-Pacific employee benefit plans and (2) will be immediately eligible to
participate in such Georgia-Pacific employee benefit plans to the extent such
plans replace coverage under comparable Fort James employee benefit plans for
such employee. The merger agreement also provides that Georgia-Pacific will
(1) waive with respect to such employee all pre-existing condition exclusions
and actively-at-work requirements of such Georgia-Pacific employee benefit
plans and (2) give credit for eligible expenses incurred under the Fort James
welfare benefit plans for purposes of satisfying deductible coinsurance and
out-of-pocket requirements under the Georgia-Pacific welfare benefit plans.
The merger agreement also provides that for so long after the effective time
of the merger as Fort James maintains the cash or deferred arrangement under
its 401(k) plan, and Georgia-Pacific maintains a 401(k) plan with a loan
feature for similarly situated employees, Georgia-Pacific shall cause the Fort
James 401(k) plan to retain its loan feature. For a period of at least one
year following the effective time of the merger, Georgia-Pacific has also
agreed to maintain a severance plan that essentially provides substantially
similar benefits as the Fort James' Salary Continuation Plan as in effect at
the effective time.
Representations and Warranties. The merger agreement contains a number of
customary representations and warranties relating to each of the parties and
their ability to consummate the offer and the merger. All representations and
warranties of each party expire at the effective time of the merger.
Conditions of the Offer
See "The Offer--Conditions to the Offer."
Conditions of the Merger
The obligations of Georgia-Pacific, Purchaser and Fort James to consummate
the merger are subject to the satisfaction of the following conditions:
. to the extent required by applicable law, the merger agreement shall
have been approved and adopted by the Fort James shareholders,
. no provision of any applicable law or regulation and no order, judgment
or decree shall prohibit the consummation of the merger,
. Georgia-Pacific Group common stock to be issued in the merger shall have
been authorized for listing on the NYSE, subject to official notice of
issuance,
. if required, the registration statement on Form S-4 relating to the
merger shall have become effective under the Securities Act and not be
the subject of any stop order or proceedings seeking a stop order, and
. Purchaser shall have purchased shares of Fort James common stock
pursuant to the offer.
Termination of the Merger Agreement
Termination by Mutual Agreement. The merger agreement may be terminated at
any time prior to the effective time of the merger by mutual written consent
of Georgia-Pacific and Fort James.
Termination by either Georgia-Pacific or Fort James. The merger agreement
may be terminated at any time prior to the effective time of the merger by
either Georgia-Pacific or Fort James if:
(1) the offer has not been consummated on or before February 28, 2001,
unless the failure to consummate the offer is the result of a material
breach or failure to fulfill a material obligation of the merger agreement
by the party seeking termination, or
(2) any governmental authority shall have issued an order, judgment or
decree or taken any other action permanently restricting, enjoining,
restraining or otherwise prohibiting the consummation of the offer
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or the merger, and such order, judgment or decree or other action shall
have become final and nonappealable.
Termination by Georgia-Pacific. The merger agreement may be terminated at
any time prior to the effective time of the merger by Georgia-Pacific if:
(1) prior to the acceptance date, Fort James breaches in any material
respect any representation, warranty, covenant or other agreement contained
in the merger agreement, which (A) would give rise to the failure of any of
the conditions set forth in paragraph (5) or paragraph (6) under "The
Offer--Conditions to the Offer--Other Conditions of the Offer," (B) cannot
be or has not been cured prior to the earlier of (x) 30 days following
receipt by Fort James of a written notice from Georgia-Pacific of such
breach or failure to perform and (y) the February 28, 2001 and (C) has not
been waived by Georgia-Pacific,
(2) prior to the acceptance date, Fort James or Fort James' board of
directors (A) enters into any agreement to effect any Takeover Proposal
other than the offer or the merger and other than a confidentiality
agreement in connection with an unsolicited Takeover Proposal, (B) amends,
conditions, qualifies, withdraws or modifies, or proposes or resolves to do
so, in a manner adverse to Georgia-Pacific, its approval and recommendation
of the offer, the merger and the merger agreement, or (C) approves or
recommends, or proposes to approve or recommend, any Takeover Proposal
other than the offer or the merger,
(3) prior to the acceptance date, Fort James or Fort James' board of
directors resolves to do anything listed in paragraph (2) above, or
(4) prior to the acceptance date, Fort James breaches any of its
obligations under "Covenants and Representations and Warranties--No
Solicitation of Alternative Transactions" above, or "Termination by Fort
James" below.
Termination by Fort James. The merger agreement may be terminated at any
time prior to the effective time of the merger by Fort James if:
(1) prior to the acceptance date, Georgia-Pacific breaches in any
material respect any representation, warranty, covenant or other agreement
contained in the merger agreement, which (A) cannot be or has not been
cured prior to the earlier of (x) 30 days following receipt by Fort James
of a written notice from Georgia-Pacific of such breach or failure to
perform and (y) the February 28, 2001 and (B) has not been waived by Fort
James, or
(2) prior to the acceptance date, a Superior Proposal is received by Fort
James and the Fort James board of directors reasonably determines in good
faith (after receiving the advice of outside legal counsel) that it is
necessary to terminate the merger agreement and enter into an agreement to
effect the Superior Proposal to comply with its fiduciary duties under
applicable law; provided that Fort James may not terminate the merger
agreement pursuant to the right described in this paragraph unless and
until: (i) six business days have elapsed following delivery to Georgia-
Pacific of a written notice of such determination by the Fort James board
of directors and during such six business day period Fort James has fully
cooperated with Georgia-Pacific, including, without limitation, informing
Georgia-Pacific of the terms and conditions of such Superior Proposal, and
the identity of the person making such Superior Proposal, with the intent
of enabling Georgia-Pacific and Fort James to agree to a modification of
the terms and conditions of the merger agreement so that the offer and the
merger may be effected; (ii) at the end of such six business day period the
Takeover Proposal continues to constitute a Superior Proposal and the Fort
James board of directors confirms its determination (after receiving the
advice of outside legal counsel) that it is necessary to terminate the
merger agreement and enter into an agreement to effect the Superior
Proposal to comply with its fiduciary duties under applicable law; and
(iii) (x) at or prior to such termination, Georgia-Pacific receives all
fees and expenses described under "Termination Fees" below and (y)
immediately following such termination Fort James enters into a definitive
acquisition, merger or similar agreement to effect the Superior Proposal.
63
<PAGE>
Termination Fees
Termination Fees Payable by Fort James to Georgia-Pacific. In the event that
the merger agreement is terminated by (i) Georgia-Pacific as described under
paragraph (2) under "--Termination of the Merger Agreement--Termination by
Georgia-Pacific" above or (ii) Fort James as described under paragraph (2)
under "--Termination of the Merger Agreement--Termination by Fort James"
above, then Fort James shall pay to Georgia-Pacific in immediately available
funds a termination fee in an amount equal to $125 million.
If the merger agreement is terminated by (i) Georgia-Pacific as described
under paragraph (3) or paragraph (4) under "--Termination of the Merger
Agreement--Termination by Georgia-Pacific " or (ii) by Georgia-Pacific or Fort
James under paragraph (1) under "--Termination of the Merger Agreement--
Termination by either Georgia-Pacific or Fort James" above and (x) a Takeover
Proposal has been made and publicly announced or communicated to Fort James'
shareholders after the date of the merger agreement and prior to February 28,
2001 and (y) concurrently with or within twelve months of the date of such
termination a Third Party Acquisition Event (as defined below) occurs, then
Fort James shall within 15 business days of the occurrence of such a Third
Party Acquisition Event pay to Georgia-Pacific in immediately available funds
a termination fee in an amount equal to $125 million.
If the merger agreement is terminated by Fort James or Georgia-Pacific under
paragraph (1) or paragraph (2) under "--Termination of the Merger Agreement--
Termination by either Georgia-Pacific or Fort James" and, at the time of such
termination (i) any of the events of circumstances under (A) "Conditions to
the Offer--Antitrust Condition" or (B) under paragraph (1) or paragraph (2)
under "Conditions to the Offer--Other Conditions to the Offer" occur or exist
and continue and (ii) no events or circumstances under paragraphs (3), (4),
(5) or (6) under "Conditions to the Offer--Other Conditions to the Offer" or
under "Conditions to the Offer--Registration Statement Effectiveness
Condition" occur or exist, then Georgia-Pacific shall pay to Fort James in
immediately available funds a reverse termination fee in an amount equal to
$125 million. The reverse termination fee is the exclusive remedy of Fort
James with respect to such termination, but nothing in the merger agreement
shall relieve any party from liability for the willful breach of its
representations and warranties or the breach of any of its covenants or
agreements set forth in the merger agreement.
"Third Party Acquisition Event" means (1) the consummation of a Takeover
Proposal involving the purchase of a majority of either the equity securities
of Fort James or of the consolidated assets of Fort James and its
subsidiaries, taken as a whole, or any such transaction that, if it had been
proposed prior to the termination of the merger agreement, would have
constituted a Takeover Proposal, or (2) the entering into by Fort James or any
of its subsidiaries of a definitive agreement with respect to any such
transaction.
Amendments
The merger agreement may be amended, modified and supplemented in writing by
the parties thereto in any and all respects before the acceptance date
(notwithstanding the Fort James shareholder approval), by action taken by the
respective boards of directors of Georgia-Pacific and the Fort James or by the
respective officers authorized by such boards of directors or otherwise, as
the case may be; provided, that after Fort James shareholder approval, no
amendment shall be made which by law requires further approval by the
shareholders of Fort James without such further approval.
64
<PAGE>
INTERESTS OF CERTAIN PERSONS
Each material agreement, arrangement or understanding and any actual or
potential conflict of interest between Fort James or its affiliates and Fort
James' executive officers, directors or affiliates, or between Fort James or
its affiliates and Georgia-Pacific or the Purchaser or their respective
executive officers, directors or affiliates, is either incorporated herein by
reference as a result of the previous sentence or set forth below.
Treatment of Equity Awards. The merger agreement provides that not less than
five business days prior to a change of control of Fort James, each holder of
an option to purchase shares of Fort James common stock shall have the right
to elect to have, in whole or in part, their options cashed out or to elect to
have, in whole or in part, their options exchanged for options to purchase
shares of Georgia Pacific common stock (See "The Merger Agreement--Treatment
of Fort James Stock Options, Performance Shares and Restricted or Performance
Share Units"). A change of control will occur upon the consummation of the
offer. Also upon consummation of the offer, each outstanding option to
purchase shares of Fort James common stock will, by its terms, to the extent
not already vested, become immediately fully vested and exercisable and each
outstanding share of restricted stock and outstanding performance share will,
by its terms, to the extent not already vested or free of restrictions, become
immediately fully vested and the restrictions thereon will lapse. In addition,
upon consummation of the offer, each restricted stock unit will, by its terms,
immediately vest and become payable in cash. In addition, if, during the
three-year period following consummation of the offer, an employee's
employment is terminated by Fort James without cause, or the employee
terminates his employment for "good reason" (as defined in the employee's
employment agreement), the option exercise period for each outstanding option
held by such employee shall continue until the earlier of three years
following the date the offer is completed or the last day of the option's
original scheduled term.
As of July 31, 2000, the executive officers of Fort James held an aggregate
of 3,987,759 options, 187,604 shares of restricted stock, 609,765 performance
shares and 725,000 restricted stock units that were unvested or subject to
restrictions and which will become fully vested and exercisable or free of
restrictions on the consummation of the offer. In addition, as of July 31,
2000, non-employee directors held an aggregate of 9,915 shares of restricted
stock that were unvested and subject to restrictions and would become vested
and free of restrictions if the non-employee director ceased to be a member of
the Fort James board of directors as a result of a change of control of Fort
James.
Employment Agreement and Individual Supplemental Retirement Plan. Fort James
has employment agreements with each of its named executive officers (Messrs.
Cutchins, Haberli, Lundgren, Marsh and Neil) and with eight of its other
executive officers that provide for severance benefits in the event of a
termination of the executive's employment by Fort James other than for cause
(as defined in the employment agreements) or disability, or a termination of
the executive's employment by the executive with good reason (as defined in
the employment agreements) during the three-year period following completion
of the offer (in the case of Mr. Neil and three of the other executive
officers, during the remainder of the three-year term of his employment
agreement).
If Fort James terminates an executive's employment other than for cause or
disability, or if the executive terminates his employment for good reason, the
executive will be entitled to receive a lump sum cash severance payment equal
to the sum of (1) any accrued unpaid salary, plus a prorated annual bonus
based on the executive's highest bonus in the immediately preceding five years
(three years for Mr. Neil and four of the other executive officers) ("Annual
Bonus"); (2) three times the executive's base salary and Annual Bonus; and (3)
if the executive is not age 55, a supplemental retirement payment based on the
additional pension amounts (under both qualified defined benefit plans and
supplemental plans, including Mr. Marsh's Supplemental Retirement Plan
described below) that the executive would have accrued had he remained
employed for three additional years, assuming that the executive's
compensation for such three years is his final base salary and Annual Bonus.
Upon such a termination of employment, each executive will also be
automatically vested in any unvested shares of restricted stock, stock
options, performance shares and other equity-based awards, and the executive
and his family will receive continued coverage under certain Fort James
welfare benefit plans for three years. Each employment agreement also provides
that the executive will be made whole on an after-tax basis with respect to
certain excise taxes which may be imposed upon payments under the employment
agreement.
65
<PAGE>
In addition to the supplemental retirement payment described above, each
executive (other than Mr. Neil and four of the other executive officers) will
be entitled to the following retirement benefits in the event of a termination
of his employment other than for cause or disability, or the executive's
termination of his employment for good reason: (1) three years of additional
age and service credit for purposes of determining the executive's retirement
benefits under both qualified defined benefit plans and supplemental plans,
using the executive's final base salary and Annual Bonus to calculate the
additional retirement benefit amount as a result of the additional age and
service credit (other than for Mr. Marsh); (2) eligibility for retiree medical
plan coverage; and (3) a lump sum cash payment of $50,000.
Under Mr. Marsh's Supplemental Retirement Plan, upon consummation of the
offer, (1) he will be credited with up to two years additional service if
necessary to provide him with six years and ten months service, (2) the basic
benefit under the plan will be increased by 5% if he retires at age 54, and
10% if he retires on or after the first day of the month coinciding with or
next following the date he attains age 55, (3) reduction factors for payments
beginning before age 55 will not apply, (4) the value of retirement benefits
will be paid in a lump sum, and (5) if he is terminated for cause (as defined
in the plan), his rights under the plan will be determined as if the
termination were not for cause. For purposes of the benefits under the plan,
Mr. Marsh will be credited with the additional years of service that he is
entitled to receive under his employment agreement upon a termination of
employment (as described above).
Split Dollar Life Insurance Plan. Under the Fort James Split Dollar Life
Insurance Plan, each executive officer whose employment terminates within two
years following consummation of the offer will be permitted to continue in the
plan, and the Fort James premium payment obligation will continue for a period
of 15 years from the effective date of the executive officer's participation
in the plan.
Appointment to the Georgia-Pacific Board of Directors. Under the terms of
the merger agreement, at the effective time of the merger, three individuals
from among the present directors of Fort James will be appointed to Georgia-
Pacific's board of directors.
Directors' and Officers' Insurance; Indemnification. The merger agreement
provides that for a period of six years from the effective time of the merger,
the surviving corporation in the merger will maintain in effect Fort James'
existing directors' and officers' liability insurance covering those persons
who were covered under such insurance on July 16, 2000 (the "Indemnified
Parties"); provided that Georgia-Pacific is not required to expend an amount
in excess of 200% of the annual premiums currently paid by Fort James for such
insurance. If such insurance coverage is not otherwise available, Georgia-
Pacific will cause its directors' and officers' liability insurance then in
effect to cover those persons who are covered on July 16, 2000 with respect to
those matters covered by Fort James' directors' and officers' liability
policy.
The surviving corporation will also indemnify all Indemnified Parties to the
fullest extent permitted by applicable law with respect to all acts and
omissions arising out of such individuals' service as officers, directors,
employees or agents of Fort James or any of its subsidiaries or as trustees or
fiduciaries of any plan for the benefit of employees of Fort James or any of
its subsidiaries occurring prior to the effective time of the merger,
including the transactions contemplated by the merger agreement. In the event
that any Indemnified Party becomes involved in any action, proceeding or
investigation in connection with any matter occurring prior to the effective
time of the merger, the surviving corporation will pay, as incurred, such
Indemnified Party's reasonable legal and other expenses (including the cost of
any investigation and preparation) incurred in connection therewith. If
expenses are advanced, however, prior to receiving such advance, if required
by applicable law, the Indemnified Party shall provide Georgia-Pacific with an
undertaking to repay such advance in full after it is ultimately determined
that such party was not entitled to indemnification. Subject to certain notice
and cooperation provisions, the surviving corporation in the merger will pay
all reasonable expenses, including attorneys' fees, that may be incurred by
any Indemnified Party in enforcing the indemnification provisions of the
merger agreement or any action involving an Indemnified Party resulting from
the transactions contemplated by the merger agreement.
66
<PAGE>
COMPARATIVE STOCK PRICES AND DIVIDENDS
Georgia-Pacific Group common stock is listed and traded on the NYSE under
the symbol "GP." Fort James common stock is listed and traded on the NYSE
under the symbol "FJ."
The following table sets forth, for the periods indicated, the high and low
sales prices per share of Georgia-Pacific Group common stock and Fort James
common stock as reported on the NYSE Composite Tape, and the quarterly cash
dividends per share declared with respect thereto.
<TABLE>
<CAPTION>
Georgia-Pacific Group Fort James Common
Common Stock Stock
----------------------------- ---------------------------
High Low Dividends High Low Dividends
--------- ---- --------- ---- --- ---------
<S> <C> <C> <C> <C> <C> <C>
1998
First Quarter........... 35 26 0.125 48 3/16 34 5/16 0.15
Second Quarter.......... 40 1/2 27 11/32 0.125 52 1/4 41 3/8 0.15
Third Quarter........... 30 1/4 18 11/16 0.125 45 1/4 27 0.15
Fourth Quarter.......... 30 22 0.125 41 32 0.15
1999
First Quarter........... 41 29 11/32 0.125 41 9/16 28 7/16 0.15
Second Quarter.......... 49 22 29/32 0.125 40 3/8 31 11/16 0.15
Third Quarter........... 52 37 1/2 0.125 42 25 15/16 0.15
Fourth Quarter.......... 50 35 3/4 0.125 29 1/16 24 9/16 0.15
2000
First Quarter........... 51 15/16 31 11/16 0.125 31 9/16 16 15/16 0.15
Second Quarter.......... 44 1/2 25 11/16 0.125 26 5/16 20 7/8 0.15
Third Quarter (through
August 17, 2000)....... 33 3/4 32 33/36 0.125 33 22 7/8 0.15
</TABLE>
On July 14, 2000, the last trading day prior to the announcement of the
execution of the merger agreement, the last sales price of Fort James common
stock was $24 9/16 per share and the last sales price of Georgia-Pacific Group
common stock was $28 5/8 share, as reported on the NYSE Composite Tape. On
, 2000, the most recent practicable trading day prior to the printing of
this prospectus, the last sales price of Fort James common stock was $ per
share and the last sales price of Georgia-Pacific Group common stock was $
per share.
The market prices of shares of Fort James common stock and Georgia-Pacific
Group common stock are subject to fluctuation. As a result, Fort James
shareholders are urged to obtain current market quotations.
On , 2000, there were approximately holders of record of Fort James
common stock and approximately holders of record of Georgia-Pacific Group
common stock.
Georgia-Pacific Group Dividend Policy
The holders of Georgia-Pacific Group common stock receive dividends if and
when declared by the Georgia-Pacific board of directors out of the lesser of
the funds legally available therefor and the available dividend amount (as
defined in Georgia-Pacific's articles of incorporation) with respect to the
Georgia-Pacific Group. Georgia-Pacific expects to continue paying quarterly
cash dividends on Georgia-Pacific Group common stock. However, Georgia-Pacific
cannot be certain that its dividend policy will remain unchanged after
completion of the merger. The declaration and payment of dividends after the
merger will depend upon the Georgia-Pacific board of directors' consideration
of business conditions, operating results, capital and reserve requirements
and other relevant factors. For a more detailed description of our dividend
policy please see "Description of Georgia-Pacific Capital Stock--Description
of Common Stock--Dividends."
67
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated financial information (the
"Pro Forma Financial Statements") is based on the historical financial
statements of Georgia-Pacific and Fort James, adjusted to give effect to the
acquisition of Fort James by Georgia-Pacific (the "Acquisition").
The Pro Forma Financial Statements were prepared to illustrate the estimated
effects of the Acquisition, including Acquisition-related debt and equity
transactions and debt repayments and certain assumptions. The Pro Forma
Consolidated Statements of Operations Data for the year ended January 1, 2000
and the six months ended July 1, 2000 give effect to the Acquisition, as if
the Acquisition had occurred as of January 1, 1999. The Pro Forma Consolidated
Balance Sheet Data give effect to the Acquisition as if it had occurred as of
July 1, 2000. The pro forma adjustments are described in the accompanying
notes. The pro forma adjustments are based upon available information and
certain assumptions that Georgia-Pacific's management believes are reasonable.
The Pro Forma Financial Statements do not purport to represent Georgia-
Pacific's results of operations or financial condition for any future period
or as of any date. The Pro Forma Financial Statements should be read in
conjunction with the historical consolidated financial statements of Georgia-
Pacific and Fort James and the notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," all of which are
incorporated herein by reference.
The Acquisition will be accounted for as a purchase. Under purchase
accounting, the total purchase cost and fair value of liabilities assumed will
be allocated to the tangible and intangible assets of Fort James based upon
their respective fair values as of the closing of the Acquisition based on
valuations and other studies which are not yet available. A preliminary
allocation of the purchase cost has been made to major categories of assets
and liabilities in the accompanying pro forma consolidated financial
information based on estimates. The actual allocation of purchase cost and the
resulting effect on income from operations may differ materially from the pro
forma amounts included herein.
On July 18, 2000, Georgia-Pacific signed a definitive agreement pursuant to
which The Timber Group would merge with and into Plum Creek Timber Co. The
disposition of The Timber Group is subject to approval by the shareholders of
both Plum Creek and The Timber Group, and receipt of a ruling from the
Internal Revenue Service that the transaction is tax-free to Georgia-Pacific,
Plum Creek and the holders of The Timber Group common stock. The disposition
of The Timber Group is also subject to receipt of applicable governmental
approvals and the satisfaction of customary closing conditions. Georgia-
Pacific will treat The Timber Group as a discontinued operation once the
significant contingencies surrounding the disposition of The Timber Group are
resolved. Closing on this transaction is expected by the end of the first
quarter of 2001. The following Pro Forma Financial Statements also include
adjustments to give effect to the disposal of The Timber Group.
68
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS DATA
Year Ended January 1, 2000
(in millions, except per share amounts)
<TABLE>
<CAPTION>
Actual
Actual Fort James Actual
Georgia-Pacific Corporation Combined Pro Forma
Corporation Fiscal Year Total Timber Combined
Fiscal Year Ended before Pro Transaction Pro Excluding
Ended January December 26, Forma Pro Forma Pro Forma Forma Timber
1, 2000 1999 Adjustments Adjustments Combined Adjustments (k) Operations
--------------- ------------ ----------- ----------- --------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales............... $17,977 $6,827 $24,804 $ (29)a
(126)b
(296)g
(461)j $23,892 $ (181) $23,711
Costs and expenses
Cost of sales,
excluding depreciation
and cost of timber
harvested shown
below................. 13,333 4,262 17,595 (29)a
(126)b
(212)g 17,228 43 17,271
Depreciation,
amortization and cost
of timber harvested... 1,013 463 1,476 153 c
-- e
(19)g 1,610 190 1,800
Administrative
expenses.............. 1,670 1,244 2,914 (25)g
(461)j 2,428 (43) 2,385
Interest............... 495 239 734 590 f
6 d 1,330 (69) 1,261
Other expense
(income).............. (355) 115 (240) (240) 355 115
------- ------ ------- ----- ------- ------ -------
Total cost and
expenses............ 16,156 6,323 22,479 (123) 22,356 476 22,832
------- ------ ------- ----- ------- ------ -------
Income from continuing
operations before
income taxes........... 1,821 504 2,325 (789) 1,536 (657) 879
Provision for income
taxes.................. 705 155 860 (308)h 552 (257) 295
------- ------ ------- ----- ------- ------ -------
Income from continuing
operations............. $ 1,116 $ 349 $ 1,465 $(481) $ 984 $ (400) $ 584
======= ====== ======= ===== ======= ====== =======
Georgia-Pacific Group
Income from continuing
operations............ $ 716 $ 349 $ 1,065 $(481) $ 584 $ 584
======= ====== ======= ===== ======= =======
Basic income from
continuing operations
per share............. $ 4.17 $ 2.59 $ 2.59
======= ======= =======
Diluted income from
continuing operations
per share............. $ 4.07 $ 2.54 $ 2.54
======= ======= =======
Basic average number of
shares outstanding.... 171.8 54.2 i 226.0 226.0
======= ======= =======
Diluted average number
of shares
outstanding........... 175.9 54.2 i 230.1 230.1
======= ======= =======
The Timber Company
Income from continuing
operations............ $ 400 $ 400 $ (400) $ --
======= ======= ====== =======
Basic income from
continuing operations
per share............. $ 4.75 $ 4.75 $(4.75) $ --
======= ======= ====== =======
Diluted income from
continuing operations
per share............. $ 4.73 $ 4.73 $(4.73) $ --
======= ======= ====== =======
Basic average number of
shares outstanding.... 84.1 84.1 (84.1) --
======= ======= ====== =======
Diluted average number
of shares
outstanding........... 84.6 84.6 (84.6) --
======= ======= ====== =======
</TABLE>
See notes to unaudited pro forma consolidated statement of operations data.
69
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS DATA
Six Months Ended July 1, 2000
(in millions, except per share amounts)
<TABLE>
<CAPTION>
Actual
Fort James Actual
Actual Corporation Combined Pro Forma
Georgia-Pacific Six Months Total Timber Combined
Corporation Ended before Pro Pro Transaction Pro Excluding
Six Months Ended June 25, Forma Pro Forma Forma Forma Timber
July 1, 2000 2000 Adjustments Adjustments Combined Adjustments (k) Operations
---------------- ----------- ----------- ----------- -------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales............... $10,912 $3,433 $14,345 $ (15)a
(60)b
(115)g
(240)j $13,915 $ (78) $13,837
Costs and expenses
Cost of sales,
excluding depreciation
and cost of timber
harvested shown
below................. 8,121 2,192 10,313 (15)a
(60)b
(87)g 10,151 9 10,160
Depreciation,
amortization and cost
of timber harvested... 526 241 767 76 c
-- e
(7)g 836 76 912
Administrative
expenses.............. 1,218 587 1,805 (12)g
(240)j 1,553 (20) 1,533
Interest............... 291 115 406 271 f
3 d 680 (21) 659
Other expense
(income).............. -- (20) (20) (20) -- (20)
------- ------ ------- ----- ------- ------ -------
Total cost and
expenses............ 10,156 3,115 13,271 (71) 13,200 44 13,244
------- ------ ------- ----- ------- ------ -------
Income from continuing
operations before
income taxes........... 756 318 1,074 (359) 715 (122) 593
Provision for income
taxes.................. 282 105 387 (140)h 247 (48) 199
------- ------ ------- ----- ------- ------ -------
Income from continuing
operations............. $ 474 $ 213 $ 687 $(219) $ 468 $ (74) $ 394
======= ====== ======= ===== ======= ====== =======
Georgia-Pacific Group
Income from continuing
operations............ $ 400 $ 213 $ 613 $(219) $ 394 $ 394
======= ====== ======= ===== ======= =======
Basic income from
continuing operations
per share............. $ 2.34 $ 1.75 $ 1.75
======= ======= =======
Diluted income from
continuing operations
per share............. $ 2.30 $ 1.73 $ 1.73
======= ======= =======
Basic average number of
shares outstanding.... 171.2 54.2 i 225.4 225.4
======= ======= =======
Diluted average number
of shares
Outstanding........... 173.6 54.2 i 227.8 227.8
======= ======= =======
The Timber Company
Income from continuing
operations............ $ 74 $ 74 $ (74) $ --
======= ======= ====== =======
Basic income from
continuing operations
per share............. $ 0.91 $ 0.91 $(0.91) $ --
======= ======= ====== =======
Diluted income from
continuing operations
per share............. $ 0.91 $ 0.91 $(0.91) $ --
======= ======= ====== =======
Basic average number of
shares outstanding.... 81.4 81.4 (81.4) --
======= ======= ====== =======
Diluted average number
of shares
outstanding........... 81.7 81.7 (81.7) --
======= ======= ====== =======
</TABLE>
See notes to unaudited pro forma consolidated statement of operations data.
70
<PAGE>
Georgia-Pacific Corporation
Notes to Unaudited Pro Forma Consolidated Statement of Operations Data
(in millions, except per share amounts)
a. Represents the elimination of sales from Georgia-Pacific to Fort James.
b. Represents the elimination of sales from Fort James to Georgia-Pacific.
c. Represents the pro forma adjustments for goodwill amortization:
<TABLE>
<CAPTION>
Six months
Year ended ended
January 1, 2000 July 1, 2000
--------------- ------------
<S> <C> <C>
Elimination of Fort James historical goodwill
amortization................................ $(18) $(9)
Estimated pro forma goodwill amortization
(goodwill is amortized on a straight-line
basis over 40 years)........................ 171 85
---- ---
Net pro forma adjustment................... $153 $76
==== ===
</TABLE>
d. Represents the pro forma adjustments for amortization of debt issuance
costs:
<TABLE>
<CAPTION>
Six months
Year ended ended
January 1, 2000 July 1, 2000
--------------- ------------
<S> <C> <C>
Elimination of Fort James historical debt
issuance costs amortization related to
refinanced debt........................... $(2) $(1)
Amortization of debt issuance costs on
Acquisition-related debt.................. 8 4
--- ---
Net pro forma adjustment................. $ 6 $ 3
=== ===
</TABLE>
e. The net carrying value of Fort James' patents, trademarks, and property,
plant and equipment is estimated to equal the current replacement cost. In
addition, the remaining useful lives of the intangible assets, property,
plant and equipment are estimated to equal the historical remaining useful
lives. Accordingly, there is no pro forma adjustment for amortization
expense or depreciation expense. The final valuation of intangible assets
and property, plant and equipment may differ significantly from their
actual carrying value; accordingly, the actual amortization expense and
depreciation expense may differ materially from the pro forma amounts
included herein.
f. The pro forma adjustments to interest expense are based on the elimination
of certain Fort James and Georgia-Pacific historical short-term debt, the
pro forma borrowing amounts as of the assumed Acquisition date and the
rates expected to be in effect as of the closing of debt transactions
related to the Acquisition as follows:
<TABLE>
<CAPTION>
Six months
Year ended ended
January 1, 2000 July 1, 2000
--------------- ------------
<S> <C> <C>
Bank debt ($8,611 at 8%).................... $689 $345
Elimination of Fort James' historical
interest expense related to refinanced
debt....................................... (43) (32)
Elimination of Georgia-Pacific's historical
interest expense related to refinanced
debt....................................... (56) (42)
---- ----
Pro forma interest expense adjustment..... $590 $271
==== ====
</TABLE>
71
<PAGE>
g. In connection with the Acquisition, Georgia-Pacific is preparing to divest
approximately 250,000 tons of tissue manufacturing capacity. These
adjustments represent the elimination of revenues and expenses associated
with the divested capacity. The following is a summary of estimated
revenues, costs and expenses associated with the divested capacity:
<TABLE>
<CAPTION>
Six months
Year ended ended
January 1, 2000 July 1, 2000
--------------- ------------
<S> <C> <C>
Net sales..................................... $ 296 $115
Cost of sales................................. (212) (87)
Depreciation and amortization expense......... (19) (7)
Administrative expenses....................... (25) (12)
----- ----
Income from operations...................... $ 40 $ 9
===== ====
</TABLE>
h. The tax effect of the pro forma adjustments to earnings before income taxes
is based on an estimated income tax rate of 39%.
i. Represents the pro forma adjustment to weighted average shares outstanding
for shares issued in connection with the Acquisition as follows:
<TABLE>
<CAPTION>
<S> <C>
Fort James outstanding
shares at June 25, 2000
(in millions).......... 205
Exchange ratio.......... x 0.2644
--------
Estimated number of
shares issued (in
millions).............. 54.2
========
</TABLE>
j. Represents the pro forma adjustment to conform the classification of trade
spending costs.
k. Represents the elimination of The Timber Group revenues and expenses to
give effect to the disposition of The Timber Group.
72
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET DATA
As of July 1, 2000
($ in millions)
<TABLE>
<CAPTION>
Actual
Actual Actual Combined Pro Forma
Georgia-Pacific Fort James Total Timber Combined
Corporation Corporation before Pro Transaction Pro Excluding
as of as of Forma Pro Forma Pro Forma Forma Timber
July 1, 2000 June 25, 2000 Adjustments Adjustments Combined Adjustments (j) Operations
--------------- ------------- ----------- ----------- --------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Current assets
Cash................... $ 30 $ 5 $ 35 $ 35 $ -- $ 35
Receivables, net of
allowance for doubtful
accounts.............. 2,469 895 3,364 $ (34) i 3,330 (4) 3,326
Inventories............ 2,072 801 2,873 48 a
(34) i 2,887 (2) 2,885
Deferred income tax
assets................ 128 89 217 (19) a 198 -- 198
Other current assets... 66 41 107 107 (3) 104
------- ------- ------- ------- ------- ------- -------
Total current assets... 4,765 1,831 6,596 (39) 6,557 (9) 6,548
------- ------- ------- ------- ------- ------- -------
Timber and timberlands.. 1,238 1,238 1,238 (1,161) 77
Property, plant and
equipment, net of
accumulated
amortization........... 7,047 4,274 11,321 -- b
(199) i 11,122 (18) 11,104
Goodwill, net........... 2,636 498 3,134 6,657 c
165 c,f 9,956 -- 9,956
Other assets............ 1,510 503 2,013 (1) d
-- b
40 e 2,052 (353) 1,699
------- ------- ------- ------- ------- ------- -------
Total assets........... $17,196 $ 7,106 $24,302 $ 6,623 $30,925 $(1,541) $29,384
======= ======= ======= ======= ======= ======= =======
Liabilities and Shareholders' Equity
Current liabilities
Short-term debt........ $ 2,506 $ 70 $ 2,576 $ 2,576 $ (362) $ 2,214
Accounts payable....... 895 581 1,476 $ (13) i 1,463 (8) 1,455
Accrued compensation... 292 292 292 (4) 288
Other current
liabilities........... 553 570 1,123 1,123 (31) 1,092
------- ------- ------- ------- ------- ------- -------
Total current
liabilities........... 4,246 1,221 5,467 (13) 5,454 (405) 5,049
------- ------- ------- ------- ------- ------- -------
Long-term debt,
excluding current
portion................ 4,612 3,449 8,061 8,611 f
(1,207) f
(1,020) f
(254) i 14,191 (665) 13,526
Senior deferrable
notes.................. 863 863 863 -- 863
Other long-term
liabilities............ 1,813 663 2,476 2,476 (9) 2,467
Deferred income tax
liabilities............ 1,534 727 2,261 2,261 (380) 1,881
Shareholders' equity
Common stock........... 155 20 175 (20) g
43 h 198 (1) 197
Treasury stock......... (1,021) (1,021) (1,021) 330 (691)
Additional paid-in
capital............... 1,521 2,852 4,373 (2,852) g
1,509 h 3,030 (26) 3,004
Retained earnings...... 3,514 (1,562) 1,952 1,562 g 3,514 (385) 3,129
Long-term incentive
plan deferred
compensation.......... (5) (5) (5) -- (5)
Accumulated other
comprehensive income.. (36) (264) (300) 264 g (36) -- (36)
------- ------- ------- ------- ------- ------- -------
Total shareholders'
equity................ 4,128 1,046 5,174 506 5,680 (82) 5,598
------- ------- ------- ------- ------- ------- -------
Total liabilities and
shareholders' equity.. $17,196 $ 7,106 $24,302 $ 6,623 $30,925 $(1,541) $29,384
======= ======= ======= ======= ======= ======= =======
</TABLE>
See notes to unaudited pro forma consolidated balance sheet data.
73
<PAGE>
Georgia-Pacific Corporation
Notes to Unaudited Pro Forma Consolidated Balance Sheet Data
(in millions, except per share amounts)
--------
a. Represents the adjustment of inventory to its estimated fair value. This
adjustment relates to the elimination of the Fort James actual LIFO
reserve and related deferred taxes. The final valuation of inventory may
differ significantly from the pro forma amount included herein.
b. For purposes of preparing these Pro Forma Financial Statements, Georgia-
Pacific has assumed that the actual net carrying value of Fort James'
patents, trademarks, and property, plant and equipment is equivalent to
their current replacement cost. Accordingly, there is no pro forma
adjustment to revalue intangible assets or property, plant and equipment.
The final valuation of intangible assets and property, plant and equipment
may differ significantly from their actual carrying value.
c. The Acquisition will be accounted for as a purchase. Under purchase
accounting, the total purchase cost and the fair value of the liabilities
assumed will be allocated to the tangible and intangible assets of Fort
James based upon their respective fair values as of the closing based on
valuations and other studies which are not yet available. A preliminary
allocation of the purchase cost has been made to tangible and intangible
assets based on estimates. The final allocation of purchase cost may
differ significantly from the pro forma amounts included herein.
The estimated purchase cost and preliminary adjustments to historical book
values are as follows:
<TABLE>
<S> <C>
Purchase cost:
Net cash purchase price before estimated fees and expenses.... $ 6,179 (f)
Value of equity issued........................................ 1,552 (h)
Estimated fees and expenses................................... 165 (f)
-------
Total purchase price........................................ 7,896
Estimated value of net assets acquired:
Actual book value of net assets at June 25, 2000.............. (1,046)
Reversal of historical debt issuance costs.................... 1 (d)
Increase inventory to fair market value....................... (48)(a)
Deferred tax effect of inventory adjustment................... 19 (a)
-------
Adjusted book value of net assets acquired.................. (1,074)
-------
Estimated goodwill............................................ $ 6,822
=======
</TABLE>
Goodwill will be amortized on a straight-line basis over 40 years.
d. In conjunction with the Acquisition, Georgia-Pacific expects to refinance
certain Georgia-Pacific and Fort James short-term debt. This pro forma
adjustment reflects the elimination of $1 million of historical debt
issuance costs for related Fort James debt that is to be refinanced (see
note (f) below).
e. Reflects the recording of $40 million of estimated debt issuance costs
related to the Acquisition-related debt (see note (f) below).
74
<PAGE>
f. Reflects the sources and uses of cash related to the acquisition of Fort
James as follows:
<TABLE>
<S> <C>
Sources of funds:
Bank debt....................................................... $ 8,611
=======
Uses of funds:
Net cash purchase of Fort James shares (see * below)............ $ 6,126
Cash pay-out differential for Fort James
in-the-money options (see ** below)............................ 53
Refinance certain Fort James short-term debt.................... 1,020
Refinance certain Georgia-Pacific short-term debt............... 1,207
Estimated transaction expenses.................................. 165
Debt issuance costs (see note e above).......................... 40
-------
Total uses of funds........................................... $ 8,611
=======
* Represents the net cash purchase of outstanding Fort James shares as
follows:
Fort James outstanding shares (in millions)..................... 205
In-the-money options (in millions).............................. 7
-------
Total shares and options outstanding (in millions).............. 212
Cash purchase price per share................................... x$29.60
-------
Gross cash offer value.......................................... $ 6,275
Less option proceeds ($23.49 per share)......................... (149)
-------
Net cash purchase of Fort James shares........................ $ 6,126
=======
** For purposes of these Pro Forma Financial Statements, Georgia-Pacific has
assumed that holders of in-the-money Fort James options will receive the
full value of the offer price in cash in lieu of Georgia-Pacific Group
common stock. Accordingly, the cash pay-out differential is determined as
follows:
Offer price per share........................................... $ 37.17
Cash purchase price per share................................... (29.60)
-------
Difference per share............................................ 7.57
Fort James in-the-money options (in millions)................... x 7
-------
Cash pay-out differential....................................... $ 53
=======
g. Reflects the elimination of historical Fort James shareholders' equity.
h. Reflects the issuance of Georgia-Pacific Group common stock as follows:
Offer price per share........................................... $ 37.17
Total Fort James shares and options outstanding (in millions)
(see * above).................................................. x 212
-------
Total purchase price............................................ 7,880
Less gross cash offer value (see * above)....................... (6,275)
Less cash pay-out differential (see ** above)................... (53)
-------
Value of equity issued.......................................... $ 1,552
=======
</TABLE>
i. In connection with the Acquisition, Georgia-Pacific is preparing to divest
approximately 250,000 tons of tissue manufacturing capacity. For purposes
of these Pro Forma Financial Statements, Georgia-Pacific has assumed that
these operations were sold for the net book value of $254 million in cash
(with a corresponding reduction in debt) resulting in no gain or loss on
the sale. Georgia-Pacific expects to sell these
75
<PAGE>
operations for amounts greater than the net book value; accordingly, the
actual proceeds from the sale could differ materially from the pro forma
amounts included herein. The following is a summary of estimated asset and
liability values associated with the divested capacity:
<TABLE>
<S> <C>
Accounts receivable................................................. $ 34
Inventory........................................................... 34
Property, plant and equipment, net.................................. 199
Accounts payable.................................................... (13)
----
Net proceeds from sale.............................................. $254
====
</TABLE>
j. Represents the elimination of The Timber Group assets, liabilities and
equity to give effect to the disposition of The Timber Group.
76
<PAGE>
DESCRIPTION OF GEORGIA-PACIFIC CAPITAL STOCK
Description of Preferred Stock
We have summarized below the general terms of the Preferred Stock, without
par value per share, "Preferred Stock," and the Junior Preferred Stock,
without par value per share, "Junior Preferred Stock." The summary is not
complete. We encourage you to read our restated articles of incorporation
which have been filed with the SEC.
General. We are authorized to issue up to 10,000,000 shares of Preferred
Stock and 25,000,000 shares of Junior Preferred Stock, of which 5,000,000
shares have been designated as Series B Junior Preferred Stock and 5,000,000
shares have been designated as Series C Junior Preferred Stock. The shares of
Series B Junior Preferred Stock and Series C Junior Preferred Stock have been
reserved for issuance in connection with our restated rights agreement
described under "Description of Common Stock--Restated Rights Agreement." As
of the date of this prospectus, we had no Preferred Stock or Junior Preferred
Stock outstanding.
Our restated articles of incorporation authorize our board of directors to
issue Preferred Stock and Junior Preferred Stock in one or more series,
without shareholder action. Our board of directors can determine the rights,
preferences and limitations of each series. Prior to the issuance of each
series of Preferred Stock or Junior Preferred Stock, as the case may be, our
board of directors will adopt resolutions creating and designating the series
as a series of Preferred Stock or Junior Preferred Stock, as applicable.
Rank. Any series of Preferred Stock will rank:
. senior to all classes of common stock and Junior Preferred Stock with
respect to dividend rights and liquidation rights;
. senior to classes of Preferred Stock with respect to either dividend
rights or liquidation rights where the terms of the Preferred Stock
entitle the holders to receipt of dividends or a liquidation
distribution, as the case may be, in preference or priority to the
holders of such other classes of Preferred Stock;
. equally with classes of Preferred Stock with respect to either dividend
rights or liquidation rights if the holders of the Preferred Stock are
entitled to receipt of dividends or a liquidation distribution, as the
case may be, without preference or priority one over the other; and
. junior to classes of Preferred Stock with respect to either dividend
rights or liquidation rights if the rights of holders are subject or
subordinate to the rights of holders of such other classes of Preferred
Stock with respect to the receipt of dividends or a liquidation
distribution, as the case may be.
Any series of Junior Preferred Stock will rank:
. senior to all classes of common stock with respect to dividend rights
and liquidation rights;
. senior to classes of Junior Preferred Stock with respect to either
dividend rights or liquidation rights if the terms of the Junior
Preferred Stock entitle the holders to receipt of dividends or a
liquidation distribution, as the case may be, in preference or priority
to the holders of such other classes of Junior Preferred Stock;
. equally with classes of Junior Preferred Stock with respect to either
dividend rights or liquidation rights if the holders of the Junior
Preferred Stock are entitled to receipt of dividends or a liquidation
distribution, as the case may be, without preference or priority over
the other; and
. junior to all classes of Preferred Stock with respect to dividend rights
and liquidation rights, and to classes of Junior Preferred Stock with
respect to either dividend rights or liquidation rights if the rights of
holders are subject or subordinate to the rights of holders of such
other classes of Junior Preferred Stock with respect to the receipt of
dividends or a liquidation distribution, as the case may be.
77
<PAGE>
Dividend Rights. Dividends on the Preferred Stock and the Junior Preferred
Stock are cumulative. Different series of Preferred Stock and Junior Preferred
Stock may be entitled to dividends at different rates. The rates may be fixed
or variable or both.
Holders of the Preferred Stock and Junior Preferred Stock of each series
will be entitled to receive cash dividends, when, as and if declared by our
board of directors. Each dividend will be payable to the holders of record as
they appear on our stock record books on the record dates determined by our
board of directors.
No full dividends may be declared or paid or funds set apart for the payment
of dividends on any equal securities unless dividends have been paid or set
apart for payment on the Preferred Stock or Junior Preferred Stock, as the
case may be. If full dividends are not paid, the Preferred Stock or Junior
Preferred Stock, as the case may be, will share dividends pro rata with the
securities ranking equally. No dividends may be declared or paid or funds set
apart for the payment of dividends on any junior securities unless full
cumulative dividends for all dividend periods terminating on or prior to the
date of the declaration or payment will have been paid or declared and a sum
sufficient for the payment set apart for payment on the Preferred Stock or
Junior Preferred Stock, as the case may be.
Voting Rights. Except as required by applicable law, the holders of the
Preferred Stock and the Junior Preferred Stock will not be entitled to any
voting rights.
Liquidation Rights. If we liquidate, dissolve or terminate our affairs,
either voluntarily or involuntarily, the holders of each series of Preferred
Stock and Junior Preferred Stock will be entitled to receive, after we pay our
debts and liabilities and after we provide for liquidating distributions to
holders of securities senior to such series of Preferred Stock or Junior
Preferred Stock, as the case may be, and before we make any liquidating
distributions to holders of securities junior to such series of Preferred
Stock or Junior Preferred Stock, as the case may be, liquidating distributions
relating to such series of Preferred Stock and Junior Preferred Stock, as the
case may be, plus an amount equal to accrued and unpaid dividends for all
dividend periods prior to that point in time.
If the amounts payable with respect to such series of Preferred Stock or
Junior Preferred Stock, as the case may be, and any other securities equal
with such series are not paid in full, the holders of such series of Preferred
Stock or Junior Preferred Stock and the securities equal with such series will
share proportionately in the distribution of our assets in proportion to the
full liquidation preferences to which they are entitled. After the holders of
such series of Preferred Stock or Junior Preferred Stock, as the case may be,
are paid in full, they will have no right or claim to any of our remaining
assets.
Redemption. Neither the Preferred Stock nor Junior Preferred Stock is
redeemable.
Description of Common Stock
We have summarized below the material terms of Georgia-Pacific Group common
stock and The Timber Group common stock. The summary is not complete. We
encourage you to read our restated articles of incorporation and our bylaws.
You should also refer to the applicable provisions of the Georgia Business
Corporation Code (the "GBCC").
Authorized and Outstanding Shares. We are authorized to issue up to
400,000,000 shares of Georgia-Pacific Group common stock, par value $.80 per
share. At , 2000, we had outstanding shares of Georgia-Pacific Group
common stock. We also are authorized to issue up to 250,000,000 shares of The
Timber Group common stock, par value $.80 per share. At , 2000, we had
outstanding shares of The Timber Group common stock.
As described under "Recent Developments," on July 18, 2000, Georgia-Pacific
entered into an Agreement and Plan of Merger with Plum Creek Timber Co.
pursuant to which Plum Creek has agreed to
78
<PAGE>
acquire The Timber Group. Under the terms of the merger agreement,
shareholders of The Timber Group will receive in exchange for each share of
The Timber Group common stock held thereby, 1.37 shares of Plum Creek common
stock. Georgia-Pacific expects such merger to be completed by the end of the
first quarter of 2001. However, such merger is subject to certain significant
conditions, including the receipt by Georgia-Pacific of a ruling from the
United States Internal Revenue Service indicating that such merger will be, in
all respects, tax-free to Georgia-Pacific, Plum Creek and the holders of, The
Timber Group common stock. Accordingly, no assurances can be given that such
merger will be completed.
Dividends. Our ability to pay dividends on Georgia-Pacific Group common
stock and The Timber Group common stock is limited by Georgia law. Under
Georgia law, dividends are limited to our legally available assets and subject
to the prior payment of dividends on any outstanding shares of Preferred Stock
and Junior Preferred Stock. Under Georgia law, assets are not legally
available for paying dividends if (1) we would not be able to pay our debts as
they become due in the usual course of business or (2) our total assets would
be less than our total liabilities plus, subject to some exceptions, any
amounts necessary to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights are superior to those of shareholders
receiving the dividend.
Our ability to pay dividends on Georgia-Pacific Group common stock and The
Timber Group common stock is also limited by our restated articles of
incorporation. Under our restated articles of incorporation, dividends are
limited to an amount not greater than the available dividend amount for the
relevant group. Each group's available dividend amount is, on any date, any
amount in excess of the minimum amount necessary for the group to be able to
pay its debts as they become due in the usual course of business, as
determined by our board of directors exercising its business judgment based on
the facts and circumstances then existing. This amount is calculated as if
each group was a stand-alone company.
Under Georgia law, the amount of assets legally available for paying
dividends is determined on the basis of our entire company, and not just the
respective groups. Consequently, the amount of our legally available assets
will reflect the amount of any net losses of each group, any dividends on
Georgia-Pacific Group common stock, The Timber Group common stock, any
Preferred Stock or any Junior Preferred Stock, and any repurchases of Georgia-
Pacific Group common stock or The Timber Group common stock or Preferred Stock
or Junior Preferred Stock. Dividend payments on Georgia-Pacific Group common
stock and The Timber Group common stock could be precluded because legally
available assets are not available under Georgia law, even though the
available dividend amount test for the particular relevant group was met.
Moreover, we cannot assure you that there will be an available dividend amount
for either group.
Subject to these restrictions on paying dividends, our board of directors
may, in its sole discretion, declare and pay dividends exclusively on the
Georgia-Pacific Group common stock, exclusively on The Timber Group common
stock or on both, in equal or unequal amounts, without having to take into
account the relative available dividend amounts for the two groups, the amount
of dividends it previously declared on each class of common stock, the
respective voting or liquidation rights of each class or any other factor.
Voting Rights. Under our restated articles of incorporation, the entire
voting power of our shareholders is vested in the holders of Georgia-Pacific
Group common stock and The Timber Group common stock. Except as otherwise
provided by law, by the terms of any outstanding Preferred Stock and Junior
Preferred Stock or by any provision of our restated articles of incorporation
restricting the power to vote on a specified matter to other shareholders,
holders of Georgia-Pacific Group common stock and The Timber Group common
stock are entitled to vote on any matter on which our shareholders are, by law
or by the provisions of our restated articles of incorporation or our bylaws,
entitled to vote. Both classes of common stock vote together as a single
voting group on each matter on which holders of common stock are generally
entitled to vote.
On each matter as to which holders of both classes of common stock vote
together as a single voting group:
. each share of Georgia-Pacific Group common stock has one vote; and
79
<PAGE>
. each share of Timber Group common stock has a number of votes equal to
the quotient of the time-weighted average market value of one share of
The Timber Group common stock over the 20-trading day period ending on
the 10th trading day prior to the record date for determining the common
shareholders entitled to vote, divided by the time-weighted average
market value of one share of Georgia-Pacific Group common stock over the
same period.
In calculating the time-weighted average market values of the two classes of
common stock, the average market values for the second, third and fourth five-
trading day period in the 20-trading day period will be weighted two times,
three times and four times, respectively, the weight given to the average
market value of the first five trading days in the 20-trading day period.
Accordingly, the relative per share voting rights of Georgia-Pacific Group
common stock and The Timber Group common stock fluctuate depending upon
changes in the relative market values of shares of the two classes of common
stock. As of the date of this prospectus, Georgia-Pacific Group common stock
has a majority of the voting power because the aggregate market value of the
outstanding shares of Georgia-Pacific Group common stock is greater than the
aggregate market value of the outstanding shares of The Timber Group common
stock.
If shares of only one class of common stock are outstanding, each share of
that class will have one vote. If either class of common stock is entitled to
vote as a separate voting group with respect to any matter, each share of that
class will, for purposes of that vote, have one vote on the matter.
The holders of Georgia-Pacific Group common stock and The Timber Group
common stock do not have any right to vote separately as a voting group on any
matter coming before our shareholders, except for the limited group voting
rights provided under Georgia law described below, by NYSE rules or as
determined by our board of directors. In addition to the approval of the
holders of a majority of the voting power of all shares of common stock voting
together as a single voting group, the approval of a majority of the
outstanding shares of Georgia-Pacific Group common stock or The Timber Group
common stock, voting as a separate voting group, would also be required under
Georgia law to approve any amendment to our restated articles of incorporation
that would, among other things:
. increase or decrease the number of authorized shares of Georgia-Pacific
Group common stock or The Timber Group common stock; or
. change the designation, rights, preferences or limitations of the shares
of the class.
The following illustration demonstrates the calculation of the number of
votes each share of The Timber Group common stock would be entitled on all
matters on which holders of Georgia-Pacific Group common stock and The Timber
Group common stock vote together as a single voting group. If:
. the time-weighted average market value of The Timber Group common stock
during the 20-trading day valuation period was $30 per share; and
. the time-weighted average market value of Georgia-Pacific Group common
stock during the 20-trading day valuation period was $28 per share,
then each share of Georgia-Pacific Group common stock would have one vote and
each share of The Timber Group common stock would have 1.07 votes based on the
following calculation:
$30 per share
------------- = 1.07 votes
$28 per share
If, after the merger, 230 million shares of Georgia-Pacific Group common
stock and 70 million shares of The Timber Group common stock were outstanding
and their respective trading prices did not change from those assumed above,
the shares of Georgia-Pacific Group common stock would represent 75.4% of our
total voting power and the shares of The Timber Group common stock would
represent 24.6% of our total voting power.
80
<PAGE>
Mandatory Dividend, Redemption or Conversion of Common Stock if Disposition of
Group Assets Occurs. If we dispose of all or substantially all of the
properties and assets of either the Georgia-Pacific Group or The Timber Group,
we must take action that returns the value of those assets to the holders of
the common stock intended to reflect that group. That action could take the
form of a cash dividend, a redemption of shares or a conversion into the
common stock intended to reflect the other group.
Accordingly, if we sell all or substantially all of one group's assets in a
transaction, we will:
. pay a dividend to the holders of shares of that group's common stock in
cash and/or securities or other property having a fair value equal to
the net proceeds of the disposition; or
. if the disposition involves all of the properties and assets of that
group, redeem all outstanding shares of that group's common stock in
exchange for cash and/or securities or other property having a fair
value equal to the net proceeds of the disposition; or
. if the disposition involves substantially all, but not all, of the
properties and assets of that group, redeem a number of whole shares of
that group's common stock in exchange for cash and/or securities or
other property having a fair value equal to the net proceeds of the
disposition; the number of shares so redeemed will have, in the
aggregate, an average market value, during the 10-trading day period
beginning on the 16th trading day following the disposition date,
closest to the net proceeds; or
. convert each outstanding share of that group's common stock into a
number of shares of the other group's common stock equal to 110% of the
ratio of the average market value of one share of common stock of the
group whose assets are disposed to the average market value of one share
of common stock of the other group, during the 10-trading day period
beginning on the 16th trading day following the disposition date.
We may only pay a dividend or redeem shares of common stock if we have
legally available assets under Georgia law and the amount to be paid to
holders is less than or equal to the available dividend amount for the group.
We will pay the dividend or complete the redemption or conversion prior to or
on the 85th trading day following the disposition date.
For purposes of determining whether a disposition has occurred,
"substantially all of the properties and assets" of either group means a
portion of the properties and assets:
. that represents at least 80% of the then fair value of the properties
and assets of that group; or
. from which were derived at least 80% of the aggregate revenues of that
group for the immediately preceding 12 fiscal quarterly periods.
The "net proceeds" of a disposition means an amount equal to what remains of
the gross proceeds of the disposition after we pay or reasonably provide for,
as determined by our board of directors:
. any taxes payable by us, or which would have been payable but for the
utilization of tax benefits attributable to the group not subject to the
disposition, in respect of the disposition or in respect of any
resulting dividend or redemption;
. any transaction costs, including, without limitation, any legal,
investment banking and accounting fees and expenses; and
. any liabilities of or attributed to the group whose assets are disposed,
including, without limitation, any liabilities for deferred taxes, any
indemnity or guarantee obligations incurred in connection with the
disposition or otherwise, any liabilities for future purchase price
adjustments and any preferential amounts plus any accumulated and unpaid
dividends in respect of the Preferred Stock or Junior Preferred Stock
attributed to that group.
We may elect to pay the dividend or redemption price either in the same form
as the proceeds of the disposition were received or in any other combination
of cash, securities or other property that our board of directors or, in the
case of securities that have not been publicly traded for a period of at least
15 months, an independent investment banking firm, determines will have an
aggregate market value of not less than the fair value of the net proceeds.
81
<PAGE>
The following illustration demonstrates the provisions requiring a mandatory
dividend, redemption or conversion if a disposition occurs. If:
. 200 million shares of Georgia-Pacific Group common stock and 100 million
shares of The Timber Group common stock were outstanding;
. the net proceeds of the disposition of substantially all (but not all)
of the assets of The Timber Group equals $2 billion;
. the average market value of The Timber Group common stock during the 10-
trading day valuation period was $30 per share; and
. the average market value of Georgia-Pacific Group common stock during
the same valuation period was $50 per share,
then we could do any of the following:
(1) pay a dividend to the holders of shares of The Timber Group common
stock equal to:
<TABLE>
<CAPTION>
net proceeds $2 billion
------------ = ------------------
<S> <C> <C> <C> <C>
number of outstanding shares 100 million shares = $20 per share
of The Timber Group common
stock
</TABLE>
(2) redeem for $30 per share a number of shares of The Timber Group common
stock equal to:
<TABLE>
<CAPTION>
net proceeds $2 billion
------------ = -----------------
<S> <C> <C> <C> <C>
average market value of 66,666,666 shares = $30 per share
The Timber Group
common stock
</TABLE>
(3) convert each outstanding share of The Timber Group common stock into a
number of Georgia-Pacific Group common stock equal to:
<TABLE>
<CAPTION>
average market value of
The Timber Group common
stock $30 per share
----------------------- = 1.10 x ------------- = 0.66 shares
<S> <C> <C> <C> <C> <C> <C>
average market value of $50 per share
Georgia-Pacific Group
common stock
</TABLE>
Our board of directors may, within one year after a dividend or redemption
following a disposition of a group's properties or assets, convert each
outstanding share of that group's common stock into a number of shares of the
other group's common stock equal to 110% of the ratio of the time-weighted
average market value of one share of common stock of the group whose assets
are disposed over the 20-trading day period ending on the 5th trading day
prior to the date the notice of the conversion is mailed to the holders to the
time- weighted average market value of one share of common stock of the other
group over the same period. We refer you to "--Voting Rights" for a summary
explanation of how we will calculate the time-weighted average market values.
The following illustration demonstrates the calculation of the number of
shares issuable upon conversion of one class of common stock into shares of
the other class of common stock within one year following a disposition. If:
. 200 million shares of Georgia-Pacific Group common stock and 100 million
shares of The Timber Group common stock were outstanding immediately
prior to a conversion;
. the time-weighted average market value of The Timber Group common stock
during the 20-trading day valuation period was $10 per share; and
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<PAGE>
. the time-weighted average market value of Georgia-Pacific Group common
stock during the same valuation period was $50 per share,
then each share of The Timber Group common stock could be converted into 0.22
shares of Georgia-Pacific Group common stock based on the following
calculation:
<TABLE>
<CAPTION>
$10 per share
1.10 x ------------- = 0.22 shares
<S> <C> <C> <C> <C>
$50 per share
</TABLE>
Exceptions to the Dividend, Redemption or Conversion Requirement if a
Disposition Occurs. We are not required to take any of the above actions for
any disposition of all or substantially all of the properties and assets of
either group in a transaction or series of related transactions that results
in our receiving for those properties and assets primarily equity securities
of any entity which:
. acquires those properties or assets or succeeds to the business
conducted with those properties or assets or controls such acquiror or
successor; and
. is primarily engaged or proposes to engage primarily in one or more
businesses similar or complementary to the businesses conducted by that
group prior to the disposition, as determined by our board of directors.
The purpose of this exception is to enable us technically to dispose of
properties or assets of a group to other entities engaged or proposing to
engage in businesses similar or complementary to those of that group without
requiring a dividend on, or a conversion or redemption of, the class of common
stock of that group, so long as we hold an equity interest in that entity. A
joint venture in which we own a direct or indirect equity interest is an
example of such an acquiror. We are not required to control that entity,
whether by ownership or contract provisions.
We are also not required to effect a dividend, redemption or conversion if
the disposition is:
. of all or substantially all of our properties and assets in one
transaction or a series of related transactions in connection with our
dissolution, liquidation or winding up and the distribution of our
assets to shareholders;
. on a pro rata basis, such as in a spin-off, to the holders of all
outstanding shares of the common stock of the group whose assets are
disposed; or
. made to any person or entity controlled by us, as determined by our
board of directors.
Notices if Disposition of Group Assets Occurs. Not later than the 10th
trading day after the consummation of a disposition, we will announce publicly
by press release:
. the estimated net proceeds of the disposition;
. the number of shares outstanding of the common stock of the group whose
assets are disposed; and
. the number of shares of that group's common stock into or for which
convertible securities are then convertible, exchangeable or exercisable
and the conversion, exchange or exercise price of those convertible
securities.
In addition, not earlier than the 26th trading day and not later than the
30th trading day after the consummation of the disposition, we will announce
publicly by press release whether we will pay a dividend or redeem shares of
the common stock with the net proceeds of the disposition or convert the
shares of common stock of the group whose assets are disposed into the other
group's common stock.
We will mail to each holder of shares of the group whose assets are disposed
the additional notices and other information required by our restated articles
of incorporation.
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<PAGE>
Conversion of Common Stock at Our Option at Any Time. Our board of directors
may at any time convert each outstanding share of:
. Georgia-Pacific Group common stock into a number of shares of The Timber
Group common stock; or
. The Timber Group common stock into a number of shares of Georgia-Pacific
Group common stock,
equal to 115% of the ratio of the time-weighted average market value of one
share of common stock of the group whose shares are to be converted over the
20-trading day period ending on the 5th trading day prior to the date the
notice of conversion is mailed to the holders to the time-weighted average
market value of one share of common stock of the other group over the same
period. We refer you to "--Voting Rights" for a summary explanation of how we
will calculate the time-weighted average market values.
These provisions allow us the flexibility to recapitalize the two classes of
common stock into one class of common stock that would, after the
recapitalization, represent an equity interest in all of our businesses. The
optional conversion could be exercised at any time in the future if our board
of directors determines that, under the facts and circumstances then existing,
an equity structure consisting of two classes of common stock intended to
reflect separately the performance of our manufacturing business and our
timber business were no longer in the best interests of all of our
shareholders. A conversion could be exercised, however, at a time that is
disadvantageous to the holders of one of the classes of common stock.
Conversion would be based upon the relative market values of Georgia-Pacific
Group common stock and The Timber Group common stock.
The following illustration demonstrates the calculation of the number of
shares issuable upon conversion of one class of common stock into shares of
the other class at our option. If:
. 200 million shares of Georgia-Pacific Group common stock and 100 million
shares of The Timber Group common stock were outstanding immediately
prior to a conversion;
. the time-weighted average market value of The Timber Group common stock
during the 20-trading day valuation period was $30 per share; and
. the time-weighted average market value of Georgia-Pacific Group common
stock during the same valuation period was $50 per share,
then each share of The Timber Group common stock could be converted into 0.69
shares of Georgia-Pacific Group Stock based on the following calculation:
$30 per share
1.15 x ------------- = 0.69 shares
$50 per share
Redemption in Exchange for Stock of Subsidiary. Our board of directors may
redeem on a pro rata basis all of the outstanding shares of Georgia-Pacific
Group common stock or The Timber Group common stock for shares of the common
stock of one or more of our wholly owned subsidiaries which own all of the
assets and liabilities attributed to the relevant group. We may redeem shares
of common stock for subsidiary stock only if we have legally available assets
under Georgia law.
As a result of a redemption, holders of each class of common stock would
hold securities of separate legal entities operating in distinct lines of
business. This redemption could be authorized by our board of directors at any
time in the future if it determines that, under the facts and circumstances
then existing, an equity structure comprised of Georgia-Pacific Group common
stock and The Timber Group common stock is no longer in the best interests of
all of our shareholders.
Selection of Shares for Redemption. If less than all of the outstanding
shares of a class of common stock are to be redeemed, we will redeem those
shares proportionately from among the holders of outstanding shares of that
class of common stock or by such method as may be determined by our board of
directors to be equitable.
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<PAGE>
Fractional Interests. We are not required to issue fractional shares of any
capital stock or any fractional securities to any holder of either class of
common stock upon any conversion, redemption, dividend or other distribution
described above. If a fraction is not issued to a holder, we will pay cash
instead of that fraction.
Liquidation. In the event of our liquidation, dissolution or termination,
after we pay our debts, other liabilities and full preferential amounts to
which our holders of any Preferred Stock or Junior Preferred Stock are
entitled, the holders of Georgia-Pacific Group common stock and The Timber
Group common stock are entitled to receive our assets, if any, remaining for
distribution to holders of common stock on a per share basis in proportion to
a fixed number of liquidation units per share of such class.
Each share of Georgia-Pacific Group common stock has one liquidation unit.
As of the date of this prospectus, each share of The Timber Group common stock
has 0.402 of a liquidation unit. The number of liquidation units per share of
common stock will not change without the approval of shareholders of each
Group, except in the limited circumstances described below. Consequently, the
liquidation rights of the holders of the respective classes of common stock
may not bear any relationship to the relative market values or the relative
voting rights of the two classes.
No holders of Georgia-Pacific Group common stock will have any special right
to receive specific assets of the Georgia-Pacific Group and no holder of The
Timber Group common stock will have any special right to receive specific
assets of The Timber Group in the case of our liquidation, dissolution or
termination.
If we subdivide or combine the outstanding shares of either class of common
stock or declare a dividend or other distribution of shares of either class of
common stock to holders of that class of common stock, the number of
liquidation units of either class of common stock will be appropriately
adjusted by our board of directors to avoid any dilution in the aggregate,
relative liquidation rights of any class of common stock.
Neither a merger nor share exchange of Georgia-Pacific into or with any
other corporation, nor any sale, transfer, lease, exchange or other
disposition of all or any part of our assets, will, alone, be deemed to be a
liquidation of us, or cause our dissolution, for purposes of these liquidation
provisions.
Determinations by Our Board of Directors. Any determinations made in good
faith by our board of directors under any provision described above and any
determination with respect to any group or the rights of holders of shares of
either class of common stock, are final and binding on all of our
shareholders, subject to the rights of shareholders under applicable Georgia
law and under the federal and state securities laws.
Preemptive Rights. Neither the holders of Georgia-Pacific Group common stock
nor the holders of The Timber Group common stock have any preemptive rights or
any rights to convert their shares into any other securities of Georgia-
Pacific.
Restated Rights Agreement. Under our restated rights agreement, we have
issued to all holders of Georgia-Pacific Group common stock rights to purchase
Series B Junior Preferred Stock if a "distribution date" occurs and to all
holders of The Timber Group common stock rights to purchase Series C Junior
Preferred Stock if a "distribution date" occurs. We refer to the Georgia-
Pacific Group purchase rights and The Timber Group purchase rights as the
"rights."
Until a distribution date occurs, the rights can be transferred only with
the common stock. On the occurrence of a distribution date, the rights will
separate from the common stock and become exercisable as described below.
A "distribution date" will occur upon the earlier of:
. the 10th day after a public announcement that a person or group of
affiliated or associated persons other than us, one of our subsidiaries
or one of our employee benefit plans (an "acquiring person") has
acquired beneficial ownership of 15% or more of the total voting rights
of the then outstanding shares of common stock; or
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<PAGE>
. the 10th business day following the commencement of a tender or exchange
offer that would result in such person or group beneficially owning such
voting rights.
The total voting rights of the common stock will be determined based upon
the voting rights of holders of outstanding shares of Georgia-Pacific Group
common stock and The Timber Group common stock at the time of any
determination.
Following the distribution date, holders of rights will be entitled to
purchase from us:
. in the case of a Georgia-Pacific Group right, one one-hundredth
(1/100th) of a share of Series B Junior Preferred Stock at a purchase
price of $350, subject to adjustment; and
. in the case of a Timber Group right, one one-hundredth (1/100th) of a
share of Series C Junior Preferred Stock at a purchase price of $100,
subject to adjustment.
If (1) any person or group becomes an acquiring person, (2) an acquiring
person engages in one or more "self-dealing" transactions with us as described
in our restated rights agreement, (3) we are the surviving or continuing
corporation in a merger or other combination with an acquiring person and all
of the Common stock remains outstanding and is not changed or exchanged, or
(4) while there is an acquiring person, there is a reclassification of
securities, recapitalization of Georgia-Pacific or other transaction that
increases by more than 1% the proportionate share of the outstanding shares of
any class or series of any equity securities of Georgia-Pacific beneficially
owned by the acquiring person, then the rights will "flip-in." At that time,
the rights beneficially owned by any acquiring person will become null and
void and:
. a Georgia-Pacific Group right will entitle its holder to purchase, at
the Series B purchase price, a number of shares of Series B Junior
Preferred Stock with a market value equal to twice the Series B purchase
price; and
. a The Timber Group right will entitle its holder to purchase, at the
Series C purchase price, a number of shares of Series C Junior Preferred
Stock with a market value equal to twice the Series C purchase price.
If, following the date of a public announcement that an acquiring person has
become such, (1) we are acquired in a merger or other business combination
transaction and we are not the surviving corporation, (2) any person
consolidates or merges with us and all or part of the common stock is
converted or exchanged for securities, cash or property or any other person,
or (3) 50% or more of our assets or earning power is sold or transferred, then
the rights will "flip-over." At that time, each Georgia-Pacific Group right
and each Timber Group right will entitle its holder to purchase, for the
Series B purchase price or Series C purchase price, as applicable, a number of
shares of common stock of the surviving entity in any such merger,
consolidation or other business combination or the purchaser in any such sale
or transfer with a market value equal to twice the Series B purchase price or
Series C purchase price.
The rights will expire on December 31, 2007, unless we terminate them before
that time. A majority of the independent directors of our board may terminate
all of the rights without any payment to any holder of rights at any time
until the earlier of:
. the 10th day following a public announcement that an acquiring person
has become such; or
. December 31, 2007.
Once our board acts to terminate the rights, the right to exercise the
rights will terminate and each right will become null and void.
A holder of a right will not have any rights as a shareholder of Georgia-
Pacific, including the right to vote or to receive dividends, until a right is
exercised.
At any time prior to the occurrence of a distribution date, we may, without
the approval of any holders of rights, supplement or amend any provision of
our restated rights agreement in any manner, whether or not such supplement or
amendment is adverse to any holders of the rights. However, we may not
supplement or amend the principal economic terms, such as the expiration date
of the rights and the number and price of shares of Junior Preferred Stock for
which a right is exercisable, without the approval of a majority of the
independent directors.
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<PAGE>
From and after the occurrence of a distribution date, we may, without the
approval of any holder of rights, supplement or amend our restated rights
agreement:
. to cure any ambiguity;
. to correct or supplement any provision that may be defective or
inconsistent;
. subject to some exceptions, to shorten or lengthen any time period under
the restated rights agreement; or
. in any manner that we may deem necessary or desirable and which does not
adversely affect the interests of the holders of rights, other than an
acquiring person, and which does not change the principal economic
terms.
Transfer Agent and Registrar
EquiServe Trust Company, N.A., is the transfer agent and registrar for the
Georgia-Pacific Group common stock and The Timber Group common stock.
Stock Exchange Listing; Delisting and Deregistration of Fort James Common
Stock
It is a condition to the offer and the merger that the shares of Georgia-
Pacific Group common stock issuable in the offer and the merger be approved
for listing on the NYSE. If the offer is completed, Fort James common stock
may cease to be listed on the NYSE and, if the merger is completed, Fort James
common stock will cease to be listed on the NYSE.
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<PAGE>
COMPARISON OF SHAREHOLDER RIGHTS
Georgia-Pacific is incorporated under the laws of the State of Georgia,
whereas Fort James is incorporated under the laws of the Commonwealth of
Virginia. If the offer is completed, Fort James shareholders exchanging their
shares in the offer, whose rights are currently governed by the VSCA, the
articles of incorporation of Fort James and the bylaws of Fort James, will,
upon completion of the offer, become shareholders of Georgia-Pacific, and
their rights as such will be governed by the GBCC, the Georgia-Pacific
articles of incorporation and the bylaws of Georgia-Pacific. The material
differences between the rights of holders of Fort James common stock and the
rights of holders of Georgia-Pacific common stock, resulting from the
differences in their governing documents, are summarized below.
The following summary does not purport to be a complete statement of the
rights of holders of Georgia-Pacific common stock under the applicable
provisions of the GBCC, the Georgia-Pacific articles of incorporation and the
Georgia-Pacific bylaws, or the rights of the holders of Fort James common
stock under the applicable provisions of the VSCA, the Fort James articles of
incorporation and the Fort James bylaws, or a complete description of the
specific provisions referred to herein. This summary contains a list of the
material differences but is not meant to be relied upon as an exhaustive list
or a detailed description of the provisions discussed, and is qualified in its
entirety by reference to the GBCC and VSCA and the governing documents of
Georgia-Pacific and Fort James, to which the holders of Fort James common
stock are referred. Copies of such governing corporate instruments of Georgia-
Pacific and Fort James are available, without charge, to any person, including
any beneficial owner to whom this prospectus is delivered, by following the
instructions listed under "Where You Can Find More Information."
Summary of Material Differences Between the Rights of Fort James Shareholders
and the Rights of Georgia-Pacific Shareholders
<TABLE>
<CAPTION>
Fort James Shareholder Rights Georgia-Pacific Shareholder Rights
----------------------------- ----------------------------------
<S> <C> <C>
Authorized The authorized capital stock of The authorized capital stock of
Capital Stock: Fort James is 505,000,000 shares, Georgia-Pacific is 685,000,000
5,000,000 of which are Preferred shares of which 400,000,000 are
Stock, $10 par value per share, designated Georgia-Pacific Group
and 500,000,000 shares of Common common stock, $.80 par value per
Stock, $.10 par value per share. share, 250,000,000 are designated
The Timber Group common stock,
$.80 par value per share,
10,000,000 are designated
Preferred Stock with no par value
and 25,000,000 are designated
Junior Preferred Stock with no
par value.
Number of The Fort James board of directors The Georgia-Pacific board of
Directors; Classified currently consists of 11 directors currently consists of
Board: directors, 12 directors, divided into three
with each director elected to a classes of relatively equal
one-year term. number, with each director
elected to a term expiring at the
third succeeding annual meeting
of shareholders.
</TABLE>
88
<PAGE>
<TABLE>
<CAPTION>
Fort James Shareholder Rights Georgia-Pacific Shareholder Rights
----------------------------- ----------------------------------
<S> <C> <C>
Removal of Directors: Fort James directors may be Georgia-Pacific directors may be
removed with or without cause by removed with or without cause by
a majority of the votes of the affirmative vote of the
shareholders entitled to vote for holders of 75% of the voting
removal. If a director is elected power of the outstanding capital
by a voting group, only the stock entitled to vote in the
shareholders of that voting group election of directors. Where a
may vote to remove him. specific class is entitled to
elect one or more directors,
directors may be removed by 75%
of the voting power of that class
of capital stock.
Annual Meeting: The annual meeting of Fort James The annual meeting of Georgia-
shareholders is held on the third Pacific shareholders is held at
or fourth Thursday in April of the principal executive office of
each year as set by the Fort Georgia-Pacific at 11:00 a.m. on
James board of directors or on the first Tuesday in May of each
such other dates as approved by year, or if such date is a legal
the board of directors. holiday, on the following
business day, all unless
otherwise provided by resolution
of Georgia-Pacific's board of
directors.
Calling a Special meetings of the Fort Special meetings of the Georgia-
Special Meeting James shareholders may be called Pacific shareholders may be
of Shareholders: by the Chairman, the President or called at any time by the
the board of directors. Chairman, any Vice Chairman, the
President, the Chief Executive
Officer or the board of
directors. In addition, special
meetings of shareholders are
called by Georgia-Pacific upon
written demand of the holders of
at least 75% of the voting power
of the outstanding capital stock
entitled to vote on any issue
proposed to be considered at the
proposed special meeting, voting
as a separate voting group or
upon the written demand of the
holders of 10% of the aggregate
voting power of the outstanding
capital stock entitled to vote
generally in the election of
directors after the termination
of any exclusive right, if any,
to elect directors.
Shareholder Action by Shareholder action without a Shareholder action without a
Written Consent: meeting may be taken only by the meeting may be taken only by the
unanimous consent of all unanimous consent of all
shareholders. shareholders.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Fort James Shareholder Rights Georgia-Pacific Shareholder Rights
----------------------------- ----------------------------------
<S> <C> <C>
Shareholder Rights Fort James has a shareholder Georgia-Pacific has a shareholder
Plan: rights plan. Fort James' rights plan. For a detailed
shareholder rights plan does not description of Georgia-Pacific's
apply to the offer and the merger rights plan, please see
or any other tender or exchange "Description of Georgia-Pacific
offer for all outstanding shares Capital Stock--Description of
of Fort James common stock or to Common Stock--Restated Rights
any merger or similar transaction Agreement."
approved by the Fort James board
of directors.
Amendment of Charter: The Fort James articles of Except with respect to amendments
incorporation may be amended with to the Georgia-Pacific articles
the approval of either (1) the of incorporation related to the
number of votes required by the provisions governing Junior
VSCA if the effect of the Preferred Stock or the number of
amendment is to reduce the votes required to amend such
shareholder vote necessary to provisions (which require
approve certain fundamental approval by at least 75% of the
changes, (2) the number of votes voting power of the outstanding
required by the charter, as capital stock of Georgia-Pacific
amended or restated, if it entitled to vote generally in the
requires more than a simple election of directors, voting as
majority of the votes, or (3) a a single class), the Georgia-
majority of the votes entitled to Pacific articles of incorporation
be cast if neither (1) nor (2) is may be amended with the approval
applicable. of a majority of the Georgia-
Pacific board of directors and a
majority of the outstanding
shares of Georgia-Pacific Group
common stock.
</TABLE>
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LEGAL MATTERS
The validity of the Georgia-Pacific common stock offered hereby will be
passed upon for Georgia-Pacific by James F. Kelley, Executive Vice President
and General Counsel, Georgia Pacific Corporation, Atlanta, GA.
EXPERTS
The consolidated financial statements and related financial statement
schedule of Georgia-Pacific included in Georgia-Pacific's Annual Report on
Form 10-K for its fiscal year ended January 1, 2000 have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
The consolidated financial statements of Fort James Corporation, which
appear in Fort James' 1999 Annual Report to Shareholders and incorporated by
reference in its Annual Report on Form 10-K for its fiscal year ended December
26, 1999, and the financial statement schedule included in such Annual Report
on Form 10-K, are incorporated by reference herein in reliance on the reports
of PricewaterhouseCoopers LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
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FORWARD-LOOKING STATEMENTS
This prospectus, including information included or incorporated by reference
in this document, contains certain forward-looking statements concerning the
financial condition, results of operations and business of Georgia-Pacific
following the consummation of its proposed acquisition of Fort James, the
anticipated financial and other benefits of such proposed acquisition and
Georgia-Pacific's plans and objectives following such proposed acquisition,
including, without limitation, statements relating to the cost savings
expected to result from the proposed acquisition, anticipated results of
operations of the combined company following the proposed acquisition,
projected earnings per share of the combined company following the proposed
acquisition and the restructuring charges estimated to be incurred in
connection with the proposed acquisition. Generally, the words "will," "may,"
"should," "continue," "believes," "expects," "intends," "anticipates" or
similar expressions identify forward-looking statements.
These forward-looking statements involve certain risks and uncertainties.
Factors that could cause actual results to differ materially from those
contemplated by the forward-looking statements include, among others, the
following factors:
. cost savings expected to result from the proposed acquisition may not be
fully realized or realized within the expected time frame,
. costs or difficulties related to the integration of the businesses of
Georgia-Pacific and Fort James may be greater than expected,
. operating results following the proposed acquisition may be lower than
expected,
. competition among companies in our industry may increase significantly,
. adverse changes in the interest rate environment may reduce interest
margins or adversely affect asset values of the combined company,
. general economic conditions, whether nationally or in the market areas
in which Georgia-Pacific and Fort James conduct business, may be less
favorable than expected,
. legislation or regulatory changes may adversely affect the businesses in
which Georgia-Pacific and Fort James are engaged, or
. adverse changes may occur in the securities markets.
See "Where You Can Find More Information."
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF GEORGIA-PACIFIC AND PURCHASER
DIRECTORS AND EXECUTIVE OFFICERS OF GEORGIA-PACIFIC
Set forth in the table below are the name and the present principal
occupations or employment and the name, principal business and address of any
corporation or other organization in which such occupation or employment is
conducted, and the five-year employment history of each of the directors and
executive officers of Georgia-Pacific. Unless otherwise indicated, each person
identified below is a United States citizen. The principal business address of
Georgia-Pacific and, unless otherwise indicated, the business address of each
person identified below is Georgia-Pacific Corporation, 133 Peachtree Street,
N.E., Atlanta, GA 30303.
<TABLE>
<CAPTION>
Georgia-Pacific Directors Present Principal
Occupation or Employment; Material Positions
Name, Citizenship and Held During the Past Five Years and Business
Current Business Address Age Addresses Thereto
------------------------ --- --------------------------------------------
<S> <C> <C>
James S. Balloun........ 62 Chairman, Chief Executive Officer and President
of National Service Industries, Inc. (lighting
equipment, chemicals, textile rental and
envelopes), Atlanta, Georgia since 1996, has
been one of our directors since July 30, 1998,
and his current term as director ends in 2002.
Mr. Balloun served as a Director of McKinsey &
Company, Inc. (management consulting) from 1976
until assuming his present position.
Mr. Balloun is also a director of National
Service Industries, Inc., Radiant Systems, Inc.
and Wachovia Corporation.
Robert Carswell......... 71 Of Counsel to the law firm of Shearman &
Sterling, New York, New York since January 1994,
has been one of our directors since 1987, and
his current term as director ends in 2001. Mr.
Carswell was a partner of Shearman & Sterling
from 1981 through 1993. He also served as
Chairman of the Private Export Funding
Corporation, New York, New York (finance company
affiliated with the Export-Import Bank of the
United States) from 1993 until December 1996.
Alston D. Correll....... 59 Chief Executive Officer of Georgia-Pacific since
May 1993, Chairman since December 1993, and
President since May 1996, has been one of our
directors since 1992 and his current term as
director ends in 2002.
Mr. Correll is also a director of The Southern
Company and SunTrust Banks, Inc.
Jane Evans.............. 56 President and Chief Executive Officer of GAMUT
Interactive, Inc. (inter-active television/smart
cards), Scottsdale, Arizona since August 1995,
has been one of our directors since 1994 and her
current term as director ends in 2003.
Ms. Evans is also a director of Kaufman & Broad
Home Corp., Philip Morris Companies, Inc.,
PETsMART, Inc. and Main St. & Main.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Georgia-Pacific Directors Present Principal
Occupation or Employment; Material Positions
Name, Citizenship and Held During the Past Five Years and Business
Current Business Address Age Addresses Thereto
------------------------ --- --------------------------------------------
<S> <C> <C>
Donald V. Fites......... 66 Retired effective February 1, 1999 as Chairman
and Chief Executive Officer of Caterpillar Inc.
(manufacture of construction, mining and
agricultural machinery and engines), Peoria,
Illinois, a position he had held since 1990. Mr.
Fites has been one of our directors since 1992,
and his current term as director ends in 2001.
Mr. Fites is also a director of Caterpillar
Inc., AT&T Corporation, ExxonMobil Corporation,
AK Steel Corporation and Wolverine World Wide,
Inc.
Harvey C. Fruehauf, 70 President of HCF Enterprises, Inc. (private
Jr. .................... investment management company), St. Clair
Shores, Michigan since 1969, has been one of our
directors since 1968, and his current term as
director ends in 2001.
Mr. Fruehauf is also a director of bCandid Corp.
and Sentinel Trust Company, LBA.
Richard V. Giordano..... 66 Chairman of BG plc (purchase, distribution and
sale of gas and gas supported services), London,
England since January 1994, has been one of our
directors since 1984 and his current term as
director ends in 2003.
Mr. Giordano is also a director of Rio Tinto
plc.
David R. Goode.......... 59 Chairman, President and Chief Executive Officer
of Norfolk Southern Corporation (transportation
holding company), Norfolk, Virginia since
September 1992, has been one of our directors
since 1992, and his current term as director
ends in 2001.
Mr. Goode is also a director of Norfolk Southern
Corporation, Caterpillar Inc., Delta Air Lines,
Inc. and Texas Instruments Incorporated.
M. Douglas Ivester...... 53 Retired Chairman of the Board and Chief
Executive Officer of The Coca-Cola Company
(manufacture, marketing and distribution of soft
drink syrups, concentrates and soft drink
products, and juice and juice drink products),
Atlanta, Georgia. He served in that position
from October 23, 1997 to February 17, 2000. He
has been one of our directors since 1993 and his
current term as director ends in 2003. Mr.
Ivester served as President and Chief Operating
Officer of The Coca-Cola Company from July 1994
to October 1997.
Mr. Ivester is also a director of SunTrust
Banks, Inc.
</TABLE>
94
<PAGE>
<TABLE>
<CAPTION>
Georgia-Pacific Directors Present Principal
Occupation or Employment; Material Positions
Name, Citizenship and Held During the Past Five Years and Business
Current Business Address Age Addresses Thereto
------------------------ --- --------------------------------------------
<S> <C> <C>
James P. Kelly.......... 57 Chairman and Chief Executive Officer of United
Parcel Service (UPS) (the world's largest
package distribution company and logistics
provider), Atlanta, Georgia since 1997. He has
held various positions at UPS since 1965
including Vice-Chairman and Chief Operating
Officer prior to assuming his current position.
He has been one of our directors since 1999 and
his current term as director ends in 2002.
Louis W. Sullivan, 66 President of Morehouse School of Medicine,
M.D. ................... Atlanta, Georgia since January 1993, has been
one of our directors since 1993 and his current
term as director ends in 2003.
Dr. Sullivan is also a director of Bristol-Myers
Squibb Company, CIGNA Corporation, Equifax Inc.,
General Motors Corporation, Household
International, Inc., and Minnesota Mining &
Manufacturing Company.
James B. Williams....... 67 Chairman of the Executive Committee of SunTrust
Banks, Inc. (bank holding company), Atlanta,
Georgia since March 31, 1998, has been one of
our directors since 1989, and his current term
as director ends in 2001. Mr. Williams held
positions of Chairman and Chief Executive
Officer of SunTrust Banks, Inc. from April 1991
and April 1990, respectively, until March 21,
1998.
Mr. Williams is also a director of SunTrust
Banks, Inc., The Coca-Cola Company, Genuine
Parts Company, Rollins, Inc., RPC, Inc.
</TABLE>
<TABLE>
<CAPTION>
Georgia-Pacific Executive Officers Present
Principal Occupation or Employment; Material
Name, Citizenship and Positions Held During the Past Five Years and
Current Business Address Age Business Addresses Thereto
------------------------ --- ---------------------------------------------
<S> <C> <C>
A. D. Correll........... 59 Chairman, Chief Executive Officer and President.
See above.
Donald L. Glass......... 51 Executive Vice President--Timber and President
and Chief Executive Officer of The Timber
Company since December 16, 1997. Mr. Glass
served as Executive Vice President--Building
Products from January 1997 to December 1997 and
Senior Vice President--Building Products
Manufacturing and Sales from 1991 until December
1996.
Danny W. Huff........... 49 Executive Vice President--Finance and Chief
Financial Officer since November 1, 1999. Prior
to that time, he served as Vice President and
Treasurer from February, 1996 to November, 1999
and Treasurer from October 23, 1993 to February
1, 1996.
</TABLE>
95
<PAGE>
<TABLE>
<CAPTION>
Georgia-Pacific Executive Officers Present
Principal Occupation or Employment; Material
Name, Citizenship and Positions Held During the Past Five Years and
Current Business Address Age Business Addresses Thereto
------------------------ --- ---------------------------------------------
<S> <C> <C>
James F. Kelley......... 58 Executive Vice President and General Counsel
since August 1, 2000. Prior to that time, he
served as Senior Vice President--Law and General
Counsel from December 1993 until July 2000.
Clint M. Kennedy........ 50 Executive Vice President--Pulp and Paperboard
since January 1997. Prior to that time, he
served as Senior Vice President--Pulp, Bleached
Board and Logistics from February 1995 until
December 1996, Group Vice President--Pulp and
Bleached Board from July 1992 through January
1995 and Vice President--Sales and Marketing,
Pulp and Bleached Board from May 1990 to July
1992.
Stephen E. Macadam...... 40 Executive Vice President--Containerboard and
Packaging/Purchasing since August 1, 2000 and
Senior Vice President--Containerboard and
Packaging from March 1, 1998 to July 2000. Prior
to that time, Mr. Macadam was a Principal of
McKinsey & Company, Inc.
Ronald L. Paul.......... 57 Executive Vice President--Wood Products and
Distribution since December 30, 1997. Prior to
that time, he served as Executive Vice
President--Wood Products from September 1997
until December 1997 and Vice President--
Structural Panels and Building Products
Engineering from May 1996 until September 1997.
John F. Rasor........... 57 Executive Vice President--Wood Procurement,
Gypsum and Industrial Wood Products since
December 16, 1997. Prior to that time, he served
as Executive Vice President--Forest Resources
from January 1997 to December 1997, Senior Vice
President--Forest Resources from February 1995
until December 1996, Group Vice President--
Forest Resources from May 1992 through January
1995, Group Vice President--Timber from January
1992 to May 1992 and Vice President--Forest
Resources from 1991 to January 1992.
</TABLE>
Lee F. Thomas........... 56 Executive Vice President--Packaged Products
since August 1, 2000. Prior to that time, he
served as Executive Vice President--Paper and
Chemicals from December 1997 until July 2000,
Executive Vice President--Paper from January
1997 to December 1997 and Senior Vice President
-- Paper from February 1995 until December 1996.
96
<PAGE>
<TABLE>
<CAPTION>
Georgia-Pacific Executive Officers Present
Principal Occupation or Employment; Material
Name, Citizenship and Positions Held During the Past Five Years and
Current Business Address Age Business Addresses Thereto
------------------------ --- ---------------------------------------------
<S> <C> <C>
Patricia A. Barnard..... 51 Senior Vice President--Human Resources since
March 26, 1999. Prior to that time, she served
as Vice President--Compensation and Benefits
from February 1998 until March 1999, Group
Director--Human Resources, Paper and Chemicals,
from October 1997 to January 1998, and Group
Director -- Human Resources, Paper from ,
1995 to September 1997.
James E. Bostic, Jr..... 53 Senior Vice President--Environmental, Government
Affairs and Communications since February 1995.
James E. Terrell........ 51 Vice President of Georgia-Pacific since January
1991 and has served as Controller since 1989.
</TABLE>
97
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
Set forth in the table below are the name and the present principal
occupations or employment and the name, principal business and address of any
corporation or other organization in which such occupation or employment is
conducted, and the five-year employment history of each of the directors and
executive officers of Purchaser. Unless otherwise indicated, each person
identified below is a United States citizen. The principal business address of
Purchaser and, unless otherwise indicated, the business address of each person
identified below is 133 Peachtree Street, N.E., Atlanta, GA 30303.
<TABLE>
<CAPTION>
Purchaser Directors and Executive Officers
Present Principal Occupation or Employment;
Name, Citizenship and Material Positions Held During the Past Five
Current Business Address Age Years And Business Address Thereto
------------------------ --- --------------------------------------------
<S> <C> <C>
Alston D. Correll........ 59 Director and Chairman of the Board, Chief
Executive Officer and President of Fenres
Acquisition Corp. since July 17, 2000. See
above.
Michael C. Burandt....... 56 Senior Vice President of Fenres Acquisition
Corp. since July 17, 2000. Mr. Burandt has
served as Senior Vice President--Packaged
Products of Georgia-Pacific since May 5, 1998.
Prior to that time, he served as Vice
President--Packaged Products from February 1995
until May 1998.
Danny W. Huff............ 49 Executive Vice President--Finance and Treasurer
of Fenres Acquisition Corp. since July 17, 2000.
See above.
James F. Kelley.......... 58 Vice President and Secretary of Fenres
Acquisition Corp. since July 17, 2000. See
above.
Lee M. Thomas............ 56 Vice President of Fenres Acquisition Corp. since
July 17, 2000. See above.
</TABLE>
98
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ANNEX A
----------------
AGREEMENT AND PLAN OF MERGER
----------------
Among
GEORGIA-PACIFIC CORPORATION,
FENRES ACQUISITION CORP.
and
FORT JAMES CORPORATION
Dated as of July 16, 2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
A-1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
Definitions
SECTION 1.01. Definitions................................................. A-5
SECTION 1.02. Other Defined Terms......................................... A-7
ARTICLE II
The Offer
SECTION 2.01. The Offer................................................... A-9
SECTION 2.02. Company Action.............................................. A-10
SECTION 2.03. Directors................................................... A-10
ARTICLE III
The Merger
SECTION 3.01. The Merger.................................................. A-11
SECTION 3.02. Articles of Incorporation of the Surviving Corporation...... A-12
SECTION 3.03. By-Laws of the Surviving Corporation........................ A-12
SECTION 3.04. Directors and Officers of the Surviving Corporation......... A-12
SECTION 3.05. Closing..................................................... A-12
ARTICLE IV
Conversion of Shares and Related Matters
SECTION 4.01. Conversion of Capital Stock................................. A-12
SECTION 4.02. Exchange of Shares.......................................... A-13
SECTION 4.03. Exchange of Certificates.................................... A-13
SECTION 4.04. Stock Options and Other Stock Plans......................... A-15
ARTICLE V
Representations and Warranties of The Company
SECTION 5.01. Due Organization, Good Standing and Corporate Power......... A-17
SECTION 5.02. Authorization and Validity of Agreement..................... A-17
SECTION 5.03. Capitalization.............................................. A-17
SECTION 5.04. Consents and Approvals; No Violations....................... A-18
SECTION 5.05. Company Reports and Financial Statements.................... A-19
SECTION 5.06. Information to Be Supplied.................................. A-20
SECTION 5.07. Absence of Certain Events................................... A-20
SECTION 5.08. Litigation.................................................. A-20
SECTION 5.09. Title to Properties; Encumbrances........................... A-20
SECTION 5.10. Compliance with Laws........................................ A-21
SECTION 5.11. Company Employee Benefit Plans.............................. A-21
SECTION 5.12. Labor/Employment............................................ A-22
SECTION 5.13. Taxes....................................................... A-22
SECTION 5.14. Intellectual Property....................................... A-23
SECTION 5.15. Broker's or Finder's Fee.................................... A-23
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 5.16. Environmental Laws and Regulations......................... A-23
SECTION 5.17. State Takeover Statutes.................................... A-24
SECTION 5.18. Voting Requirements; Board Approval; Appraisal Rights...... A-24
SECTION 5.19. Opinion of Financial Advisor............................... A-25
SECTION 5.20. Rights Agreement........................................... A-25
SECTION 5.21. Non-competition Agreements................................. A-25
ARTICLE VI
Representations and Warranties of Parent
SECTION 6.01. Due Organization, Good Standing and Corporate Power........ A-25
SECTION 6.02. Authorization and Validity of Agreement.................... A-26
SECTION 6.03. Capitalization............................................. A-26
SECTION 6.04. Consents and Approvals; No Violations...................... A-27
SECTION 6.05. Parent Reports and Financial Statements.................... A-27
SECTION 6.06. Information to Be Supplied................................. A-28
SECTION 6.07. Absence of Certain Events.................................. A-28
SECTION 6.08. Litigation................................................. A-29
SECTION 6.09. Compliance with Laws....................................... A-29
SECTION 6.10. Parent Employee Benefit Plans.............................. A-29
SECTION 6.11. Broker's or Finder's Fee................................... A-30
SECTION 6.12. Ownership of Capital Stock................................. A-30
SECTION 6.13. Vote Required.............................................. A-30
SECTION 6.14. Financing.................................................. A-30
ARTICLE VII
Transactions Prior to Closing Date
SECTION 7.01. Access to Information Concerning Properties and Records.... A-30
SECTION 7.02. Confidentiality............................................ A-30
SECTION 7.03. Conduct of the Business of the Company Pending the Closing
Date.................................................................... A-31
SECTION 7.04. Conduct of the Business of Parent Pending the Closing
Date.................................................................... A-33
SECTION 7.05. Company Shareholder Meeting; Preparation of Proxy
Statement/Prospectus.................................................... A-34
SECTION 7.06. Reasonable Best Efforts.................................... A-35
SECTION 7.07. No Solicitation............................................ A-35
SECTION 7.08. Notification of Certain Matters............................ A-37
SECTION 7.09. Antitrust Laws............................................. A-37
SECTION 7.10. Directors' and Officers' Insurance......................... A-38
SECTION 7.11. Public Announcements....................................... A-39
SECTION 7.12. Transfer Tax............................................... A-39
SECTION 7.13. NYSE Listing............................................... A-39
SECTION 7.14. Affiliates of the Company.................................. A-39
SECTION 7.15. Section 16 Matters......................................... A-39
SECTION 7.16. Employee Benefits.......................................... A-39
SECTION 7.17. Voting of Shares........................................... A-40
SECTION 7.18. The Company Rights Plan.................................... A-40
SECTION 7.19. Fees and Expenses.......................................... A-41
SECTION 7.20. Merger Sub................................................. A-41
</TABLE>
A-3
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VIII
Conditions to The Merger
SECTION 8.01. Conditions to Obligations of Each Party...................... A-41
ARTICLE IX
Termination
SECTION 9.01. Termination.................................................. A-41
SECTION 9.02. Effect of Termination........................................ A-43
SECTION 9.03. Payment of Certain Fees...................................... A-43
ARTICLE X
Miscellaneous
SECTION 10.01. Representations and Warranties.............................. A-43
SECTION 10.02. Extension; Waiver........................................... A-44
SECTION 10.03. Notices..................................................... A-44
SECTION 10.04. Entire Agreement............................................ A-44
SECTION 10.05. Binding Effect; Benefit; Assignment......................... A-45
SECTION 10.06. Amendment and Modification.................................. A-45
SECTION 10.07. Further Actions............................................. A-45
SECTION 10.08. Headings.................................................... A-45
SECTION 10.09. Enforcement................................................. A-45
SECTION 10.10. Counterparts................................................ A-45
SECTION 10.11. Applicable Law.............................................. A-45
SECTION 10.12. Severability................................................ A-45
SECTION 10.13. WAIVER OF JURY TRIAL........................................ A-45
ANNEX I--Conditions of the Offer
</TABLE>
A-4
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 16, 2000 (this "Agreement"),
by and among GEORGIA-PACIFIC CORPORATION, a Georgia corporation ("Parent"),
FENRES ACQUISITION CORP., a Virginia corporation and a direct wholly owned
subsidiary of Parent ("Merger Sub"), and FORT JAMES CORPORATION, a Virginia
corporation (the "Company").
WHEREAS, the Boards of Directors of Parent and the Company each have
determined that it is in the best interests of each corporation and their
respective shareholders to effect a business combination between Parent and
the Company and, accordingly, have agreed to effect the merger of Merger Sub
with and into the Company, with the Company as the surviving corporation, upon
the terms and subject to the conditions set forth herein (the "Merger"); and
WHEREAS, by resolutions duly adopted, the respective Boards of Directors of
the Company, Parent and Merger Sub have approved and adopted this Agreement
and the transactions contemplated hereby.
NOW THEREFORE, in consideration of the premises and of the mutual covenants,
representations, warranties and agreements herein contained, the parties
hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. When used in this Agreement, the following terms
shall have the respective meanings specified therefore below (such meanings to
be equally applicable to both the singular and plural forms of the terms
defined):
"Acceptance Date" shall mean the date on which Merger Sub accepts for
payment all shares of Company Common Stock validly tendered and not withdrawn
pursuant to the Offer.
"Affiliate" shall mean, with respect to any specified Person, any Person who
directly or indirectly controls, is controlled by, or is under common control
with, such specified Person; provided that, for the purposes of this
definition, "control" (including with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or partnership interests,
by contract or otherwise.
"Average Price" shall mean the average (rounded to the nearest 1/10,000) of
the volume weighted averages (rounded to the nearest 1/10,000) of the trading
prices of Parent Common Stock on the NYSE, as reported by Bloomberg Financial
Markets (or such other source as the parties shall agree in writing), for the
10 consecutive Trading Days ending on the third Trading Day immediately
preceding the Acceptance Date.
"Business Day" shall mean a day other than a Saturday, a Sunday or a day on
which banks in New York, New York are permitted or required to close.
"Company Common Stock" shall mean the Company's common stock, par value $.10
per share, including the Company Rights associated therewith.
"Company Material Adverse Effect" shall mean any event, change, occurrence,
effect, fact or circumstance that is materially adverse to (i) the ability of
the Company to perform its obligations under this Agreement or to consummate
the transactions contemplated hereby or (ii) the business, assets,
liabilities, results of operations or financial condition of the Company and
its Subsidiaries, taken as a whole, but shall exclude any effects,
consequences or conditions arising out of (A) any change in (x) U.S. or global
economic or industry conditions,
A-5
<PAGE>
(y) U.S. or global financial markets or conditions or (z) any generally
applicable law, rule or regulation or GAAP or interpretation of any of the
foregoing or (B) the announcement of this Agreement or the transactions
contemplated or required hereby, including any actions required under this
Agreement pursuant to Section 7.09.
"Company Options" shall mean options to purchase shares of the Company
Common Stock, whether issued pursuant to a Company Employee Benefit Plan or
otherwise.
"Company Rights" shall mean the right associated with each share of Company
Common Stock to purchase one-one-thousandth of a share of the Company's Series
M Cumulative Participating Preferred Stock, par value $10.00 per share.
"Company Shareholder Approval" shall mean the approval of this Agreement at
the Company Shareholder Meeting by more than two-thirds of all votes entitled
to be cast at the Company Shareholder Meeting.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exchange Ratio" (as the same may be adjusted pursuant to Section 4.01(d))
shall be equal to (i) .2644, if the Average Price is less than or equal to
$39.33 or (ii) if the Average Price is greater than $39.33, the number of
shares of Parent Common Stock equal to $10.40 divided by the Average Price.
"GAAP" shall mean generally accepted accounting principles of the United
States of America, as in effect from time to time.
"know" or "knowledge" shall mean, with respect to any party, the knowledge
of such party's executive officers.
"Merger Sub Common Stock" shall mean Merger Sub's common stock, par value
$.01 per share.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Parent Common Stock" shall mean Georgia-Pacific Corporation-Georgia-Pacific
Group Common Stock, par value $.80 per share, including the Parent Rights
associated therewith.
"Parent Material Adverse Effect" shall mean any event, change, occurrence,
effect, fact or circumstance that is materially adverse to (i) the ability of
Parent to perform its obligations under this Agreement or to consummate the
transactions contemplated hereby or (ii) the business, assets, liabilities,
results of operations or financial condition of Parent and its Subsidiaries,
taken as a whole, but shall exclude any effects, consequences or conditions
arising out of (A) any change in (x) U.S. or global economic or industry
conditions, (y) U.S. or global financial markets or conditions or (z) any
generally applicable law, rule or regulation, GAAP or interpretation of any of
the foregoing or (B) the announcement of this Agreement or the transactions
contemplated or required hereby, including any actions required under this
Agreement pursuant to Section 7.09.
"Parent Rights" shall mean the rights associated with each share of Parent
Common Stock to purchase one-one-hundredth of a share of Parent's Series B
Junior Preferred Stock, no par value.
"Per Share Amount" shall mean the sum of (a) $29.60 and (b) the product of
the Exchange Ratio and the Average Price.
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an association, an unincorporated
organization, a limited liability company, a limited partnership, a group, a
syndicate, a person (including, without limitation, a "person" as defined in
Section 13(d)(3) of the Exchange Act) and a government or other department or
subdivision or instrumentality or agency thereof.
"Proxy Statement/Prospectus" shall mean the proxy statement/prospectus
included in the Merger Registration Statement relating to the Company
Shareholder Meeting.
A-6
<PAGE>
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Significant Subsidiary" shall mean (a) with respect to the Company, Fort
James Operating Company, Fort James-Pennington, Inc., Harmon Associates
Corporation, Fort James UK Limited, Fort James International Holdings, Ltd.,
Fort James France S.A.S., Fort James France s.c.a., Fort James Canada Inc.,
Fort James S.P.R.L.S. Com. p.A. and Fort James Italia S.r.l. and (b) with
respect to Parent, Brunswick Pulp & Paper Company, CeCorr, Inc., G-P Gypsum
Corporation, Georgia-Pacific Resins, Inc., Georgia-Pacific Tissue, LLC,
Georgia-Pacific West, Inc., Great Northern Nekoosa Corporation, North American
Timber Corp. and Unisource Worldwide, Inc.
"Subsidiary" shall mean, with respect to a Person, (x) any partnership of
which such Person or any of its Subsidiaries is a general partner or (y) any
other entity in which such Person or any of its Subsidiaries owns or has the
power to vote more than 50% of the equity interests in such entity having
general voting power to participate in the election of the governing body of
such entity.
"Trading Day" shall mean any day on which securities are traded on the NYSE.
Section 1.02. Other Defined Terms. The following terms used herein are
defined in the Section of this Agreement specified below:
<TABLE>
<CAPTION>
Terms Section
----- --------------
<S> <C>
"401(k) Plan"................................................ Section 7.16(c)
"Acquisition Agreement"...................................... Section 7.07(b)
"Agreement".................................................. Preamble
"Antitrust Authorities"...................................... Section 7.09(b)
"Antitrust Law".............................................. Section 7.09(b)
"Articles Of Merger"......................................... Section 3.01(a)
"Cashout Election"........................................... Section 4.04(a)
"Certificate"................................................ Section 4.01(c)
"Claims"..................................................... Section 5.16
"Closing".................................................... Section 3.05
"Closing Date"............................................... Section 3.05
"Code"....................................................... Section 5.11(a)
"Company".................................................... Preamble
"Company Disclosure Schedule"................................ Article V
"Company Employee Benefit Plans"............................. Section 5.11(a)
"Company Employees".......................................... Section 7.16(a)
"Company Intellectual Property".............................. Section 5.14(a)
"Company Preferred Stock".................................... Section 5.03(a)
"Company Property"........................................... Section 5.16
"Company Recommendation"..................................... Section 7.05(a)
"Company SEC Reports"........................................ Section 5.05(a)
"Company Shareholder Meeting"................................ Section 7.05(a)
"Confidentiality Agreement".................................. Section 7.02
"Continuing Directors"....................................... Section 2.03(a)
"Consent Decree"............................................. Section 7.09(b)
"Contacts"................................................... Section 7.09(a)
"Contracts".................................................. Section 5.04
"Conversion Election"........................................ Section 4.04(a)
"Designated Directors"....................................... Section 2.03(d)
"Effective Time"............................................. Section 3.01(a)
"Environmental Claims"....................................... Section 5.16
</TABLE>
A-7
<PAGE>
<TABLE>
<CAPTION>
Terms Section
----- --------------
<S> <C>
"Environmental Law".......................................... Section 5.16
"ERISA"...................................................... Section 5.11(a)
"European Antitrust Laws".................................... Section 5.04
"Exchange Agent"............................................. Section 4.02
"Exchange Fund".............................................. Section 4.03(a)
"Governmental Authority"..................................... Section 5.04
"Hazardous Materials"........................................ Section 5.16
"HSR Act".................................................... Section 5.04
"Indemnified Parties"........................................ Section 7.10(b)
"Issuance Obligation"........................................ Section 5.03(a)
"Junior Preferred Stock"..................................... Section 6.03(a)
"Laws"....................................................... Section 5.04
"Liens"...................................................... Section 6.03(b)
"Merger"..................................................... Preamble
"Merger Registration Statement".............................. Section 6.06(a)
"Merger Sub"................................................. Preamble
"Minimum Condition".......................................... Section 2.01(a)
"Morgan Stanley"............................................. Section 2.02(a)
"New Plans".................................................. Section 7.16(b)
"Offer"...................................................... Section 2.01(a)
"Offer Documents"............................................ Section 2.01(b)
"Offer Registration Statement"............................... Section 2.01(a)
"Old Plans".................................................. Section 7.16(b)
"Orders"..................................................... Section 5.04
"Parent"..................................................... Preamble
"Parent Disclosure Schedule"................................. Article VI
"Parent Employee Benefit Plans".............................. Section 6.10(a)
"Parent SEC Reports"......................................... Section 6.05(a)
"Permits".................................................... Section 5.10(b)
"Preferred Stock"............................................ Section 6.03(a)
"Proceedings"................................................ Section 5.08
"Release".................................................... Section 5.16
"Representatives"............................................ Section 7.07(a)
"Returns".................................................... Section 5.13(a)
"Reverse Termination Fee".................................... Section 9.03(c)
"Rights Agreement"........................................... Section 5.20
"Rule 145 Affiliate"......................................... Section 7.14
"Rule 145 Affiliate Agreement"............................... Section 7.14
"Schedule 14D-9"............................................. Section 2.02(b)
"Schedule TO"................................................ Section 2.01(b)
"Substituted Option"......................................... Section 4.04(c)
"Superior Proposal".......................................... Section 7.07(a)
"Surviving Corporation"...................................... Section 3.01(b)
"Takeover Proposal".......................................... Section 7.07(a)
"Taxes"...................................................... Section 5.13(a)
"Termination Date"........................................... Section 9.01(d)
"Termination Fee"............................................ Section 9.03(a)
"Third Party Acquisition Event".............................. Section 9.03(b)
"Transfer Taxes"............................................. Section 7.12
"Voting Debt"................................................ Section 5.03(a)
"VSCA"....................................................... Section 2.02(a)
</TABLE>
A-8
<PAGE>
ARTICLE II
The Offer
Section 2.01. The Offer. (a) Provided that this Agreement shall not have
been terminated in accordance with Article IX, unless otherwise agreed by
Parent and the Company, no later than three Business Days following
effectiveness of a Registration Statement on Form S-4 (together with any
amendments or supplements thereto, the "Offer Registration Statement") Parent
shall cause Merger Sub to commence an offer (the "Offer") to purchase all of
the outstanding shares of Company Common Stock at a price for each share of
Company Common Stock of (1) $29.60, net to the seller in cash, and (2) a
fraction of a share of Parent Common Stock equal to the Exchange Ratio. The
Offer shall be subject only to (1) the condition that there shall be validly
tendered in accordance with the terms of the Offer, prior to the expiration
date of the Offer and not withdrawn, a number of shares of Company Common
Stock that, together with the shares of Company Common Stock then owned by
Parent and/or Merger Sub, represents at least two-thirds of the shares of
Company Common Stock outstanding on a fully-diluted basis (the "Minimum
Condition") and (2) the other conditions set forth in Annex I hereto. Merger
Sub shall have the right to waive any of the conditions to the Offer and to
make any change in the terms of or conditions to the Offer; provided that (A)
the Minimum Condition may not be waived or reduced to less than two-thirds of
the shares of Company Common Stock outstanding on a fully-diluted basis
without the prior written consent of the Company and (B) no change may be made
that changes the form of consideration payable in the Offer, decreases the
consideration payable in the Offer, reduces the maximum number of shares of
Company Common Stock to be purchased in the Offer, imposes conditions to the
Offer in addition to those set forth in Annex I or makes any other change
which is adverse to the holders of Company Common Stock. Notwithstanding the
foregoing, without the consent of the Company, Merger Sub shall have the right
to extend the Offer (i) for one or more periods (not in excess of 10 Business
Days each) but in no event ending later than the Termination Date if, at the
scheduled or extended expiration date of the Offer, any of the conditions to
the Offer shall not have been satisfied or waived, until such conditions are
satisfied or waived, (ii) for any period required by any rule, regulation,
interpretation or position of the SEC or the staff thereof applicable to the
Offer or any period required by applicable law or (iii) for an aggregate
period of not more than 10 Business Days beyond the latest applicable date
that would otherwise be permitted under clause (i) or (ii) of this sentence,
if, as of such date, all of the conditions to the Offer have been satisfied or
waived, but the number of shares of Company Common Stock validly tendered and
not withdrawn pursuant to the Offer equals 80% or more, but less than 90%, of
the outstanding shares of Company Common Stock on a fully diluted basis. In
the event that Merger Sub is unable to consummate the Offer on the initial
scheduled expiration date due to the failure of the conditions to the Offer to
be satisfied or waived, Parent shall cause Merger Sub to, unless this
Agreement is terminated pursuant to Article IX, extend the Offer and set a
subsequent scheduled expiration date, and shall continue to so extend the
Offer and set subsequent scheduled expiration dates until the Termination
Date. Subject to the foregoing and upon the terms and subject to the
conditions of the Offer, Parent shall cause Merger Sub to, accept for payment
and pay for, as promptly as practicable after the expiration of the Offer, all
shares of Company Common Stock validly tendered and not withdrawn pursuant to
the Offer. Parent will announce the exact Exchange Ratio with respect to each
share of Company Common Stock that is to be exchanged in the Offer by 9:00
a.m., New York City time, on the second Trading Day immediately preceding the
Acceptance Date. Parent will make such announcement by issuing a press release
to the Dow Jones News Service.
(b) As soon as reasonably practicable on the date of commencement of the
Offer, Parent shall, and Parent shall cause Merger Sub to file with the SEC a
Tender Offer Statement on Schedule TO (together with any amendments or
supplements thereto, the "Schedule TO"). As soon as reasonably practicable
after the date hereof, Parent shall, and shall cause Merger Sub to, file the
Offer Registration Statement (the Schedule TO, the Offer Registration
Statement and such documents included therein pursuant to which the Offer will
be made, the "Offer Documents"). Parent and the Company agree promptly to
correct any information provided by it for use in the Offer Documents if and
to the extent that such information shall have become false or misleading in
any material respect. Parent shall, and Parent shall cause Merger Sub to take
all steps necessary to cause the Schedule TO and the Offer Registration
Statement as so corrected to be filed with the SEC and the other Offer
Documents as so corrected to be, at such time as reasonably agreed by Parent
and the Company, disseminated to holders of
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shares of Company Common Stock, in each case as and to the extent required by
applicable federal securities laws. The Company and its counsel shall be given
an opportunity to review and comment on the Offer Documents prior to their
being filed with the SEC or disseminated to the holders of shares of Company
Common Stock. Parent shall, and Parent shall cause Merger Sub to provide the
Company and its counsel with any comments Parent and Merger Sub or their
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments and shall provide the
Company and its counsel an opportunity to participate in the response of
Parent or Merger Sub to such comments.
Section 2.02. Company Action. (a) The Company hereby approves of and
consents to the Offer and represents that its Board of Directors, at a meeting
duly called and held, has (i) determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, are in
the best interests of the Company's shareholders, (ii) approved and adopted
this Agreement and the transactions contemplated hereby, including the Offer
and the Merger, in accordance with the requirements of the Virginia Stock
Corporation Act (the "VSCA") and (iii) subject to Section 7.07, resolved to
recommend acceptance of the Offer and approval of this Agreement by the
Company's shareholders. The Company further represents that Morgan Stanley &
Co. Incorporated ("Morgan Stanley") has delivered to the Company's Board of
Directors its written opinion as of the date hereof that the consideration to
be received by the holders of shares of Company Common Stock pursuant to the
terms of the Offer and the Merger is fair from a financial point of view to
such holders. The Company will promptly furnish Parent with a list of its
shareholders, mailing labels and any available listing or computer file
containing the names and addresses of all record holders of shares of Company
Common Stock and lists of securities positions of shares of Company Common
Stock held in stock depositories, in each case true and correct as of the most
recent practicable date, and will provide to Parent such additional
information (including updated lists of shareholders, mailing labels and lists
of securities positions) and such other assistance as Parent may reasonably
request in connection with the Offer.
(b) The Company hereby agrees to file with the SEC contemporaneously with
the commencement of the Offer and disseminate to holders of shares of Company
Common Stock, in each case as and to the extent required by applicable federal
securities laws, a Solicitation/Recommendation Statement on Schedule 14D-9
(together with any amendments or supplements thereto, the "Schedule 14D-9")
that, subject to Section 7.07, shall reflect the recommendations of the
Company's Board of Directors referred to in Section 2.02(a) above; provided,
however, that prior to the Acceptance Date, the Board of Directors of the
Company may amend, modify, withdraw, condition or qualify such recommendations
or may take any action or make any statement inconsistent with such
recommendations, to the extent that the majority of the Company's Board of
Directors concludes in its good faith judgment, after receiving the advice of
outside legal counsel, that it is necessary to take such action in order to
comply with its fiduciary duties to shareholders under applicable law. The
Company agrees to provide Parent and its counsel with any comments that the
Company or its counsel may receive from the SEC or its staff with respect to
the Schedule 14D-9 promptly after the receipt of such comments and shall
provide Parent and its counsel with an opportunity to participate in the
response of the Company to such comments. The Company and Parent each agree
promptly to correct any information provided by it for use in the Schedule
14D-9 if and to the extent that it shall have become false or misleading in
any material respect. The Company agrees to take all steps necessary to cause
the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to holders of shares of Company Common Stock, in each case as and
to the extent required by applicable federal securities laws. Parent and its
counsel shall be given an opportunity to review and comment on the Schedule
14D-9 prior to its being filed with the SEC or disseminated to holders of
shares of Company Common Stock.
Section 2.03. Directors. (a) Effective upon the acceptance for payment of
any shares of Company Common Stock pursuant to the Offer, Parent shall be
entitled to designate the number of directors, rounded up to the next whole
number, on the Company's Board of Directors that equals the product of (i) the
total number of directors on the Company's Board of Directors (giving effect
to the election of any additional directors pursuant to this Section 2.03) and
(ii) the percentage that the number of shares of Company Common Stock
beneficially owned by Parent and/or Merger Sub (including shares of Company
Common Stock accepted for payment) bears to the total number of shares of
Company Common Stock outstanding, and the Company shall
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take all action necessary to cause Parent's designees to be elected or
appointed to the Company's Board of Directors, including increasing the number
of directors, and seeking and accepting resignations of incumbent directors.
At such time, the Company will also use its best efforts to cause individuals
designated by Parent to constitute the number of members, rounded up to the
next whole number, on (i) each committee of the Board and (ii) each board of
directors of each Subsidiary of the Company identified by Parent (and each
committee thereof) that represents the same percentage as such individuals
represent on the Board of Directors of the Company, in each case only to the
extent permitted by applicable law. Notwithstanding the provisions of this
Section 2.03, the parties hereto shall use their respective best efforts to
ensure that at least two of the members of the Company's Board of Directors
shall, at all times prior to the Effective Time, be directors of the Company
who were directors of the Company on the date hereof (the "Continuing
Directors"); provided that if there shall be in office fewer than two
Continuing Directors for any reason, the Company's Board of Directors shall
cause a person designated by the remaining Continuing Director to fill such
vacancy who shall be deemed to be a Continuing Director for all purposes of
this Agreement, or if no Continuing Directors then remain, the other directors
of the Company then in office shall designate two persons to fill such
vacancies who will not be officers or employees or Affiliates of the Company,
Parent or Merger Sub or any of their respective Subsidiaries and such persons
shall be deemed to be Continuing Directors for all purposes of this Agreement.
(b) The Company's obligations to appoint Parent's designees to the Company's
Board of Directors shall be subject to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder. The Company shall promptly take all
actions, and shall include in the Schedule 14D-9 such information with respect
to the Company and its officers and directors, as Section 14(f) and Rule 14f-1
require in order to fulfill its obligations under this Section, so long as
Parent shall have provided to the Company on a timely basis in writing and be
solely responsible for any information with respect to itself, Merger Sub and
their respective nominees, officers, directors and Affiliates required by
Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Parent's designees pursuant to
Section 2.03(a) and until the Effective Time, the approval of a majority of
the Continuing Directors shall be required to authorize any termination of
this Agreement by the Company, any amendment of this Agreement requiring
action by the Company's Board of Directors, any extension of time for
performance of any obligation or action hereunder by Parent or Merger Sub, any
waiver of compliance with any of the agreements or conditions contained herein
for the benefit of the Company, any consent or action by the Board of
Directors of the Company hereunder and any other action of the Company
hereunder which adversely affects the holders of shares of Company Common
Stock (other than Parent or Purchaser).
(d) Parent shall take such action as shall be necessary so that, at the
Effective Time, the number of directors comprising each class of directors of
the Board of Directors of Parent shall be increased from four to five, and
three individuals from among the present directors of the Company (the
"Designated Directors") who shall be agreed upon by Parent and the Company
shall be appointed to the Board of Directors of Parent to fill the vacancies
created by such newly created directorships having terms expiring at the
Company's annual meetings of shareholders to be held in 2001, 2002 and 2003.
The Company hereby agrees to provide to Parent as soon as practicable any
information in respect of the Designated Directors as Parent shall reasonably
request.
ARTICLE III
The Merger
Section 3.01. The Merger. (a) Upon the terms and subject to the conditions
of this Agreement, as soon as practicable after satisfaction or, to the extent
permitted hereby, waiver of all conditions to the Merger set forth herein,
Parent shall cause articles of merger (the "Articles Of Merger") to be duly
prepared, executed and acknowledged by Merger Sub and the Company in
accordance with the VSCA and filed with the State Corporation Commission of
Virginia. The Merger shall become effective upon the filing of the Articles of
Merger
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(or at such later time reflected in such Articles of Merger as shall be agreed
to by Parent and the Company). The date and time when the Merger shall become
effective is hereinafter referred to as the "Effective Time."
(b) At the Effective Time, Merger Sub shall be merged with and into the
Company and the separate corporate existence of Merger Sub shall cease, and
the Company shall continue as the surviving corporation under the laws of the
Commonwealth of Virginia (the "Surviving Corporation").
(c) From and after the Effective Time, the Merger shall have the effects set
forth in this Agreement and in Section 13.1-721 of the VSCA.
Section 3.02. Articles of Incorporation of the Surviving Corporation. The
Articles of Incorporation of the Merger Sub, as in effect immediately prior to
the Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation.
Section 3.03. By-Laws of the Surviving Corporation. The By-Laws of the
Merger Sub, as in effect immediately prior to the Effective Time, shall be the
By-Laws of the Surviving Corporation.
Section 3.04. Directors and Officers of the Surviving Corporation. At the
Effective Time, the directors of Merger Sub immediately prior to the Effective
Time shall be the directors of the Surviving Corporation, each of such
directors to hold office, subject to the applicable provisions of the VSCA and
the Articles of Incorporation and By-Laws of the Surviving Corporation, until
the next annual shareholders' meeting of the Surviving Corporation and until
their respective successors shall be duly elected or appointed and qualified.
At the Effective Time, the officers of the Company immediately prior to the
Effective Time shall, subject to the applicable provisions of the Articles of
Incorporation and By-Laws of the Surviving Corporation, be the officers of the
Surviving Corporation until their respective successors shall be duly elected
or appointed and qualified.
Section 3.05. Closing. The closing of the Merger (the "Closing") shall be
held at the offices of Shearman & Sterling, 599 Lexington Avenue, New York,
New York 10022 as soon as practicable, but in any event within three Business
Days after the last of the conditions (excluding conditions that, by their
nature, cannot be satisfied until the Closing Date) set forth in Article VIII
hereof is satisfied or waived or at such other time and date as the parties
hereto shall agree in writing. Such date is herein referred to as the "Closing
Date."
ARTICLE IV
Conversion of Shares and Related Matters
Section 4.01. Conversion of Capital Stock. At the Effective Time, by virtue
of the Merger:
(a) Cancellation of Treasury Stock and Stock Owned by Parent and Merger
Sub. All shares of Company Common Stock owned by the Company as treasury
stock and any shares of Company Common Stock owned by Parent, Merger Sub or
any Subsidiary of Parent or Merger Sub immediately prior to the Effective
Time shall, by virtue of the Merger, and without any action on the part of
the holder thereof, no longer be outstanding, shall be canceled and retired
without payment of any consideration therefor and shall cease to exist.
(b) Capital Stock of Merger Sub. Each share of Merger Sub Common Stock
outstanding immediately prior to the Effective Time shall be converted into
and become one share of common stock of the Surviving Corporation.
(c) Conversion of Company Common Stock. Except as provided in clause (a)
of this Section 4.01, each share of Company Common Stock outstanding
immediately prior to the Effective Time shall be converted into and shall
be canceled in exchange for the right to receive from Parent the same
amount of cash and the same number of shares of Parent Common Stock as paid
for each share of Company Common Stock in the Offer. At the Effective Time,
all Company Common Stock shall no longer be outstanding, shall
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be canceled and retired and shall cease to exist, and each certificate (a
"Certificate") that formerly represented such shares of Company Common
Stock shall thereafter represent only the right to receive cash and the
number of whole shares of Parent Common Stock into which the Company Common
Stock represented by such Certificate is converted pursuant to this Section
4.01(c) and the right, if any, to receive pursuant to Section 4.03(e) cash
in lieu of a fractional share of Parent Common Stock and any dividend or
distribution pursuant to Section 4.03(c), in each case without interest.
(d) In the event that, subsequent to the date of this Agreement but prior
to the Effective Time, the Company changes the number of shares of Company
Common Stock, or Parent changes the number of shares of Parent Common
Stock, issued and outstanding as a result of a stock split, stock
combination, stock dividend, recapitalization, redenomination of share
capital or other similar transaction, the consideration paid in the Offer
and the Merger and other items dependent thereon shall be appropriately
adjusted.
Section 4.02. Exchange of Shares. Prior to the Effective Time, Parent shall
appoint a bank or trust company reasonably acceptable to the Company as
exchange agent (the "Exchange Agent") for the purposes of exchanging the
Certificates for cash and the whole number of shares of Parent Common Stock
into which the shares of Company Common Stock formerly represented thereby
have been converted and cash in lieu of fractional shares of Parent Common
Stock. Promptly after the Effective Time, Parent will send, or will cause the
Exchange Agent to send, to each holder of record of Company Common Stock as of
the Effective Time a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in
customary form and have such other customary provisions as the Surviving
Corporation or Parent may reasonably specify) providing instructions for use
in effecting the surrender of Certificates in exchange for cash and the whole
number of shares of Parent Common Stock into which the shares of Company
Common Stock formerly represented thereby have been converted and cash in lieu
of a fractional share of Parent Common Stock.
Section 4.03. Exchange of Certificates. (a) Exchange Agent. On or prior to
the Effective Time, Parent shall deposit with the Exchange Agent (i) as
nominee for the benefit of the holders of Company Common Stock, the aggregate
amount of cash and the aggregate number of shares of Parent Common Stock to be
issued pursuant to Section 4.01(c) and (ii) an amount of cash sufficient to
permit the Exchange Agent to make the necessary payments of cash in lieu of
fractional shares of Parent Common Stock in accordance with Section 4.03(e)
(such cash and shares of Parent Common Stock, together with any dividends or
distributions with respect thereto being hereinafter referred to as the
"Exchange Fund"), to be held for the benefit of and distributed to the holders
of Company Common Stock in accordance with this Section 4.03. The Exchange
Agent shall invest any cash included in the Exchange Fund as directed by the
Surviving Corporation on a daily basis in direct obligations of the United
States, obligations for which the full faith and credit of the United States
is pledged to provide for the payment of principal and interest, commercial
paper rated the highest quality by Moody's Investors Services, Inc. or
Standard & Poor's Ratings Group or certificates of deposit, bank repurchase
agreements or bankers' acceptances of a commercial bank having at least
$100,000,000 in assets, or in money market funds which are invested in the
foregoing; provided that no such investment or loss thereon shall affect the
amounts payable to the Company's shareholders pursuant to this Article IV.
Parent and the Surviving Corporation shall replace any monies lost through an
investment made pursuant to this Section 4.03. Any interest and other income
resulting from such investments shall promptly be paid to the Surviving
Corporation.
(b) Exchange Procedures. Upon surrender of a Certificate for cancellation to
the Exchange Agent, together with the letter of transmittal referred to in
Section 4.02 duly executed and completed in accordance with its terms, and
such other documents as may reasonably be required by the Exchange Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor
(i) the amount of cash and a certificate or certificates representing the
whole number of shares of Parent Common Stock into which the shares of Company
Common Stock represented by such Certificate have been converted in accordance
with Section 4.01(c), (ii) the amount of dividends or other distributions, if
any, with a record date on or after the Effective Time which theretofore
became payable with respect to such shares of Parent Common Stock, and (iii)
the cash amount payable in lieu of a fractional share of Parent Common Stock
in accordance with Section 4.03(e), in each case which such holder
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has the right to receive pursuant to the provisions of this Article IV, and
the Certificate so surrendered shall forthwith be canceled. In no event shall
the holder of any Certificate be entitled to receive interest on any funds to
be received in the Merger. In the event of a transfer of ownership of shares
of Company Common Stock which is not registered in the transfer records of the
Company, the amount of cash and a certificate or certificates representing
that whole number of shares of Parent Common Stock into which such shares of
Company Common Stock have been converted in accordance with Section 4.01(c),
plus the cash amount payable in lieu of a fractional share of Parent Common
Stock in accordance with Section 4.03(e), may be issued to a transferee if the
Certificate representing such Company Common Stock is presented to the
Exchange Agent accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have
been paid. Until surrendered as contemplated by this Section 4.03(b) and
subject to Section 4.03(c), each Certificate shall, after the Effective Time,
represent for all purposes only the right to receive the amount of cash and
the whole number of shares of Parent Common Stock into which the number of
shares of Company Common Stock shown thereon has been converted in accordance
with Section 4.01(c), plus the cash amount payable in lieu of a fractional
share of Parent Common Stock in accordance with Section 4.03(e).
Notwithstanding the foregoing, certificates representing Company Common Stock
surrendered for exchange by any Person constituting a "Rule 145 Affiliate" of
the Company for purposes of Section 7.14 shall not be exchanged until Parent
has received a Rule 145 Affiliate Agreement (as defined in Section 7.14) as
provided in Section 7.14.
(c) Distributions with Respect to Unexchanged Shares. No dividends or other
distributions declared, made or paid after the Effective Time with respect to
shares of Parent Common Stock with a record date on or after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with respect
to the shares of Parent Common Stock represented thereby and no cash payment
in lieu of a fractional share of Parent Common Stock shall be paid to any such
holder pursuant to Section 4.03(e) until the holder of record of such
Certificate shall surrender such Certificate in accordance with this Section.
Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be paid to the record holder of the certificates
representing shares of Parent Common Stock, without interest, (i) at the time
of such surrender, the amount of dividends or other distributions, if any,
with a record date on or after the Effective Time which theretofore became
payable, but which were not paid by reason of the immediately preceding
sentence, with respect to such shares of Parent Common Stock and (ii) at the
appropriate payment date, the amount of dividends or other distributions with
a record date on or after the Effective Time but prior to surrender and a
payment date subsequent to surrender payable with respect to such shares of
Parent Common Stock. Dividends or other distributions with a record date on or
after the Effective Time but prior to surrender of Certificates by holders
thereof payable in respect of shares of Parent Common Stock held by the
Exchange Agent shall be held in trust for the benefit of such holders of
Certificates.
(d) No Further Ownership Rights in Company Common Stock. All shares of
Parent Common Stock issued and all cash paid upon the surrender for exchange
of Certificates in accordance with the terms hereof (including any cash paid
pursuant to Section 4.03(e)) shall be deemed to have been issued at the
Effective Time in full satisfaction of all rights pertaining to the shares of
Company Common Stock represented thereby, subject to the Surviving
Corporation's obligation to pay any dividends which may have been declared by
the Company on the shares of Company Common Stock in accordance with the terms
of this Agreement and which remained unpaid at the Effective Time. From and
after the Effective Time, the stock transfer books of the Company shall be
closed and there shall be no further registration of transfers thereon of the
shares of Company Common Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall be canceled and exchanged
as provided in this Section 4.03.
(e) No Fractional Shares. No certificate or scrip representing fractional
shares of Parent Common Stock will be issued in the Offer or the Merger upon
the surrender for exchange of Certificates, and such fractional shares of
Parent Common Stock will not entitle the owner thereof to vote or to any
rights of a holder of shares of Parent Common Stock. In lieu of any such
fractional shares of Parent Common Stock, each holder of
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Certificates who would otherwise have been entitled to a fraction of a share
of Parent Common Stock in exchange for such Certificates (after taking into
account all Certificates delivered by such holder) pursuant to this Section
4.03 shall receive from the Exchange Agent, as applicable, a cash payment in
lieu of such fractional share of Parent Common Stock, determined by
multiplying (i) the Average Price by (ii) the fraction of a share of Parent
Common Stock to which such holder would otherwise be entitled.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the shareholders of the Company for one year after
the Effective Time shall be delivered to or as directed by Parent, upon
demand, and any holders of Certificates who have not theretofore complied with
this Article IV shall thereafter look only to Parent for payment of their
claim for shares of Parent Common Stock, any cash in lieu of a fractional
share of Parent Common Stock and any dividends or distributions with respect
to shares of Parent Common Stock. Neither Parent nor the Surviving Corporation
shall be liable to any holder of any Certificate for cash or shares of Parent
Common Stock (or dividends or distributions with respect thereto), or cash
payable in respect of a fractional share of Parent Common Stock, delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law. Any securities or cash amounts remaining unclaimed by holders of
Certificates five years after the Effective Time (or such earlier date
immediately prior to such time as such amounts would otherwise escheat to or
become property of any governmental entity) shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation free and
clear of any claims or interest of any Person previously entitled thereto.
(g) Lost, Stolen or Destroyed Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact
by the person claiming such Certificate to be lost, stolen or destroyed and,
if required by Parent, the posting by such person of a bond in such reasonable
amount as Parent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will deliver
in exchange for such lost, stolen or destroyed Certificate the cash and the
whole number of shares of Parent Common Stock into which the shares of Company
Common Stock formerly represented thereby have been converted, any cash in
lieu of a fractional share of Parent Common Stock, and unpaid dividends and
distributions in respect of or on shares of Parent Common Stock deliverable in
respect thereof, pursuant to this Agreement.
(h) Withholding Rights. Each of the Surviving Corporation and Parent shall
be entitled to deduct and withhold from the cash and the shares of Parent
Common Stock (and any dividends or distributions thereon) and cash in lieu of
a fractional share of Parent Common Stock otherwise payable hereunder to any
holder of Certificates in respect of the shares of Company Common Stock
formerly represented thereby such amounts as it is required to deduct and
withhold with respect to the making of such payment under any provision of
federal, state, local or foreign income tax law. To the extent that the
Surviving Corporation or Parent so withholds those amounts, such withheld
amounts shall be treated for all purposes of this Agreement as having been
paid to the holder of Company Common Stock in respect of which such deduction
and withholding was made by the Surviving Corporation or Parent, as the case
may be.
Section 4.04. Stock Options and Other Stock Plans.
(a) Company Options. Not less than five Business Days prior to the
occurrence of a change of control, each holder of a Company Option shall have
the right to elect either of the following alternatives with respect to such
Company Options by delivering a written election to the Company: (i) that
their options be cashed out, in whole or in part, in the manner described
below (the "Cashout Election") or (ii) that their options be exchanged, in
whole or in part, for options to purchase Parent Common Stock in the manner
described below (the "Conversion Election"). In the event that any holder of a
Company Option does not make an election as provided for in this Section
4.04(a), such holder shall be deemed to have made a Cashout Election with
respect to such holder's Company Options.
(b) In the event an optionee elects the Cashout Election, on the Acceptance
Date the Company shall terminate or cancel all Company Options to which the
Cashout Election relates that are outstanding and
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unexercised as of such date as set forth in Section 4.04 of the Company
Disclosure Schedule. Each Company Option that is outstanding and unexercised
on the Acceptance Date as to which the holder thereof has made a Cashout
Election shall be cancelled on the Acceptance Date, and the holder thereof
shall receive in exchange for the cancellation of such Company Option, an
amount in cash equal to (i) the excess, if any, of (1) the Per Share Amount
over (2) the per share exercise price of such Company Option, multiplied by
(ii) the number of shares of Company Common Stock subject to such Company
Option as of the Acceptance Date. Any such payment shall be subject to all
applicable federal, state and local tax employee withholding requirements. In
the event that an optionee elects the Cashout Election with respect to a
portion of the Company Options held thereby, the remaining Company Options
held by such optionee shall be exchanged for options of Parent Common Stock
pursuant to Section 4.04(c).
(c) In the event an optionee elects the Conversion Election, prior to the
Effective Time Parent and the Company shall take such action as may be
necessary to cause each Company Option to which the Conversion Election
relates to be automatically converted at the Effective Time into an option
("Substituted Option") to purchase a number of shares of Parent Common Stock
equal to the product of (i) the number of shares of Company Common Stock that
could have been purchased (assuming full vesting) under such Company Option
immediately prior to the Effective Time multiplied by (ii) the quotient of (1)
the Per Share Amount divided by (2) the Average Price (rounded up to the
nearest whole number of shares of Parent's Common Stock), at a price per share
of Parent's Common Stock equal to the quotient of (x) the per-share option
exercise price specified in the Company Option divided by (y) (1) the Per
Share Amount divided by (2) the Average Price (rounded down to the nearest
whole cent). Except as otherwise provided in this Agreement, such Substituted
Option shall be subject to the same terms and conditions as such Company
Option. Such Substituted Options shall be subject to any other rights which
arise under the Company Employee Benefit Plans, the option agreements
evidencing awards thereunder as a result of the transactions contemplated by
this Agreement or otherwise, including the full vesting of such Company
Options to the extent provided in such plans or agreements. As promptly as
reasonably practicable after the Effective Time, Parent shall issue to each
holder of an outstanding Company Option a document evidencing the foregoing
assumption by Parent. In the event that an optionee elects the Conversion
Election with respect to a portion of the Company Options held thereby, the
remaining Company Options held by such optionee shall be cashed-out pursuant
to Section 4.04(b).
(d) In respect of each Substituted Option and the shares of Parent Common
Stock underlying such option, Parent shall file as promptly as practicable,
and in no event later than the second Business Day after the Closing Date, and
keep current, a Form S-8 or other appropriate registration statement for as
long as any Substituted Options remain outstanding. In connection with the
issuance of Substituted Options, Parent shall, by action of the Board of
Directors of Parent, reserve for issuance the number of shares of Parent
Common Stock that will become subject to Substituted Options pursuant to this
Section 4.04.
(e) Prior to the Effective Time, the Company shall take such steps
reasonably necessary, including amendment of the plans and agreements
governing the terms of the Company Options, to accomplish the disposition of
the Company Options pursuant to this Section 4.04, including the Cashout
Election and the Conversion Election. In addition, prior to the Effective
Time, the Company shall amend each outstanding Company Option to provide that
in the event the option holder's employment is involuntarily terminated
following the Acceptance Date other than for cause or in the event that an
employee terminates his or her employment for "good reason" as such term is
defined in such employee's employment agreement, the exercise period for such
option shall end on the three year anniversary of the Acceptance Date or the
last day of the original term of the Company Option, whichever occurs first.
(f) Phantom Share Units and Restricted Stock. On the Acceptance Date, the
Company shall terminate or cancel all performance shares and restricted or
performance share units and, to the extent provided for in the award
agreement, all restricted stock, and each holder of such stock or units that
are outstanding, whether or not such stock or units are free of restrictions,
shall be entitled to receive on the Acceptance Date, in exchange for the
cancellation of such stock or units, an amount in cash equal to the product of
(1) the mean of the high and
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low sales price on the Acceptance Date of Company Common Stock and (2) the
number of shares or units subject to such award. Any such payment shall be
subject to all applicable federal, state and local tax employee withholding
requirements.
ARTICLE V
Representations and Warranties of the Company
Except as disclosed in the Company's disclosure schedule delivered
concurrently with the delivery of this Agreement (the "Company Disclosure
Schedule"), the Company hereby represents and warrants to Parent as follows:
Section 5.01. Due Organization, Good Standing and Corporate Power. The
Company and each of its Subsidiaries is a corporation or legal entity duly
organized, validly existing and in good standing (with respect to
jurisdictions which recognize the concept of good standing) under the laws of
the jurisdiction of its incorporation and each such Person has all requisite
corporate, partnership or similar power and authority to own, lease and
operate its properties and to carry on its business as now being conducted,
except where the failure to be so organized, existing and in good standing or
to have such power and authority could not reasonably be expected to,
individually or in the aggregate, have a Company Material Adverse Effect. The
Company and each of its Subsidiaries is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to be so
qualified or licensed and in good standing would not reasonably be expected
to, individually or in the aggregate, have a Company Material Adverse Effect.
Other than as set forth in Section 5.01 of the Company Disclosure Schedule,
the respective Articles of Incorporation and By-Laws or other organizational
documents of the Significant Subsidiaries of the Company do not contain any
provision limiting or otherwise restricting the ability of the Company to
control such Subsidiaries. As soon as practicable after the date hereof the
Company will provide Parent with a list of all Subsidiaries of the Company and
their respective jurisdictions of incorporation or organization which
identifies the Company's (direct or indirect) percentage of equity ownership
therein. The copies of the Company's Articles of Incorporation and By-Laws
that are set forth as exhibits to the Company's Form 10-K for the year ended
December 26, 1999 are complete and correct copies thereof. Such Articles of
Incorporation and By-Laws are in full force and effect on the date hereof, and
have not been amended, modified or rescinded.
Section 5.02. Authorization and Validity of Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and, subject to obtaining the Company
Shareholder Approval, to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement by the Company, and the
consummation by it of the transactions contemplated hereby, have been duly
authorized and approved by its Board of Directors and no other corporate
action on the part of the Company is necessary to authorize the execution,
delivery and performance of this Agreement by the Company and the consummation
of the transactions contemplated hereby, other than obtaining the Company
Shareholder Approval. This Agreement has been duly executed and delivered by
the Company and is a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except to the extent that
its enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
Section 5.03. Capitalization. (a) The authorized capital stock of the
Company consists of 500,000,000 shares of Company Common Stock and 5,000,000
shares of preferred stock, par value $10 per share (the "Company Preferred
Stock"), 250,000 shares of which have been designated Series M Cumulative
Participating Preferred Stock. At the close of business on July 13, 2000: (i)
204,712,356 shares of Company Common Stock were issued and outstanding, (ii)
12,067,171 shares of Company Common Stock were issuable pursuant to
outstanding awards under the Company's stock option and stock benefit plans
and arrangements and (iii) no shares of Company Preferred Stock were issued
and outstanding. All issued and outstanding shares of capital
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stock of the Company have been duly authorized and validly issued and are
fully paid and nonassessable. Except as set forth above or in Section 5.03(a)
of the Company Disclosure Schedule or as required by local law and other than
the Company Rights, there are no outstanding or authorized options, warrants,
rights, subscriptions, claims of any character, agreements, obligations,
convertible or exchangeable securities, or other commitments, contingent or
otherwise, relating to shares of capital stock or other equity interests of
the Company or any of its Significant Subsidiaries, pursuant to which the
Company or any of its Subsidiaries is or may become obligated to issue shares
of its capital stock or other equity interests or any securities convertible
into, exchangeable for, or evidencing the right to subscribe for, any shares
of the capital stock or other equity interests of the Company or any of its
Significant Subsidiaries (each an "Issuance Obligation"). Except as set forth
in Section 5.03(a) of the Company Disclosure Schedule, there are no
outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any outstanding securities of the
Company or any of its Significant Subsidiaries. The Company has no authorized
or outstanding bonds, debentures, notes or other indebtedness the holders of
which have the right to vote (or convertible or exchangeable into or
exercisable for securities the holders of which have the right to vote) with
the shareholders of the Company on any matter ("Voting Debt"). Except as set
forth in Section 5.03(a) of the Company Disclosure Schedule, there are no
restrictions of any kind which prevent or restrict the payment of dividends by
the Company or any of its Significant Subsidiaries and there are no
limitations or restrictions on the right to vote, sell or otherwise dispose of
the capital stock or other ownership interests of the Company or its
Significant Subsidiaries.
(b) All of the issued and outstanding shares of capital stock of each
Subsidiary are validly existing, fully paid and non-assessable. Except as set
forth in the Company SEC Reports filed on or before the date hereof or in
Section 5.03(b) of the Company Disclosure Schedule, no Significant Subsidiary
of the Company has outstanding Voting Debt and there are no obligations of the
Company or any of its Significant Subsidiaries to repurchase, redeem or
otherwise acquire any outstanding securities of any of its Significant
Subsidiaries or any capital stock of, or other ownership interests in, any of
its Significant Subsidiaries.
(c) Except for the Company's interest in its Subsidiaries, and as set forth
in Section 5.03(c) of the Company Disclosure Schedule, the Company does not
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or similar
interest in, any corporation, partnership, joint venture, limited liability
company or other business association or entity which is material to the
Company and its Subsidiaries, taken as a whole.
Section 5.04. Consents and Approvals; No Violations. Assuming (i) the
filings required under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), are made and the waiting periods thereunder
(if applicable) have been terminated or expired, (ii) the prior notification
and reporting requirements of antitrust or competition laws of the member
states of the European Union as may be applicable (collectively, the "European
Antitrust Laws"), if applicable, are satisfied and any antitrust
filings/notifications which must or may be effected at the national level in
countries having jurisdiction are made and any applicable waiting periods
thereunder have been terminated or expired, (iii) the prior notification and
reporting requirements of other antitrust or competition laws as may be
applicable are satisfied and any antitrust filings/notifications which must or
may be effected in countries having jurisdiction are made, (iv) the applicable
requirements of the Securities Act and the Exchange Act are met, (v) the
requirements under any applicable foreign or state securities or blue sky laws
are met, (vi) the filing of the Articles of Merger and other appropriate
merger documents, if any, as required by the VSCA, are made, (vii) in the case
of this Agreement, the Company Shareholder Approval is received, (viii) the
requirements of any applicable state law relating to the transfer of
contaminated property are met and (ix) as otherwise set forth in Section 5.04
to the Company Disclosure Schedule, the execution and delivery of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby do not and will not: (A) violate or conflict
with any provision of the Company's Articles of Incorporation or the Company's
By-Laws or the comparable governing documents of any of its Significant
Subsidiaries; (B) violate or conflict with any statute, law, ordinance, rule
or regulation (collectively, "Laws") or any order, judgment, decree, writ,
permit or license (collectively, "Orders"), of any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality
of the United States, any foreign country or any
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domestic or foreign state, county, city or other political subdivision (a
"Governmental Authority") applicable to the Company or any of its Subsidiaries
or by which any of their respective properties or assets may be bound; (C)
except as provided above or as set forth in Section 5.04 of the Company
Disclosure Schedule, require any filing with, or permit, consent or approval
of, or the giving of any notice to, any Governmental Authority; or (D) except
as set forth in Section 5.04 of the Company Disclosure Schedule, result in a
violation or breach of, conflict with, constitute (with or without due notice
or lapse of time or both) a default (or give rise to any right of termination,
cancellation, payment or acceleration) under, or result in the creation of any
Lien upon any of the properties or assets of the Company or any of its
Subsidiaries under, or give rise to any obligation, right of termination,
cancellation, acceleration or increase of any obligation or a loss of a
material benefit under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, franchise, permit, agreement,
contract, lease, franchise agreement or other instrument or obligation of any
kind (collectively, "Contracts") to which the Company or any of its
Subsidiaries is a party, or by which any such Person or any of its properties
or assets are bound, excluding from the foregoing clauses (B), (C) and (D),
conflicts, violations, breaches, defaults, rights of payment and
reimbursement, terminations, modifications, accelerations and creations and
impositions of Liens which, and filings, permits, consents, approvals or
notices, the failure to have made or received, would not reasonably be
expected to, individually or in the aggregate, have a Company Material Adverse
Effect; provided, however, that for purposes of this Section 5.04, the
definition of "Company Material Adverse Effect" shall be read so as not to
include clause (ii)(B) thereof.
Section 5.05. Company Reports and Financial Statements. (a) Since December
28, 1997, the Company and, to the extent applicable, its Subsidiaries, have
filed all forms, reports and documents with the SEC required to be filed by it
pursuant to the federal securities laws and the SEC rules and regulations
thereunder, and all forms, reports, schedules, registration statements and
other documents filed with the SEC by the Company and, to the extent
applicable, its Subsidiaries have complied in all material respects with all
applicable requirements of the federal securities laws and the SEC rules and
regulations promulgated thereunder, each as in effect on the date such forms,
reports and documents were filed. The Company has, prior to the date of this
Agreement, made available to Parent true and complete copies of all forms,
reports, registration statements and other filings filed by the Company and
its Subsidiaries with the SEC since December 28, 1997 (such forms, reports,
registration statements and other filings, together with any exhibits, any
amendments thereto and information incorporated by reference therein, are
sometimes collectively referred to as the "Company SEC Reports"). As of their
respective dates, the Company SEC Reports did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and the unaudited consolidated interim
financial statements of the Company included in the Company SEC Reports were
prepared in accordance with GAAP applied on a consistent basis (except as may
be indicated therein or in the notes or schedules thereto) and present fairly,
in all material respects, the consolidated financial position of the Company
and its consolidated Subsidiaries as of the dates thereof and their
consolidated results of operations and changes in financial position for the
periods then ended subject, in the case of the unaudited interim financial
statements, to normal and recurring year-end adjustments. The Company has
heretofore provided Parent with true and correct copies of any material
amendments and/or modifications to any Company SEC Reports which have not yet
been filed with the SEC but that are required to be filed with the SEC in
accordance with applicable federal securities laws and the SEC rules.
(b) Except as set forth or provided in the Company SEC Reports filed prior
to the date of this Agreement or in Section 5.05(b) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has any liability or
obligation of any nature (whether accrued, absolute, contingent or otherwise),
in each case that is required by GAAP to be set forth on a consolidated
balance sheet of the Company, except for (i) liabilities or obligations
disclosed or provided for in the Company SEC Reports filed prior to the date
of this Agreement; (ii) liabilities or obligations under this Agreement or
incurred in connection with the transactions contemplated hereby and (iii)
liabilities or obligations which would not reasonably be expected to,
individually or in the aggregate, have a Company Material Adverse Effect.
Except as set forth in Section 5.05(b) of the Company Disclosure Schedule, as
of the date hereof, neither the Company nor any of its Subsidiaries is in
default in respect
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of the material terms and conditions of any indebtedness or other agreement
which would reasonably be expected to, individually or in the aggregate, have
a Company Material Adverse Effect.
Section 5.06. Information to Be Supplied. (a) Each of the Schedule 14D-9 and
the Proxy Statement/Prospectus and the other documents required to be filed by
the Company with the SEC in connection with the Offer, the Merger and the
other transactions contemplated hereby will comply as to form in all material
respects with the requirements of the Exchange Act and the Securities Act, as
the case may be, and will not, on the date of its filing or, in the case of
the Proxy Statement/Prospectus, on the dates it is mailed to shareholders of
the Company and at the time of the Company Shareholder Meeting, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
(b) Notwithstanding the foregoing provisions of this Section 5.06, no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference in the Merger Registration Statement, the
Proxy Statement/Prospectus or the Schedule 14D-9 based on information supplied
by Parent or Merger Sub for inclusion or incorporation by reference therein or
based on information which is not made in or incorporated by reference in such
documents but which should have been disclosed pursuant to Section 6.06.
Section 5.07. Absence of Certain Events. Except as disclosed in the Company
SEC Reports filed on or before the date hereof or in Section 5.07 of the
Company Disclosure Schedule or as required or expressly permitted by this
Agreement, since December 26, 1999, the Company and its Subsidiaries have
operated their respective businesses only in the ordinary course and there has
not occurred (i) any event, occurrence, change or development which would
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect; (ii) any damage, destruction or loss which,
individually or in the aggregate, resulted in or would reasonably be expected
to result in, a Company Material Adverse Effect; or (iii) any increase in the
compensation of, or change of control agreement with, any officer of the
Company or any of its Subsidiaries or, other than in the ordinary course of
business, any general salary or benefits increase to the employees of the
Company or any of its Subsidiaries.
Section 5.08. Litigation. Except as disclosed in Section 5.08 of the Company
Disclosure Schedule or in the Company SEC Reports filed prior to the date
hereof, there are no investigations, actions, suits or proceedings
("Proceedings") pending against the Company or its Subsidiaries or, to the
knowledge of the Company, threatened against the Company or its Subsidiaries
(or any of their respective properties, rights or franchises), at law or in
equity, or before or by any federal or state commission, board, bureau,
agency, regulatory or administrative instrumentality or other Governmental
Authority or any arbitrator or arbitration tribunal, that would reasonably be
expected to, individually or in the aggregate, have a Company Material Adverse
Effect, and, to the knowledge of the Company, no development has occurred with
respect to any pending or threatened Proceeding that would reasonably be
expected to result in a Company Material Adverse Effect or would reasonably be
expected to prevent, materially impair or materially delay the consummation of
the transactions contemplated hereby. Except as disclosed in the Company SEC
Reports filed prior to the date hereof, neither the Company nor any of its
Subsidiaries is subject to any Order entered in any proceeding which would
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect. The foregoing does not apply to any Proceeding or
Order arising in connection with or as a result of the execution of this
Agreement or the commencement of the Offer or the consummation of the other
transactions contemplated hereby.
Section 5.09. Title to Properties; Encumbrances. Except as disclosed in
Section 5.09 of the Company Disclosure Schedule, the Company and each of its
Significant Subsidiaries has good, valid and marketable title to, or, in the
case of leased properties and assets, valid leasehold interests in, all of its
tangible properties and assets except where the failure to have such good,
valid and marketable title would not reasonably be expected to, individually
or in the aggregate, have a Company Material Adverse Effect; in each case
subject to no Liens, except for (a) Liens reflected in the consolidated
balance sheet as of December 26, 1999, (b) Liens consisting of zoning or
planning restrictions, easements, permits and other restrictions or
limitations on the use of real property or irregularities in title thereto
which do not materially detract from the value of, or materially impair the
use of,
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such property by the Company or any of its Significant Subsidiaries in the
operation of its respective business, (c) Liens for current Taxes, assessments
or governmental charges or levies on property not yet due or which are being
contested in good faith and (d) Liens which would not reasonably be expected
to, individually or in the aggregate, have a Company Material Adverse Effect.
Except as would not reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect, (i) the Company and each of
its Significant Subsidiaries are in compliance with the terms of all leases of
tangible properties to which they are a party and under which they are in
occupancy, and all such leases are in full force and effect and (ii) the
Company and each of its Significant Subsidiaries enjoys peaceful and
undisturbed possession under all such leases.
Section 5.10. Compliance with Laws. Except as disclosed in the Company SEC
Reports or Section 5.10 of the Company Disclosure Schedule, (a) the Company,
each of its Significant Subsidiaries, the North American Tissue division and
the Dixie division are in compliance with all applicable Laws and Orders,
except where the failure to so comply would not reasonably be expected to,
individually or in the aggregate, have a material adverse effect upon the
business, operations or financial condition of the Company, any of its
Significant Subsidiaries, the North American Tissue division or the Dixie
division, and (b) the Company, each of its Significant Subsidiaries, the North
American Tissue division and the Dixie division hold, to the extent legally
required, all federal, state, local and foreign permits, approvals, licenses,
authorizations, certificates, rights, exemptions and orders from Governmental
Authorities (the "Permits") that are required for the operation of the
respective businesses of the Company, each of its Significant Subsidiaries,
the North American Tissue division and the Dixie division as now conducted,
except where the failure to hold any such Permit would not reasonably be
expected to, individually or in the aggregate, have a material adverse effect
upon the business, operations or financial condition of the Company, any of
its Significant Subsidiaries, the North American Tissue division or the Dixie
division, and there has not occurred any default under any such Permit, except
to the extent that such default would not reasonably be expected to,
individually or in the aggregate, have a material adverse effect upon the
business, operations or financial condition of the Company, any of its
Significant Subsidiaries, the North American Tissue division or the Dixie
division.
Section 5.11. Company Employee Benefit Plans. (a) Except as set forth in
Section 5.11(a) of the Company Disclosure Schedule, (i) each employee benefit
plan subject to or governed by the laws of any jurisdiction outside of the
United States or any State or Commonwealth of the United States, (ii) each
employee benefit plan, within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, and the rules and
regulations thereunder ("ERISA"), whether or not subject to ERISA, and (iii)
each foreign or domestic stock option, stock appreciation right, restricted
stock, stock purchase, stock unit, performance share, incentive, bonus,
profit-sharing, savings, deferred compensation, health, medical, dental, life
insurance, disability, accident, supplemental unemployment or retirement,
employment, severance, termination or salary or benefits continuation or
fringe benefit plan, program, arrangement, contract or agreement maintained by
the Company or any Affiliate thereof (including, for this purpose and for the
purpose of all of the representations in this Section 5.11, all employers
(whether or not incorporated) that would be treated together with the Company
and/or any such Affiliate as a single employer within the meaning of Section
414 of the Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder (the "Code")) or to which the Company or any Affiliate
thereof contributes (or has any obligation to contribute), has any liability
or is a party (collectively, the "Company Employee Benefit Plans") is in
compliance with all applicable Laws (including, without limitation, ERISA and
the Code) and has been administered and operated in accordance with its terms,
in each case except as would not, in the aggregate, have a Company Material
Adverse Effect.
(b) Set forth in Section 5.11(b) of the Company Disclosure Schedule is an
accurate and complete list of (i) each material Company Employee Benefit Plan
and (ii) any material claim, action, litigation, audit, examination,
investigation or administrative proceeding that has been made or commenced or,
to the best knowledge of the Company, threatened with respect to any material
Company Employee Benefit Plan (other than routine claims for benefits in the
ordinary course).
(c) The Company has made available or will make available to Parent or its
counsel true and complete copies of each plan document related to each Company
Employee Benefit Plan and any related trust agreement
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or funding vehicle, together with all amendments thereto, and such other
documentation with respect to any Company Employee Benefit Plan as reasonably
requested by Parent.
Section 5.12. Labor/Employment. Section 5.12 of the Company Disclosure
Schedule sets forth a list of all material employment, labor and collective
bargaining agreements to which the Company or any Subsidiary of the Company is
a party. The Company has heretofore made available or will make available to
Parent true and complete copies of the employment, labor and collective
bargaining agreements listed on Section 5.12 of the Company Disclosure
Schedule, together with all material amendments, modifications and supplements
affecting the duties, rights and obligations of any party thereunder. Except
as would not reasonably be expected to, individually or in the aggregate, have
a Company Material Adverse Effect or as set forth in Section 5.12 of the
Company Disclosure Schedule, (i) to the Company's knowledge, there are no
organizational campaigns, written demands or proceedings pending or, to the
Company's knowledge, threatened by any labor organization or group of
employees seeking recognition or certification as collective bargaining
representative of any group of employees of the Company or any of its
Subsidiaries; (ii) there are no strikes, or material labor disputes ongoing
or, to the Company's knowledge, threatened involving the Company or any of its
Significant Subsidiaries, and the Company and its Significant Subsidiaries has
not experienced any such strike, or material labor dispute within the past two
years; and (iii) no collective bargaining agreement is currently being
negotiated by the Company or any of its Significant Subsidiaries.
Section 5.13. Taxes. Except as set forth in Section 5.13 of the Company
Disclosure Schedule or as would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect:
(a) The Company and each of its Subsidiaries has timely filed or caused
to be timely filed with the appropriate Taxing authorities all Federal
income and all other returns, statements, forms and reports for Taxes
("Returns") that are required to be filed by, or with respect to, the
Company and such Subsidiaries on or prior to the Closing Date. The Returns
as filed were correct and complete in all respects. "Taxes" shall mean all
taxes, assessments, charges, duties, fees, levies or other governmental
charges including, without limitation, all Federal, state, local, foreign
and other income, franchise, profits, capital gains, capital stock,
transfer, sales, use, occupation, property, excise, severance, windfall
profits, stamp, license, payroll, withholding and other taxes, assessments,
charges, duties, fees, levies or other governmental charges of any kind
whatsoever (whether payable directly or by withholding and whether or not
requiring the filing of a Return), all estimated taxes, deficiency
assessments, additions to tax, penalties and interest and shall include any
liability for such amounts as a result of being a member of a combined,
consolidated, unitary or affiliated group.
(b) All Taxes and Tax liabilities of the Company and its Subsidiaries
that have become due and payable have been timely paid or fully provided
for as a liability on the financial statements of the Company and its
Subsidiaries in accordance with GAAP.
(c) Neither the Company nor any of its Subsidiaries is the subject of an
audit, other examination, matter in controversy, proposed adjustment,
refund litigation or other proceeding with respect to Taxes by the Tax
authorities of any nation, state or locality which could reasonably be
expected to result in a Tax liability, nor has the Company or any of its
Subsidiaries received any notices from any Tax authority relating to any
issue which could reasonably be expected to result in a Tax liability.
(d) All Taxes which the Company or any of its Subsidiaries is (or was)
required by law to withhold or collect have been duly withheld or
collected, and have been timely paid over to the proper authorities to the
extent due and payable.
(e) There are no Tax sharing, allocation, indemnification or similar
agreements (in writing) in effect as between the Company, any of its
Subsidiaries, or any predecessor or Affiliate of any of them and any other
party under which the Company (or any of its Subsidiaries) could be liable
for any Taxes of any party other than the Company or any Subsidiary of the
Company.
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(f) No election under Section 341(f) of the Code has been made or shall
be made prior to the Closing Date to treat the Company or any of its
Subsidiaries as a consenting corporation, as defined in Section 341 of the
Code.
(g) There are no outstanding rulings of, or requests for rulings with,
any Tax Authority addressed to the Company or any of its Subsidiaries that
are, or if issued would be, binding on the Company or any of its
Subsidiaries.
(h) There have been no distributions intended to qualify as tax-free
under Section 355 of the Code, involving the Company as either the
distributing or distributed corporation within the past two years.
Section 5.14. Intellectual Property. Except as would not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse
Effect:
(a) The Company or one of its Subsidiaries exclusively owns, without
restrictions, or is licensed to use, the rights to all patents, trademarks,
trade names, service marks, copyrights together with any registrations and
applications therefor, Internet domain names, net lists, schematics,
inventories, technology, trade secrets, source codes, know-how, computer
software programs or applications including, without limitation, all object
and source codes and tangible or intangible proprietary information or
material that are used in the business of the Company and any of its
Subsidiaries as currently conducted (the "Company Intellectual Property").
Neither the Company nor any of its Subsidiaries is, or as a result of the
execution, delivery or performance of the Company's obligations hereunder
will be, in violation of, or lose any rights pursuant to, any Company
Intellectual Property.
(b) Except as set forth in Section 5.14(b) of the Company Disclosure
Schedule, no claims with respect to the Company Intellectual Property have
been asserted or, to the knowledge of the Company, are threatened by any
Person nor does the Company or any of its Subsidiaries know of any valid
grounds for any bona fide claims against the use by the Company or any of
its Subsidiaries of any Company Intellectual Property, or challenging the
ownership, validity, enforceability or effectiveness of any of the Company
Intellectual Property. All granted and issued patents and all registered
trademarks and service marks and all copyrights held by the Company or any
of its Subsidiaries are valid, enforceable and subsisting. To the Company's
knowledge, there has not been and there is not any unauthorized use,
infringement or misappropriation of any of the Company Intellectual
Property by any third Person, including, without limitation, any employee
or former employee.
(c) Except as set forth in Section 5.14(c) of the Company Disclosure
Schedule, no owned Company Intellectual Property is subject to any
outstanding Order, or agreement restricting in any manner the licensing
thereof by the Company or any of its Subsidiaries.
Section 5.15. Broker's or Finder's Fee. Except for the fees of Morgan
Stanley (whose fees and expenses will be paid by the Company in accordance
with the Company's agreement with such firm, a true and correct copy of which
has been previously delivered to Parent by the Company), no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission or expense reimbursement from the Company or from any of its
Subsidiaries or any of its controlled Affiliates in connection with the
transactions contemplated by this Agreement based upon arrangements made by
and on behalf of the Company, any of its Subsidiaries or any of its
Affiliates.
Section 5.16. Environmental Laws and Regulations. Except as would not
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect and except as set forth in Section 5.16 of the Company
Disclosure Schedule or in the Company SEC Reports filed prior to the date
hereof, (i) Hazardous Materials have not been generated, used, treated or
stored on, transported to or from or Released or disposed of on, any Company
Property, (ii) the Company and each of its Subsidiaries are in compliance with
all applicable Environmental Laws and the requirements of any permits issued
under such Environmental Laws with respect to
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any Company Property, (iii) there are no past, pending or, to the Company's
knowledge, threatened Environmental Claims against the Company or any of its
Subsidiaries or any Company Property and (iv) there are no facts or
circumstances, conditions or occurrences regarding the business, assets or
operations of the Company or any Company Property that could reasonably be
anticipated to form the basis of an Environmental Claim against the Company or
any of its Subsidiaries or any Company Property.
For purposes of this Agreement, (i) "Company Property" means any real
property and improvements owned, leased or operated by the Company or any of
its Subsidiaries; (ii) "Hazardous Materials" means (A) any petroleum or
petroleum products, radioactive materials, asbestos in any form that is or
could become friable, transformers or other equipment that contain dielectric
fluid containing levels of polychlorinated biphenyls, and radon gas; (B) any
chemicals, materials or substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "extremely hazardous substances," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," or words of similar import,
under any applicable Environmental Law; and (C) any other chemical, material
or substance, exposure to which is prohibited, limited or regulated by any
Governmental Authority; (iii) "Environmental Law" means any federal, state,
foreign or local statute, law, rule, regulation, ordinance, code or rule of
common law and any judicial or administrative interpretation thereof binding
on the Company or its operations or property as of the date hereof and Closing
Date, including any judicial or administrative order, consent decree or
judgment, relating to the environment, health or Hazardous Materials,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. sec. 9601 et
seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. sec.
6901 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
sec. 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. sec. 2601 et
seq.; the Clean Air Act, 42 U.S.C. sec. 7401 et seq.; Oil Pollution Act of
1990, 33 U.S.C. sec. 2701 et seq.; the Safe Drinking Water Act, 42 U.S.C. sec.
300f et seq.; and their state and local counterparts and equivalents; (iv)
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations or proceedings under any
Environmental Law or any permit issued under any such Environmental Law (for
purposes of this subclause (iv), "Claims"), including, without limitation, (A)
any and all Claims by Governmental Authorities for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law and (B) any and all Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment; and (v)
"Release" means disposing, discharging, injecting, spilling, leaking,
leaching, dumping, emitting, escaping, emptying or seeping into or upon any
land or water or air, or otherwise entering into the environment.
Section 5.17. State Takeover Statutes. The Board of Directors of the Company
has approved the Offer, the Merger and this Agreement and such approval is
sufficient to render inapplicable to the Offer, the Merger, this Agreement and
the other transactions contemplated hereby the provisions of Section 13.1-
725.1 et seq. of the VSCA. The Company has taken all actions necessary to
cause 13.1-728.1 et seq. to be inapplicable to the Company. Except for Section
13.1-725.1 et seq. and Sections 13.1-728.1 et seq. of the VSCA (which have
been rendered inapplicable), to the Company's knowledge, no other takeover
statute or similar statute or regulation of any state is applicable to the
Offer, the Merger, this Agreement and the other transactions contemplated
hereby.
Section 5.18. Voting Requirements; Board Approval; Appraisal Rights
(a) The affirmative vote of the holders of more than two-thirds of the
outstanding shares of the Company Common Stock (voting as one class, with each
share of the Company Common Stock having one vote) entitled to be cast
approving this Agreement is the only vote of the holders of any class or
series of the Company's capital stock necessary to approve this Agreement, and
the transactions contemplated hereby.
(b) The Board of Directors of the Company has, as of the date of this
Agreement, (i) determined that the Offer and the Merger are in the best
interests of the Company and its shareholders, (ii) approved this Agreement
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and the transactions contemplated hereby and (iii) resolved to recommend that
the shareholders of the Company accept the Offer and approve this Agreement.
(c) No holder of Company Common Stock will have appraisal rights under
Section 13.1-730 of the VSCA as a result of, or in connection with, the Offer
or the Merger.
Section 5.19. Opinion of Financial Advisor. The Company has received the
opinion of Morgan Stanley that, as of the date of this Agreement, the
consideration to be received by the holders of the Company Common Stock
pursuant to the terms of the Offer and the Merger is fair from a financial
point of view to such holders, and a copy of such opinion has been, or
promptly upon receipt thereof will be, delivered to Parent; it being
understood and acknowledged by Parent that such opinion has been rendered for
the benefit of the Board of Directors of the Company, and is not intended to,
and may not, be relied upon by Parent, its Affiliates or their respective
shareholders.
Section 5.20. Rights Agreement. The copy of the Rights Agreement, dated as
of February 26, 1999, between the Company and Norwest Bank Minnesota, N.A., as
Rights Agent (the "Rights Agreement"), including all amendments and exhibits
thereto, that is set forth as an exhibit to the Company's Form 8-A, dated as
of February 26, 1999, is a complete and correct copy thereof. The Company has
taken all necessary action to amend the Rights Agreement, a copy of which
amendment will be promptly provided to Parent, so that neither the execution
of this Agreement nor the consummation of the Merger will (a) cause the Rights
issued pursuant to the Rights Agreement to become exercisable, (b) cause
Parent or Merger Sub to become an Acquiring Person (as such term is defined in
the Rights Agreement) or (c) give rise to a Distribution Date (as such term is
defined in the Rights Agreement).
Section 5.21. Non-competition Agreements. Except as set forth in Section
5.21 of the Company Disclosure Schedule, neither the Company nor any
Subsidiary of the Company is a party to any contract or agreement that has or
will have a material adverse effect upon the ability of (a) the Company or the
Surviving Company to, in all respects, conduct its business and operations as
currently conducted or (b) Parent to, in all respects, conduct its business
and operations as currently conducted.
ARTICLE VI
Representations and Warranties of Parent
Except as disclosed in Parent's disclosure schedule delivered concurrently
with the delivery of this Agreement (the "Parent Disclosure Schedule"), Parent
hereby represents and warrants to the Company as follows:
Section 6.01. Due Organization, Good Standing and Corporate Power. Parent
and each of its Subsidiaries is a corporation or legal entity duly organized,
validly existing and in good standing (with respect to jurisdictions which
recognize the concept of good standing) under the laws of the jurisdiction of
its incorporation and each such Person has all requisite corporate,
partnership or similar power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, except where
the failure to be so organized, existing and in good standing or to have such
power and authority could not reasonably be expected to, individually or in
the aggregate, have a Parent Material Adverse Effect. Parent and each of its
Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it makes such qualification
necessary, except where the failure to be so qualified or licensed and in good
standing would not reasonably be expected to, individually or in the
aggregate, have a Parent Material Adverse Effect. Other than as set forth in
Section 6.01 of the Parent Disclosure Schedule, the respective Articles of
Incorporation and By-Laws or other organizational documents of the
Subsidiaries of Parent do not contain any provision limiting or otherwise
restricting the ability of Parent to control such Subsidiaries. As soon as
practicable after the date hereof Parent will provide the
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Company with a list of all Subsidiaries of Parent and their respective
jurisdictions of incorporation or organization which identifies Parent's
(direct or indirect) percentage of equity ownership therein. The copies of
Parent's Articles of Incorporation and By-Laws that are set forth as exhibits
to Parent's Form 10-K for the year ended January 1, 2000 are complete and
correct copies thereof. Such Articles of Incorporation and By-Laws are in full
force and effect on the date hereof, and have not been amended, modified or
rescinded.
Section 6.02. Authorization and Validity of Agreement. Parent and, upon
execution of the Agreement, Merger Sub will, have all necessary corporate
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by Parent and, upon
execution of the Agreement, Merger Sub, and the consummation by each such
party of the transactions contemplated hereby, have been or upon execution by
Merger Sub, will be, duly authorized and unanimously approved by the Board of
Directors of Parent and Merger Sub and no other corporate action on the part
of either of Parent or Merger Sub is or will be necessary to authorize the
execution, delivery and performance of this Agreement by each of Parent and
Merger Sub and the consummation of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Parent and (in the case of
Merger Sub, will be), and is a valid and binding obligation of each of Parent
and Merger Sub (or, in the case of Merger Sub, will be) enforceable against
Parent and Merger Sub in accordance with its terms, except to the extent that
its enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
Section 6.03. Capitalization. (a) The authorized capital stock of Parent
consists of 650,000,000 shares of common stock, 400,000,000 of which are
Parent Common Stock and 250,000,000 of which have been designated Georgia-
Pacific Corporation-Timber Group Common Stock ("Timber Stock"), par value $.80
per share, and 35,000,000 shares of preferred stock, 25,000,000 of which have
been designated Junior Preferred Stock (the "Junior Preferred Stock"), no par
value per share, and 10,000,000 have been designated Preferred Stock, no par
value per share (the "Preferred Stock"). At the close of business on July 11,
2000: (i) 170,563,964 and 79,615,682 shares of Parent Common Stock and Timber
Stock, respectively, were issued and outstanding, (ii) 25,200,000 and
8,400,000 shares of Parent Common Stock and Timber Stock, respectively, were
reserved for issuance under Parent's stock option and stock benefit plans and
arrangements, (iii) no shares of Junior Preferred Stock or shares of Preferred
Stock were issued and outstanding and (iv) 21,501,300 and 14,387,850 shares of
Parent Common Stock and Timber Stock, respectively, were held by Parent in its
treasury. All issued and outstanding shares of capital stock of Parent are,
and all shares of Parent Common Stock to be issued hereunder will be, upon
issuance, duly authorized, validly issued, fully paid and nonassessable.
Except as set forth above or in Section 6.03(a) of the Parent Disclosure
Schedule or as required by local law and other that the Parent Rights, (i)
Parent is not bound by, obligated under, or party to an Issuance Obligation
with respect to any security of Parent or any Significant Subsidiary of Parent
and (ii) there is no outstanding Voting Debt of Parent. Except as set forth in
Section 6.03(a) of the Parent Disclosure Schedule, there are no outstanding
obligations of Parent or any of its Significant Subsidiaries to repurchase,
redeem or otherwise acquire any outstanding securities of Parent. Except as
set forth in Section 6.03(a) of the Parent Disclosure Schedule, there are no
restrictions of any kind which prevent or restrict the payment of dividends by
Parent or any of its Significant Subsidiaries and there are no limitations or
restrictions on the right to vote, sell or otherwise dispose of the capital
stock of Parent or other ownership interests.
(b) The authorized capital stock of Merger Sub will consist of 1,000 shares
of common stock, par value $.01 per share, all of which are validly issued and
outstanding, fully paid and nonassessable and are owned by Parent free and
clear of all security interests, liens, claims, pledges, options, rights of
first refusal, agreements, charges or other encumbrances of any nature or any
other limitation or restriction (including any restriction on the right to
vote or sell the same, except as may be provided under applicable Federal or
state securities laws) (collectively, "Liens").
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(c) All of the issued and outstanding shares of capital stock of each
Subsidiary are validly existing, fully paid and non-assessable. Except as set
forth in the Parent SEC Reports filed on or before the date hereof or in
Section 6.03(c) of the Parent Disclosure Schedule, no Significant Subsidiary
of Parent has outstanding Voting Debt and there are no obligations of Parent
or any of its Significant Subsidiaries to repurchase, redeem or otherwise
acquire any outstanding securities of any of its Significant Subsidiaries or
any capital stock of, or other ownership interests in, any of its Significant
Subsidiaries.
(d) Except for Parent's interest in its Subsidiaries, and as set forth in
Section 6.03(d) of the Parent Disclosure Schedule, Parent does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture, limited liability company or other
business association or entity which is material to Parent and its
Subsidiaries, taken as a whole.
Section 6.04. Consents and Approvals; No Violations. Assuming (i) the
filings required under the HSR Act are made and the waiting periods thereunder
have been terminated or expired, (ii) the prior notification and reporting
requirements of the European Antitrust Laws, if applicable, are satisfied and
any antitrust filings/notifications which must or may be effected at the
national level in countries having jurisdiction are made and any applicable
waiting periods thereunder have been terminated or expired, (iii) the prior
notification and reporting requirements of other antitrust or competition laws
as may be applicable are satisfied and any antitrust filings/notifications
which must be or may be effected in countries having jurisdiction are made,
(iv) the applicable requirements of the Securities Act and the Exchange Act
are met, (v) the requirements under any applicable foreign or state securities
or blue sky laws are met, (vi) the requirements of the NYSE in respect of the
listing of the shares of Parent Common Stock to be issued hereunder are met,
(vii) the filing of the Articles of Merger and other appropriate merger
documents, if any, as required by the VSCA, are made, (viii) the requirements
of any applicable state law relating to the transfer of contaminated property
are met and (ix) as otherwise set forth in Section 6.04 of the Parent
Disclosure Schedule, the execution and delivery of this Agreement by Parent
and Merger Sub and the consummation by Parent and Merger Sub of the
transactions contemplated hereby do not and will not: (A) violate or conflict
with any provision of Parent's Articles of Incorporation or Parent's By-Laws
or the comparable governing documents of any of its Significant Subsidiaries;
(B) violate or conflict with any Laws or Orders of any Governmental Authority
applicable to Parent or any of its Subsidiaries or by which any of their
respective properties or assets may be bound; (C) except as provided above or
as set forth in Section 6.04 of the Parent Disclosure Schedule, require any
filing with, or permit, consent or approval of, or the giving of any notice
to, any Governmental Authority; or (D) except as set forth in Section 6.04 of
the Parent Disclosure Schedule, result in a violation or breach of, conflict
with, constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any Lien upon any of the
properties or assets of Parent or any of its Subsidiaries under, or give rise
to any obligation, right of termination, cancellation, acceleration or
increase of any obligation or a loss of a material benefit under, any of the
terms, conditions or provisions of any Contracts to which Parent or any of its
Subsidiaries is a party, or by which any such Person or any of its properties
or assets are bound, excluding from the foregoing clauses (B), (C) and (D)
conflicts, violations, breaches, defaults, rights of payment and
reimbursement, terminations, modifications, accelerations and creations and
impositions of Liens which, and filings, permits, consents, approvals or
notices, the failure to have made or received, would not reasonably be
expected to, individually or in the aggregate, have a Parent Material Adverse
Effect; provided, however, that for purposes of this Section 6.04, the
definition of "Parent Material Adverse Effect" shall be read so as not to
include clause (ii)(B) thereof.
Section 6.05. Parent Reports and Financial Statements. (a) Since December
31, 1997, Parent and, to the extent applicable, its Subsidiaries have filed
all forms, reports and documents with the SEC required to be filed by it
pursuant to the federal securities laws and the SEC rules and regulations
thereunder, and all forms, reports, schedules, registration statements and
other documents filed with the SEC by Parent and, to the extent applicable,
its Subsidiaries have complied in all material respects with all applicable
requirements of the federal securities laws and the SEC rules and regulations
promulgated thereunder, each as in effect on the date such forms, reports
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and documents were filed. Parent has, prior to the date of this Agreement,
made available to the Company true and complete copies of all forms, reports,
registration statements and other filings filed by Parent and its Significant
Subsidiaries with the SEC since December 31, 1997 (such forms, reports,
registration statements and other filings, together with any exhibits, any
amendments thereto and information incorporated by reference therein, are
sometimes collectively referred to as the "Parent SEC Reports"). As of their
respective dates, the Parent SEC Reports did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and the unaudited consolidated interim
financial statements of Parent included in the Parent SEC Reports were
prepared in accordance with GAAP applied on a consistent basis (except as may
be indicated therein or in the notes or schedules thereto) and present fairly,
in all material respects, the consolidated financial position of Parent and
its consolidated Subsidiaries as of the dates thereof and their consolidated
results of operations and changes in financial position for the periods then
ended subject, in the case of the unaudited interim financial statements, to
normal and recurring year-end adjustments. Parent has heretofore provided to
the Company with true and correct copies of any material amendments and/or
modifications to any Parent SEC Reports which have not yet been filed with the
SEC but that are required to be filed with the SEC in accordance with
applicable federal securities laws and the SEC rules.
(b) Except as set forth or provided in the Parent SEC Reports filed prior to
the date of this Agreement or in Section 6.05(b) of the Parent Disclosure
Schedule, neither Parent nor any of its Subsidiaries has any liability or
obligation of any nature (whether accrued, absolute, contingent or otherwise),
in each case that is required by GAAP to be set forth on a consolidated
balance sheet of Parent, except for (i) liabilities or obligations disclosed
or provided for in the Parent SEC Reports filed prior to the date of this
Agreement; (ii) liabilities or obligations under this Agreement or incurred in
connection with the transactions contemplated hereby; and (iii) liabilities or
obligations which would not reasonably be expected to, individually or in the
aggregate, have a Parent Material Adverse Effect. Except as set forth in
Section 6.05(b) of the Parent Disclosure Schedule, neither Parent nor any of
its Subsidiaries is in default in respect of the material terms and conditions
of any indebtedness or other agreement which would reasonably be expected to,
individually or in the aggregate, have a Parent Material Adverse Effect.
Section 6.06. Information to Be Supplied. (a) Each of the Registration
Statement on Form S-4 to be filed with the SEC by Parent in connection with
the issuance of Parent Common Stock in the Merger, as amended or supplemented
from time to time (as so amended and supplemented, the "Merger Registration
Statement"), the Offer Documents and the other documents required to be filed
by Parent with the SEC in connection with the Offer, the Merger and the other
transactions contemplated hereby will comply as to form, in all material
respects, with the requirements of the Exchange Act and the Securities Act, as
the case may be, and will not, on the date of its filing or at the time they
become effective under the Securities Act or, in the case of the Offer
Registration Statement, on the dates the Offer Registration Statement is
mailed to shareholders of the Company and on the Acceptance Date and, in the
case of the Merger Registration Statement, on the dates the Proxy
Statement/Prospectus is mailed to shareholders of the Company and at the time
of the Company Shareholder Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(b) Notwithstanding the foregoing provisions of this Section 6.06, no
representation or warranty is made by Parent with respect to statements made
or incorporated by reference in the Merger Registration Statement or the Offer
Documents based on information supplied by the Company expressly for inclusion
or incorporation by reference therein or based on information which is not
made in or incorporated by reference in such documents but which should have
been disclosed pursuant to Section 5.06.
Section 6.07. Absence of Certain Events. Except as disclosed in the Parent
SEC Reports filed on or before the date hereof or in Section 6.07 of the
Parent Disclosure Schedule or as required or expressly permitted
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by this Agreement, since January 1, 2000, Parent and its Subsidiaries have
operated their respective businesses only in the ordinary course and there has
not occurred (i) any event, occurrence, change or developments which would
reasonably be expected to, individually or in the aggregate, have a Parent
Material Adverse Effect or (ii) any damage, destruction or loss which,
individually or in the aggregate, resulted in or would reasonably be expected
to result in, a Parent Material Adverse Effect.
Section 6.08. Litigation. Except as disclosed in Section 6.08 of Parent
Disclosure Schedule or in the Parent SEC Reports filed prior to the date
hereof, there are no Proceedings pending against Parent or its Subsidiaries
or, to the knowledge of Parent, threatened against Parent or its Subsidiaries
(or any of their respective properties, rights or franchises), at law or in
equity, or before or by any federal or state commission, board, bureau,
agency, regulatory or administrative instrumentality or other Governmental
Authority or any arbitrator or arbitration tribunal, that would reasonably be
expected to, individually or in the aggregate, have a Parent Material Adverse
Effect, and, to the knowledge of Parent, no development has occurred with
respect to any pending or threatened Proceeding that would reasonably be
expected to result in a Parent Material Adverse Effect or would reasonably be
expected to prevent, materially impair or materially delay the consummation of
the transactions contemplated hereby. Except as disclosed in the Parent SEC
Reports filed prior to the date hereof, neither Parent nor any of its
Subsidiaries is subject to any Order entered in any proceeding which would
reasonably be expected to, individually or in the aggregate, have a Parent
Material Adverse Effect. The foregoing does not apply to any Proceeding or
Order arising in connection with or as a result of the execution of this
Agreement or the commencement of the Offer or the consummation of the other
transactions contemplated hereby.
Section 6.09. Compliance with Laws. Except as disclosed in Section 6.09 of
the Parent Disclosure Schedule: (a) Parent and its Subsidiaries are in
compliance with all applicable federal, state, local and foreign statutes,
laws, regulations, orders, judgments and decrees except where the failure to
so comply could not reasonably be expected to, individually or in the
aggregate, have a Parent Material Adverse Effect and (b) Parent and its
Subsidiaries hold, to the extent legally required, all Permits that are
required for the operation of the respective businesses of Parent and/or its
Subsidiaries as now conducted, except where the failure to hold any such
Permit could not reasonably be expected to, individually or in the aggregate,
have a Parent Material Adverse Effect, and there has not occurred any default
under any such Permit, except to the extent that such default could not
reasonably be expected to, individually or in the aggregate, have a Parent
Material Adverse Effect.
Section 6.10. Parent Employee Benefit Plans. (a) Except as set forth in
Section 6.10(a) of the Parent Disclosure Schedule, (i) each employee benefit
plan subject to or governed by the laws of any jurisdiction outside of the
United States or any State or Commonwealth of the United States, (ii) each
employee benefit plan, within the meaning of Section 3(3) of ERISA, whether or
not subject to ERISA, and (iii) each foreign or domestic stock option, stock
appreciation right, restricted stock, stock purchase, stock unit, performance
share, incentive, bonus, profit-sharing, savings, deferred compensation,
health, medical, dental, life insurance, disability, accident, supplemental
unemployment or retirement, employment, severance, termination or salary or
benefits continuation or fringe benefit plan, program, arrangement, contract
or agreement maintained by Parent or any Affiliate thereof (including, for
this purpose and for the purpose of all of the representations in this Section
6.10, all employers (whether or not incorporated) that would be treated
together with Parent and/or any such Affiliate as a single employer within the
meaning of Section 414 of the Code) or to which Parent or any Affiliate
thereof contributes (or has any obligation to contribute), has any liability
or is a party (collectively, the "Parent Employee Benefit Plans") is in
compliance with all applicable foreign and domestic laws (including, without
limitation, ERISA and the Code) and has been administered and operated in
accordance with its terms, in each case except as would not, in the aggregate,
have a Parent Material Adverse Effect.
(b) Set forth in Section 6.10(b) of the Parent Disclosure Schedule is an
accurate and complete list of (i) each material Parent Employee Benefit Plan
and (ii) any material claim, action, litigation, audit, examination,
investigation or administrative proceeding that has been made or commenced or,
to the best knowledge of the Parent, threatened with respect to any material
Parent Employee Benefit Plan (other than routine claims for benefits in the
ordinary course).
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(c) Parent has made available or will make available to the Company or its
counsel true and complete copies of each plan document related to each
material Parent Employee Benefit Plan and any related trust agreement or
funding vehicle, together with all amendments thereto, and such other
documentation with respect to any material Parent Employee Benefit Plan as
reasonably requested by Company.
Section 6.11. Broker's or Finder's Fee.
Except for Merrill Lynch, Pierce, Fenner & Smith Incorporated and Banc of
America Securities LLC (whose fees and expenses will be paid by Parent in
accordance with their agreements with such firms), no broker, finder or
investment banker is entitled to any brokerage, finders or other fee or
commission or expense reimbursement from Parent or from any of its
Subsidiaries or any of its controlled Affiliates in connection with the
transactions contemplated by this Agreement based upon arrangements made by
and on behalf of Parent, any of its Subsidiaries or any of its Affiliates.
Section 6.12. Ownership of Capital Stock. Except as set forth in Section
6.12 of the Parent Disclosure Schedule, neither Parent nor any of its
Subsidiaries beneficially owns, directly or indirectly, any capital stock of
the Company or is a party to any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of any capital stock of
the Company, other than as contemplated by this Agreement.
Section 6.13. Vote Required. Subject to Section 6.13 of the Parent
Disclosure Schedule, no vote of the holders of any class or series of capital
stock of Parent is necessary to approve any of the transactions contemplated
hereby.
Section 6.14. Financing. Parent has, or will have prior to the expiration of
the Offer and the Merger, sufficient cash, available lines of credit or other
sources of immediately available funds to enable it to purchase all of the
shares of Company Common Stock outstanding on a fully-diluted basis and to pay
all related fees and expenses in connection therewith. Parent has provided the
Company true and complete copies of all commitment letters that Parent and
Merger Sub have received with respect to their financing of the Offer, the
Merger and the other transactions contemplated hereby.
ARTICLE VII
Transactions Prior to Closing Date
Section 7.01. Access to Information Concerning Properties and
Records. Except as otherwise prohibited by applicable Law, during the period
commencing on the date hereof and ending on the earlier of (a) the Closing
Date and (b) the date on which this Agreement is terminated pursuant to
Section 9.01 hereof, each of the Company and Parent shall, and each shall
cause each of its Subsidiaries to, upon reasonable notice, afford the other
party, and its respective counsel, accountants, consultants and other
authorized representatives, reasonable access during normal business hours to
its and its Subsidiaries' employees, properties, books and records in order
that they may have the opportunity to make such investigations as they shall
reasonably require; provided, however, that such investigation shall not
affect the representations and warranties made by the Company or Parent in
this Agreement. Except as otherwise prohibited by applicable law, the Company
shall furnish promptly to Parent and Parent shall, and shall cause Merger Sub
to, furnish promptly to the Company (x) a copy of each material form, report,
schedule, statement, registration statement and other document filed by it or
its Significant Subsidiaries during such period pursuant to the requirements
of Federal, state or foreign securities laws and (y) all other information
concerning its or its Subsidiaries' business, properties and personnel as
Parent or the Company may reasonably request. Except as otherwise prohibited
by applicable law, each of the Company and Parent agrees to cause its officers
and employees to furnish such additional financial and operating data and
other information and respond to such inquiries as the other party shall from
time to time reasonably request.
Section 7.02. Confidentiality. Prior to the Effective Time and after any
termination of this Agreement, each of Parent and the Company will comply with
all of their respective obligations under the confidentiality
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Agreement, dated May 12, 2000 (the "Confidentiality Agreement") among Parent
and the Company with respect to the information disclosed pursuant to Section
7.01 hereof or otherwise.
Section 7.03. Conduct of the Business of the Company Pending the Closing
Date. The Company agrees that, except as permitted, required or specifically
contemplated by, or otherwise described in, this Agreement or otherwise
consented to or approved in writing by Parent (which consent or approval shall
not be unreasonably withheld or delayed) during the period commencing on the
date hereof until the Effective Time:
(a) The Company and each of its Subsidiaries shall conduct their
respective operations in all material respects only according to their
ordinary and usual course of business consistent with past practice and
shall use their reasonable best efforts to preserve intact their respective
business organization, keep available the services of their officers and
employees and maintain satisfactory relationships with licensors,
suppliers, distributors, clients, joint venture partners and others having
significant business relationships with them; and
(b) Except as set forth in Section 7.03(b) of the Company Disclosure
Schedule or as expressly contemplated by this Agreement, neither the
Company nor any of its Subsidiaries shall:
(i) make any change in or amendment to its Articles of Incorporation
or its By-Laws or other organizational documents;
(ii) issue or sell, or authorize to issue or sell, any shares of its
capital stock or any other securities, or issue or sell, or authorize
to issue or sell, any securities convertible into, or options, warrants
or rights to purchase or subscribe for, or enter into any arrangement
or contract with respect to the issuance or sale of, any shares of its
capital stock or any other securities, or make any other changes in its
capital structure, other than (A) the issuance of Company Common Stock
upon the exercise of Company Options outstanding on the date hereof,
(B) issuances by a wholly owned Subsidiary of the Company of capital
stock to such Subsidiary's parent, the Company or another wholly owned
Subsidiary of the Company, (C) issuances of Company Common Stock upon
the conversion of convertible securities of the Company outstanding as
of the date of this Agreement, (D) issuances or sales of Company Common
Stock pursuant to participant-directed transactions or the matching of
contributions by the Company made in accordance with the terms and
conditions of the Company 401(k) Plan or (E) participant-directed
transactions under the Company's Canadian stock purchase plan in
accordance with terms and conditions of such plan;
(iii) declare, pay or set aside any dividend or other distribution or
payment with respect to, or split, combine, redeem or reclassify, or
purchase or otherwise acquire, any shares of its capital stock or its
other securities, other than (A) dividends payable by a Subsidiary of
the Company to the Company or another Subsidiary of the Company or (B)
the payment of regular quarterly dividends not to exceed $0.15 per
share of Company Common Stock during the quarter ended September 30,
2000 and December 31, 2000;
(iv) other than in connection with transactions permitted by Section
7.03(b)(v), incur any capital expenditures or any obligations or
liabilities in respect thereof, except for those (A) contemplated by
the capital expenditure budgets for the Company and its Subsidiaries
made available to Parent, (B) incurred in the ordinary course of
business of the Company and its Subsidiaries or (C) not otherwise
described in clauses (A) and (B) which, in the aggregate, do not exceed
$25 million;
(v) other than acquisitions by the Company or a wholly owned
Subsidiary of the Company of the assets of, or equity interests in, a
wholly owned Subsidiary of the Company, acquire (whether pursuant to
merger, stock or asset purchase or otherwise) in one transaction or
series of related transactions (A) any assets (including any equity
interests) having a fair market value in excess of $25 million, or (B)
all or substantially all of the equity interests of any Person or any
business or division of any Person in the aggregate having a fair
market value in excess of $25 million;
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(vi) except to the extent required under existing employee and
director benefit plans, agreements or arrangements as in effect on the
date of this Agreement or by applicable law, or as contemplated by this
Agreement or permitted by Section 7.03(b)(ii) hereof, increase the
compensation or fringe benefits of any of its directors or officers or
of employees (except for normal increases in the ordinary course of
business consistent with past practice for non-director and non-officer
employees) or enter into any severance, termination or change of
control or similar arrangements not currently in effect or make any
severance payments (except as required to be paid under existing
severance plans, and except in the ordinary course of business
consistent with past practice for non-director and non-officer
employees) or enter into any employment, consulting or severance
agreement or arrangement with any present or former director, officer
or other employee of the Company or any of its Subsidiaries, or
establish, adopt, enter into or amend in any material respect or
terminate any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, phantom stock,
performance shares, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust,
fund, policy or arrangement or grant any additional awards under such
plans, except to the extent required by such plans, for the benefit of
any directors, officers or employees;
(vii) transfer, lease, license, guarantee, sell, mortgage, pledge,
dispose of, encumber or subject to any Lien, any material assets, other
than in the ordinary course of business;
(viii) except as required by applicable law or GAAP, make any
material change in its method of accounting;
(ix) adopt or enter into a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of the Company or any of its Subsidiaries (other
than the Merger or any such transaction involving the Company and a
wholly owned Subsidiary of the Company or two wholly owned Subsidiaries
of the Company) or any agreement relating to a Takeover Proposal,
except as permitted by Sections 7.07 and 9.01(c)(ii);
(x) (A) incur any material indebtedness for borrowed money or
guarantee any such indebtedness of another Person, other than
indebtedness owing to or guarantees of indebtedness owing to the
Company or any direct or indirect wholly owned Subsidiary of the
Company or (B) make any loans or advances to any other Person, other
than to the Company or to any direct or indirect wholly owned
Subsidiary of the Company, except, in the case of clause (A), for
borrowings in the ordinary course of business consistent with past
practice, including without limitation borrowings under existing credit
facilities described in the Company SEC Reports in the ordinary course
of business consistent with past practice for working capital purposes;
(xi) except to the extent required under existing employee and
director benefit plans, agreements or arrangements, applicable Law or
as contemplated by this Agreement or Section 7.16 of the Company
Disclosure Schedule accelerate or otherwise modify the payment, right
to payment, vesting or exercise rights of any bonus, severance, profit
sharing, retirement, deferred compensation, stock option, insurance or
other compensation or benefits;
(xii) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction (A) of
any such claims, liabilities or obligations in the ordinary course of
business and consistent with past practice, (B) of claims, liabilities
or obligations reflected or reserved against in, or contemplated by,
the consolidated financial statements (or the notes thereto) contained
in the Company SEC Reports or (C) other claims not to exceed $5 million
in the aggregate;
(xiii) enter into any agreement, understanding or commitment that
materially limits or impedes the Company's, any of its Significant
Subsidiaries', the North American Tissue division's or the Dixie
division's ability to compete with or conduct any business or line of
business, including, but not limited to, geographic limitations on the
Company's or any of its Significant Subsidiaries', the North American
Tissue division's or the Dixie division's activities;
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(xiv) plan, announce, implement or effect any material reduction in
labor force, lay-off, early retirement program, severance program or
other program or effort concerning the termination of employment of
employees of the Company or its Subsidiaries; provided, however, that
routine employee terminations for cause or following performance
reviews shall not be considered subject to this clause (xiv);
(xv) take any action including, without limitation, the adoption of
any shareholder rights plan or amendments to its Articles of
Incorporation or By-Laws (or comparable governing documents), which
would, directly or indirectly, restrict or impair the ability of Parent
to vote, or otherwise to exercise the rights and receive the benefits
of a shareholder with respect to, securities of the Company acquired or
controlled by Parent or Merger Sub;
(xvi) materially modify, amend or terminate any material contract to
which it is a party or waive any of its material rights or claims
except in each case in the ordinary course of business;
(xvii) other than in the ordinary course of business consistent with
past practice, make any tax election or enter into any settlement or
compromise of any tax liability that in either case is material to the
business of the Company and its Subsidiaries as a whole;
(xviii) amend or modify, or propose to amend or modify, the Rights
Agreement, as amended as of the date hereof, except as contemplated in
this Agreement;
(xix) agree, in writing or otherwise, to take any of the foregoing
actions.
Section 7.04. Conduct of the Business of Parent Pending the Closing
Date. Parent agrees that, except as permitted, required or specifically
contemplated by, or otherwise described in, this Agreement or otherwise
consented to or approved in writing by the Company (which consent or approval
shall not be reasonably withheld or delayed), during the period commencing on
the date hereof until the Effective Time:
(a) Except as set forth in Section 7.04 of the Parent Disclosure
Schedule, Parent and each of its Subsidiaries shall conduct their
respective operations in all material respects only according to their
ordinary and usual course of business consistent with past practice and
shall use their reasonable best efforts to preserve intact their respective
business organization, keep available the services of their officers and
employees and maintain satisfactory relationships with licensors,
suppliers, distributors, clients, joint venture partners and others having
significant business relationships with them; and
(b) Except as set forth in Section 7.04(b) of the Parent Disclosure
Schedule or as expressly contemplated by this Agreement, neither Parent nor
any of its Subsidiaries shall:
(i) make any change in or amendment to Parent's Articles of
Incorporation that changes any material term or provision of the Parent
Common Stock;
(ii) make any material change in or amendment to Merger Sub's
Articles of Incorporation or Bylaws in any manner adverse to the
Company or its shareholders;
(iii) engage in any repurchase at a premium, recapitalization,
restructuring or reorganization with respect to Parent's capital stock,
including, without limitation, by way of any extraordinary dividend on,
or other extraordinary distributions with respect to, Parent's capital
stock;
(iv) acquire by merging or consolidating with, or by purchasing a
substantial portion of the assets of or equity in, or by any other
manner, any Person or any business or division thereof, or otherwise
acquire any assets, unless such acquisition or the entering into of a
definitive agreement relating to or the consummation of such
transaction would not (A) impose any delay in the obtaining of, or
increase the risk of not obtaining, any authorizations, consents,
orders, declarations or approvals of any Antitrust Authority necessary
to consummate the Offer or the Merger or the expiration or termination
of any applicable waiting period, (B) increase the risk of any
Governmental Authority entering an order prohibiting the consummation
of the Offer or the Merger or (C) increase the risk of not being able
to remove any such order on appeal or otherwise;
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(v) subject to Section 7.09, take or omit to take any action which
would have the consequences set forth in clauses (A) through (C) of
clause (iv) above;
(vi) not take any action which would cause the Parent Common Stock to
cease to be listed on the NYSE; or
(vii) agree, resolve or otherwise commit to do any of the foregoing.
Section 7.05. Company Shareholder Meeting; Preparation of Proxy
Statement/Prospectus. (a) Company Shareholder Meeting. If required by
applicable law, the Company, acting through its Board of Directors, shall, in
accordance with applicable law, duly call, convene and hold a special meeting
of the holders of the Company Common Stock (the "Company Shareholder Meeting")
as soon as reasonably practicable after the acceptance for payment of shares
of Company Common Stock pursuant to the Offer for the purpose of voting upon
this Agreement and the Merger and the Company agrees that this Agreement shall
be submitted at such meeting. The Company shall take all action necessary to
secure the vote of shareholders required by applicable law and the Company's
Article of Incorporation or By-Laws to obtain the approval for this Agreement.
Unless the Board of Directors of the Company otherwise determines (based upon
a majority vote of the Board of Directors in its good faith judgment that such
other action is necessary to comply with its fiduciary duty to shareholders
under applicable law after receiving advice from outside legal counsel) prior
to the approval by the shareholders of the Company, (i) the Company's Board of
Directors shall recommend approval by its shareholders of this Agreement (the
"Company Recommendation"), (ii) neither the Company's Board of Directors nor
any committee thereof shall amend, modify, withdraw, condition or qualify the
Company Recommendation in a manner adverse to Parent or take any action or
make any statement inconsistent with the Company Recommendation and (iii) the
Company shall take all lawful action to secure the Company Shareholder
Approval.
(b) Preparation of Merger Registration Statement and Proxy
Statement/Prospectus. If required by applicable law, promptly after the
acceptance for payment of shares of Company Common Stock pursuant to the
Offer, Parent and the Company shall prepare, and Parent shall file with the
SEC, the Merger Registration Statement, in which the Proxy
Statement/Prospectus will be included as Parent's prospectus. Each of the
Company and Parent shall use all reasonable efforts to have the Merger
Registration Statement declared effective under the Securities Act as promptly
as practicable after the acceptance for payment of shares of Company Common
Stock pursuant to the Offer and to keep the Merger Registration Statement
effective as long as is necessary to consummate the Merger. The Company shall
mail the Proxy Statement/Prospectus to its shareholders as promptly as
practicable after the Merger Registration Statement is declared effective
under the Securities Act and, if necessary, after the Proxy
Statement/Prospectus shall have been so mailed, promptly circulate amended,
supplemental or supplemented proxy material, and, if required in connection
therewith, resolicit proxies. Parent shall take any action required to be
taken under any applicable state securities or blue sky laws in connection
with the issuance of Parent Common Stock in the Merger. No amendment or
supplement to the Proxy Statement/Prospectus will be made by the Company or
Parent without the approval of the other party, which will not be unreasonably
withheld or delayed. Each party will advise the other party, promptly after it
receives notice thereof, of the time when the Merger Registration Statement
has become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of Parent
Common Stock issuable in connection with the Merger for offering or sale in
any jurisdiction, or any request by the SEC for amendment of the Proxy
Statement/Prospectus or comments thereon and responses thereto or requests by
the SEC for additional information. If at any time prior to the Effective
Time, the Company or Parent discovers any information relating to either
party, or any of their respective Affiliates, officers or directors, that
should be set forth in an amendment or supplement to the Proxy
Statement/Prospectus, so that such document would not include any misstatement
of a material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, the party that discovers such information shall promptly
notify the other party and an appropriate amendment or supplement describing
such information shall be promptly filed with the SEC and, to the extent
required by law or regulation, disseminated to the shareholders of the
Company.
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(c) Short-Form Merger. Notwithstanding the foregoing, if Parent or Merger
Sub shall acquire at least 90% of the outstanding shares of Company Common
Stock pursuant to the Offer or otherwise, the parties hereto agree, subject to
the satisfaction or (to the extent permitted hereunder) waiver of all
conditions to the Merger, to take, or cause to be taken, all necessary and
appropriate action to cause the Merger to be effective as soon as practicable
after the acceptance for payment and purchase of shares of Company Common
Stock pursuant to the Offer without the Company Shareholder Meeting.
Section 7.06. Reasonable Best Efforts. Subject to Section 7.09 and the terms
and conditions provided herein, each of the Company and Parent shall, and
shall cause each of its Subsidiaries to, cooperate and use their reasonable
best efforts to take, or cause to be taken, all appropriate action, and to
make, or cause to be made, all filings necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement including, without limitation, the
Company's and Parent's reasonable best efforts to obtain, prior to the
Acceptance Date, all licenses, permits, consents, approvals, authorizations,
qualifications and orders of Governmental Authorities (other than with respect
to any licenses, permits, consents, approvals, authorizations, qualifications
and orders of any Antitrust Authority which the Company and Parent shall use
their best efforts to obtain) and parties to contracts with the Company or
Parent, as the case may be, and their respective Subsidiaries as are necessary
for consummation of the transactions contemplated by this Agreement and in
order to comply with applicable Laws; provided, however, that except as
otherwise contemplated by this Agreement, no material loan agreement or
contract for borrowed money shall be repaid except as currently required by
its terms, in whole or in part, and no contract shall be amended to materially
increase the amount payable thereunder or otherwise to be more burdensome to
the Company or any of its Subsidiaries in order to obtain any such consent,
approval or authorization without first obtaining the written approval of
Parent.
Section 7.07. No Solicitation. (a) The Company shall, and shall use its
reasonable best efforts to cause its Subsidiaries, and its and their,
officers, directors, employees, financial advisors, attorneys and other
advisors, representatives and agents (collectively, "Representatives") to,
immediately cease any discussions or negotiations with third parties with
respect to any Takeover Proposal. The Company shall not, nor shall it
authorize or permit any of its Representatives, to (i) directly or indirectly
solicit, facilitate, initiate or encourage the making or submission of, any
Takeover Proposal, (ii) enter into any agreement, arrangement or understanding
with respect to any Takeover Proposal or enter into any agreement, arrangement
or understanding requiring it to abandon, terminate or fail to consummate the
Merger or any other transaction contemplated by this Agreement, (iii) initiate
or participate in any way in any discussions or negotiations regarding, or
furnish or disclose to any Person (other than a party to this Agreement) any
information with respect to, or take any other action to facilitate or in
furtherance of any inquiries or the making of any proposal that constitutes,
or could reasonably be expected to lead to, any Takeover Proposal or (iv)
grant any waiver or release under any standstill or similar agreement with
respect to any class of the Company's equity securities; provided that prior
to the Acceptance Date, in response to an unsolicited Takeover Proposal that
did not result from the breach of this Section 7.07 and following delivery to
Parent of notice of the Takeover Proposal in compliance with its obligations
under Section 7.07(d) hereof, the Company may participate in discussions or
negotiations with or furnish information (pursuant to a confidentiality
agreement with customary terms) to any third party which makes a bona fide
written Takeover Proposal if (A) a majority of the Company's Board of
Directors reasonably determines in good faith (after consultation with its
financial advisors) that taking such action would be reasonably likely to lead
to the delivery to the Company of a Superior Proposal and (B) a majority of
the Company's Board of Directors determines in good faith (after receiving the
advice of outside legal counsel) that it is necessary to take such actions(s)
in order to comply with its fiduciary duties under applicable law.
For purposes of this Agreement, "Takeover Proposal" means any inquiry,
proposal or offer from any Person or group relating to (i) any direct or
indirect acquisition or purchase of 20% or more of the assets of the Company
or any of its Subsidiaries or 20% or more of any class of equity securities of
the Company or any of its Subsidiaries, (ii) any tender offer or exchange
offer that, if consummated, would result in any Person beneficially owning all
or any portion of any class of equity securities of the Company or any of its
Subsidiaries or (iii) any
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merger, consolidation, business combination, sale of all or any substantial
portion of the assets, recapitalization, liquidation or a dissolution of, or
similar transaction involving the Company or any of its Subsidiaries other
than the Offer or the Merger; and "Superior Proposal" means a bona fide
written Takeover Proposal made by a third party to purchase at least two-
thirds of the outstanding equity securities of the Company pursuant to a
tender offer or exchange offer or to effect any merger, consolidation,
business combination or sale of all or substantially all of the assets,
recapitalization or similar transaction involving the Company (i) on terms
which a majority of the Company's Board of Directors determines in good faith
(after consultation with its financial advisors) to be superior to the Company
and its shareholders (in their capacity as shareholders) from a financial
point of view (taking into account, among other things, all legal, financial,
regulatory and other aspects of the proposal and identity of the offeror) as
compared to the transactions contemplated hereby and any alternative proposed
by Parent or Merger Sub in accordance with Section 9.01(c)(ii) and (ii) which
is reasonably capable of being consummated.
(b) The Company agrees that, except as set forth in Section 7.07(c), neither
its Board of Directors nor any committee thereof shall (i) approve or
recommend, or propose to approve or recommend, any Takeover Proposal or (ii)
approve, recommend or cause it to enter into any letter of intent, agreement
in principle, acquisition agreement or other similar agreement (each, an
"Acquisition Agreement") related to any Takeover Proposal.
(c) The Company and Parent agree that, notwithstanding anything to the
contrary herein, prior to the Acceptance Date, the Company and/or its Board of
Directors may take the actions otherwise prohibited by Section 7.07(b) if (i)
a third party makes a Superior Proposal, (ii) the Company complies with its
obligations under Section 7.07(d), (iii) all of the conditions to the
Company's right to terminate this Agreement in accordance with Section
9.01(c)(ii) hereof have been satisfied (including the expiration of the six
Business Day period described therein and the payment of all amounts required
pursuant to Section 9.03 hereof) and (iv) simultaneously therewith, this
Agreement is terminated in accordance with Section 9.01(c)(ii) hereof.
(d) The Company agrees that in addition to the obligations of the Company
set forth in paragraphs (a), (b) and (c) of this Section 7.07, promptly on the
date of receipt thereof, the Company shall advise Parent in writing of any
request for information or any Takeover Proposal, or any inquiry, discussions
or negotiations with respect to any Takeover Proposal and the terms and
conditions of such request, Takeover Proposal, inquiry, discussions or
negotiations and the Company shall promptly provide to Parent copies of any
written materials received by the Company in connection with any of the
foregoing, and the identity of the Person or group making any such request,
Takeover Proposal or inquiry or with whom any discussions or negotiations are
taking place. The Company agrees that it shall keep Parent fully informed of
the status and details (including amendments or proposed amendments) of any
such request, Takeover Proposal or inquiry and keep Parent fully informed as
to the material details of any information requested of or provided by the
Company and as to the details of all discussions or negotiations with respect
to any such request, Takeover Proposal or inquiry. The Company agrees that it
shall simultaneously provide to Parent any non-public information concerning
the Company provided to any other Person or group in connection with any
Takeover Proposal which was not previously provided to Parent.
(e) Parent agrees that nothing contained in this Section 7.07 shall prohibit
the Company from taking and disclosing to its shareholders a position
contemplated by Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act
with respect to any tender offer.
(f) The Company agrees that immediately following the execution of this
Agreement, (i) it shall request each Person which has heretofore executed a
confidentiality agreement in connection with such Person's consideration of
acquiring the Company to return or destroy (which destruction shall be
certified in writing by an executive officer of the Company) all confidential
information heretofore furnished to such Person by or on its behalf and (ii)
the Company shall cease and cause to be terminated immediately all existing
discussions or negotiations with any Person conducted heretofore with respect
to, or that could reasonably be expected to lead to, any Takeover Proposal.
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Section 7.08. Notification of Certain Matters. The Company shall give prompt
notice to Parent, and Parent shall, and shall cause Merger Sub to, give prompt
notice to the Company, of the occurrence, or failure to occur, of any event,
which occurrence or failure to occur would be likely to cause any
representation or warranty contained in this Agreement to be untrue in any
material respect at any time from the date of this Agreement to the Effective
Time. Each of the Company and Parent shall give prompt notice to the other
party of any notice or other communication from any third party alleging that
the consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement.
Section 7.09. Antitrust Laws. (a) Parent and the Company shall together
discuss and formulate the approach to be taken with respect to Antitrust
Authorities; provided, however, that Parent shall have the right to determine
the overall strategy with respect to any filings, submissions of information
or documentary materials to, proceedings or negotiations with, or any other
discussions, meetings, consultations, conversations or interactions with
(collectively, "Contacts"), any Antitrust Authority. Without limiting the
generality of the foregoing, but subject to the immediately succeeding
sentence, prior to any Contacts with any Antitrust Authority by Parent or any
of its Subsidiaries or by the Company or any of its Subsidiaries, Parent and
the Company shall each have the right to (i) in the case of filings,
submissions of information or documentary materials, review such Contacts
prepared by the other party and comment with respect thereto and the other
party shall be required to incorporate into such Contacts all reasonable
comments of Parent or the Company, as the case may be, and (ii) discuss prior
to any Contacts the appropriate approach to be taken with respect thereto. As
part of its overall strategy, Parent shall determine the timing of any
Contacts with any Antitrust Authority and Parent shall be entitled to act as
the spokesperson in connection therewith; provided that, to the extent
permitted by such Governmental Authority, Parent shall afford the Company a
reasonable opportunity to participate in any such Contacts; provided further,
that the Company shall not initiate any material Contacts with any Antitrust
Authority regarding any of the transactions contemplated hereby without
Parent's prior consent, it being understood that the Company may respond to
any such Contacts or requests for Contacts which are initiated by any
Antitrust Authority, or as otherwise required by applicable Law. The parties
hereto agree to provide to each other copies of all correspondence between it
(or its advisors) and any Antitrust Authority relating to this Agreement or
any of the matters described in this Section 7.09.
(b) Each party hereto shall use its best efforts to resolve such objections,
if any, as may be asserted with respect to the transactions contemplated by
this Agreement under any Antitrust Law. Without limiting the generality of the
foregoing, "best efforts" shall include, without limitation:
(i) in the case of each of Parent and the Company:
(1) promptly filing with the appropriate Antitrust Authorities a
Notification and Report Form or other applicable notification with
respect to the transactions contemplated by this Agreement;
(2) if Parent or the Company receives a formal request for
information and documents from an Antitrust Authority, substantially
complying with such formal request at the earliest practicable date
following the date of its receipt thereof; and
(3) opposing vigorously any litigation relating to the Offer, the
Merger or the other transactions contemplated hereby, including,
without limitation, promptly appealing any adverse court Order.
(ii) in the case of Parent only, negotiating with respect to, and
accepting at such time as permits consummation of the Offer no later than
the Termination Date, a consent decree with an Antitrust Authority
requiring any of Parent, Merger Sub or the Company to agree or commit to
divest, hold separate or offer for sale any assets (tangible or intangible)
or any business interest of it or any of its Subsidiaries (including,
without limitation, the Surviving Corporation after consummation of the
Merger) as are necessary to permit Parent and Merger Sub to otherwise fully
consummate the Offer and the Merger (a "Consent Decree"); provided, that
nothing in this Agreement shall require Parent or any of its Subsidiaries
to comply with or accept any Consent Decree which, if complied with, would,
in Parent's reasonable judgment, be expected to have a material adverse
effect on the business, results of operations or financial condition of
Parent, the Company and their Subsidiaries, taken as a whole, after giving
effect to the Offer and the Merger.
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For purposes of this Agreement, (i) "Antitrust Authorities" means the
Federal Trade Commission, the Antitrust Division of the Department of Justice,
the attorneys general of the several states of the United States and any other
Governmental Authority having jurisdiction with respect to the transactions
contemplated hereby pursuant to applicable Antitrust Laws and (ii) "Antitrust
Law" means the Sherman Act, as amended, the Clayton Act, as amended, the HSR
Act, the Federal Trade Commission Act, as amended, and all other federal,
state and foreign statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines, and other laws that are designed or
intended to prohibit, restrict or regulate actions having the purpose or
effect of monopolization or restraint of trade.
Section 7.10. Directors' and Officers' Insurance. (a) The Articles of
Incorporation and the By-Laws of the Surviving Corporation shall contain the
provisions with respect to indemnification and exculpation from liability
substantially as set forth in the Company's Articles of Incorporation and By-
Laws on the date of this Agreement, which provisions shall not be amended,
repealed or otherwise modified for a period of six years from the Effective
Time in any manner that would adversely affect the rights thereunder of
individuals who on or prior to the Effective Time were directors, officers,
employees or agents of the Company, unless such modification is required by
law.
(b) For a period of six years from the Effective Time, the Surviving
Corporation shall either (i) maintain in effect the Company's current
directors' and officers' liability insurance covering those Persons who are
currently covered on the date of this Agreement by the Company's directors'
and officers' liability insurance policy (a copy of which has been heretofore
delivered to Parent) (the "Indemnified Parties"); provided, however, that in
no event shall Parent be required to expend in any one year an amount in
excess of 200% of the annual premiums currently paid by the Company for such
insurance; provided further that if the annual premiums of such insurance
coverage exceed such amount, the Surviving Corporation shall be obligated to
obtain a policy with the greatest coverage available for a cost not exceeding
such amount; provided further that the Surviving Corporation may substitute
for the Company policy policies with at least the same coverage containing
terms and conditions which are no less advantageous and provided that said
substitution does not result in any gaps or lapses in coverage with respect to
matters occurring prior to the Effective Time or (ii) if such insurance
coverage is not otherwise available, cause Parent's directors' and officers'
liability insurance then in effect to cover those Persons who are covered on
the date of this Agreement by the Company's directors' and officers' liability
insurance policy with respect to those matters covered by the Company's
directors' and officers' liability policy.
(c) The Surviving Corporation shall indemnify all Indemnified Parties to the
fullest extent permitted by applicable law with respect to all acts and
omissions arising out of such individuals' services as officers, directors,
employees or agents of the Company or any of its Subsidiaries or as trustees
or fiduciaries of any plan for the benefit of employees of the Company or any
of its Subsidiaries occurring prior to the Effective Time, including, without
limitation, the transactions contemplated by this Agreement. Without
limitation of the foregoing, in the event any such Indemnified Party is or
becomes involved in any capacity in any action, proceeding or investigation in
connection with any matter, including, without limitation, the transactions
contemplated by this Agreement, occurring prior to, and including, the
Effective Time, the Surviving Corporation, from and after the Effective Time,
shall pay, as incurred, such Indemnified Party's reasonable legal and other
expenses (including the cost of any investigation and preparation) incurred in
connection therewith; provided, that any Indemnified Party to whom expenses
are advanced shall, prior to receiving any such advance, if required by
applicable law, provide Parent with an undertaking to repay such advance, in
full, as promptly as reasonably practicable after it is ultimately determined
that such Indemnified Party is not entitled to indemnification hereunder.
Subject to Section 7.10(d) below, the Surviving Corporation shall pay all
reasonable expenses, including attorneys' fees, that may be incurred by any
Indemnified Party in enforcing this Section 7.10 or any action which is
indemnifiable hereunder.
(d) Any Indemnified Party wishing to claim indemnification under paragraph
(a) or (c) of this Section 7.10, upon learning of any such claim, action,
suit, proceeding or investigation, shall promptly notify the Surviving
Corporation thereof. In the event of any such claim, action, suit, proceeding
or investigation (whether arising
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before or after the Effective Time), (i) the Surviving Corporation shall have
the right, from and after the Effective Time, to assume the defense thereof
(with counsel engaged by the Surviving Corporation to be reasonably acceptable
to the relevant Indemnified Party) and the Surviving Corporation shall not be
liable to such Indemnified Party for any legal expenses of other counsel or
any other expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof, (ii) such Indemnified Party will
cooperate in the defense of any such matter and (iii) the Surviving
Corporation shall not be liable for any settlement effected without its prior
written consent; provided that the Surviving Corporation shall not have any
obligation hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final, that the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law.
Section 7.11. Public Announcements. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any
public statements with respect to the transactions contemplated by this
Agreement and shall not issue any such press release or make any such public
statement prior to such consultation and review by the other party of such
release or statement, except as may be required by law, court process or by
obligations pursuant to any listing agreement with a national securities
exchange.
Section 7.12. Transfer Tax. The Company and Parent shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees and any similar taxes which become
payable in connection with the transactions contemplated by this Agreement
(together with any related interest, penalties or additions to tax, "Transfer
Taxes"). All Transfer Taxes shall be paid by the Company and expressly shall
not be a liability of any holder of the Company Common Stock.
Section 7.13. NYSE Listing. Parent shall use its best efforts to cause the
Parent Common Stock to be issued in connection with the Offer and the Merger
to be listed on the NYSE, subject to official notice of issuance.
Section 7.14. Affiliates of the Company. Not less than 15 days prior to the
Effective Time, the Company shall deliver to Parent a letter identifying all
Persons who, to the Company's knowledge, at the Effective Time, may be deemed
to be "affiliates" of the Company for purposes of Rule 145 under the
Securities Act or who may otherwise be deemed to be Affiliates of the Company
(the "Rule 145 Affiliate"). The Company shall use its reasonable best efforts
to cause each Person who is identified as a Rule 145 Affiliate in such list to
deliver to Parent prior to the Effective Time, a written agreement, in
customary form (a "Rule 145 Affiliate Agreement").
Section 7.15. Section 16 Matters. Prior to the Effective Time, Parent and
the Company shall take all such steps as may be required to cause the
transactions contemplated by this Agreement, including any dispositions of
Company Common Stock (including derivative securities with respect to the
Company Common Stock) and acquisitions of Parent Common Stock (including
derivative securities with respect to Parent Common Stock) by each individual
who is or will be subject to the reporting requirements of Section 16(a) of
the Exchange Act with respect to the Company or Parent, as the case may be, to
be exempt under Rule 16b-3 promulgated under the Exchange Act.
Section 7.16. Employee Benefits. (a) From and after the Effective Time,
Parent and the Surviving Corporation shall honor all Company Employee Benefit
Plans and compensation arrangements and agreements in accordance with their
terms as in effect immediately before the Effective Time, subject to any
amendment or termination thereof that may be permitted by such terms. For a
period of not less than one year following the Effective Time, Parent shall
provide, or cause to be provided, to current and former employees of the
Company and its Subsidiaries who are not collectively bargained employees (the
"Company Employees") compensation and employees benefits that are, in the
aggregate for all Company employees taken as a whole (and not on an individual
basis) not less favorable than those provided to Company Employees under the
material Company
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Employee Benefit Plans immediately before the Effective Time. The foregoing
shall not be construed to prevent the termination of employment of any Company
Employee or the amendment or termination of any particular Company Employee
Benefit Plan or compensation arrangement to the extent permitted by its terms
as in effect immediately before the Effective Time, nor shall it be construed
to require the provision or continuation of any compensation or benefit to any
Company Employee not otherwise entitled by virtue of his employment status or
terms of a relevant Company Benefit Plan. From and after the Acceptance Date,
Parent will cause the Company to comply with this covenant.
(b) For all purposes under the employee benefit plans of Parent and its
Affiliates providing benefits to any Company Employees after the Effective
Time (the "New Plans"), each Company Employee shall be credited with his or
her years of service with the Company and its Affiliates before the Effective
Time, to the same extent as such Company Employee was entitled, before the
Effective Time, to credit for such service under any similar Company Employee
Benefit Plans, provided, that the foregoing shall not apply to the extent that
is application would result in a duplication of benefits or for newly
established plans and programs for which prior service of Parent employees is
not taken into account. In addition, and without limiting the generality of
the foregoing: (i) each Company Employee shall be immediately eligible to
participate, without any waiting time, in any and all New Plans to the extent
coverage under such New Plan replaces coverage under a comparable Company
employee benefit plan or compensation arrangement or agreements in which such
Company Employee participated immediately before the transfer to the New Plan
(such plans, collectively, the "Old Plans"); and (ii) for purposes of each New
Plan providing medical, dental, pharmaceutical and/or vision benefits to any
Company Employee, Parent shall cause all pre-existing condition exclusions and
actively-at-work requirements of such New Plan to be waived for each employee
who, at the time of transfer to such New Plan, is participating in an Old Plan
providing such benefit and his or her covered dependents, and Parent shall
cause any eligible expenses incurred by such employee and his or her covered
dependents during the portion of the plan year of the Old Plan ending on the
date such employee's participation in the corresponding New Plan begins to be
taken into account under such New Plan for purposes for satisfying all
deductible, coinsurance and maximum out-of-pocket requirements applicable to
such employee and his or her covered dependents for the applicable plan year
as if such amounts had been paid in accordance with such New Plan.
(c) For so long after the Effective Time as the Company maintains the cash
or deferred arrangement under Section 401(k) of the Code in which Company
Employees participate immediately prior to the Effective Time, (the "401(k)
Plan"), and Parent maintains a 401(k) plan with a loan feature for similarly
situated employees, Parent shall cause the 401(k) Plan to retain the loan
feature of such plan.
(d) For a period of at least one year following the Effective Time, Parent
shall maintain a severance plan which provides substantially similar benefits
as the Company's Salary Continuation Plan (as in effect at the Effective
Time), but which allows the payment of severance benefits in a lump sum at
Parent's discretion, and allows the payment by Parent of COBRA premiums for
the salary continuation period in lieu of continued participation in any
active medical plan.
(e) In addition, Parent acknowledges that the other actions described in
Section 7.16 of the Company Disclosure Schedule have been or shall be taken.
Section 7.17. Voting of Shares. Parent agrees to vote all shares of Company
Common Stock beneficially owned by it or any of its Subsidiaries in favor of
adoption of this Agreement at the Company Shareholder Meeting.
Section 7.18. The Company Rights Plan. Prior to the Effective Time, the
Company shall take all necessary action to (i) amend the Rights Agreement so
as to accelerate the Final Expiration Date (as such term is used in the Rights
Agreement) to a date which is immediately prior to the Effective Time, and
(ii) ensure that after such acceleration (A) none of the Company, Parent or
Merger Sub shall have any obligations under the Company Rights or Rights
Agreement and (B) none of the holders of the Rights shall have any rights
under the Rights or Rights Agreement.
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Section 7.19. Fees and Expenses. Whether or not the Offer or the Merger is
consummated, all expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses, except expenses incurred in connection with the filing, printing and
mailing of the Offer Documents, the Schedule 14D-9 and the Proxy Statement,
which shall be shared equally by Parent and the Company.
Section 7.20. Merger Sub. (a) As soon as practicable after the date hereof,
Parent shall form, or cause to be formed, Merger Sub and shall cause Merger
Sub to execute this Agreement.
(b) Merger Sub will be formed solely for the purpose of engaging in the
transactions contemplated by this Agreement and will have no Subsidiaries and
will undertake no business or activities other than in connection with this
Agreement and engaging in the transactions contemplated hereby.
(c) Parent will take all action necessary to cause Merger Sub to take all
actions required of it under this Agreement and to consummate the Offer and
the Merger on the terms and conditions set forth in this Agreement.
ARTICLE VIII
Conditions to the Merger
Section 8.01. Conditions to Obligations of Each Party. The obligations of
the Company, Parent and Merger Sub to consummate the Merger are subject to the
satisfaction or, if permitted by applicable Law, waiver, of the following
conditions:
(a) to the extent required by applicable law, this Agreement shall have
been approved by the shareholders of the Company in accordance with the
VSCA;
(b) no provision of any applicable Law and no Order shall prohibit the
consummation of the Merger;
(c) Parent Common Stock to be issued in the Merger shall have been
authorized for listing on the NYSE, subject to official notice of issuance;
(d) if required, the Merger Registration Statement shall have become
effective in accordance with the provisions of the Securities Act, no stop
order suspending the effectiveness of the Merger Registration Statement
shall have been issued by the SEC and no proceedings for that purpose shall
have been initiated by the SEC and not concluded or withdrawn; and
(e) Merger Sub shall have purchased shares of Company Common Stock
pursuant to the Offer.
ARTICLE IX
Termination
Section 9.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the Company Shareholder
Approval:
(a) by mutual written consent of Parent and the Company; or
(b) by Parent:
(i) if at any time prior to the Acceptance Date, the Company has
breached in any material respect any representation, warranty, covenant
or other agreement contained in this Agreement, which (A) would give
rise to the failure of a condition set forth in clause (iii)(f) of
Annex I, (B) cannot be or has not been cured prior to the earlier of
(x) 30 days following receipt by the Company of written notice from
Parent of such breach or failure to perform and (y) the Termination
Date and (C) has not been waived by Parent pursuant to the provisions
hereof;
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(ii) if at any time after the date hereof and prior to the Acceptance
Date, (A) the Company, or its Board of Directors, as the case may be,
shall have (1) entered into any agreement with respect to any Takeover
Proposal other than the Offer or the Merger and other than a
confidentiality agreement contemplated by Section 7.07, (2) amended,
conditioned, qualified, withdrawn or modified, or proposed or resolved
to do so, in a manner adverse to Parent or Merger Sub, its approval and
recommendation of the Offer, the Merger and this Agreement, or (3)
approved or recommended, or proposed to approve or recommend, any
Takeover Proposal other than the Offer or the Merger, or (B) the
Company or the Company's Board of Directors or any committee thereof
shall have resolved to do any of the foregoing; or
(iii) if at any time prior to the Acceptance Date the Company
breaches any of its obligations under Section 7.07 or Section 9.01(c)
hereof;
(c) by the Company:
(i) if at any time prior to the Acceptance Date, Parent has breached
or failed to perform in any material respect any representation,
warranty, covenant or other agreement contained in this Agreement,
which (A) cannot be or has not been cured prior to the earlier of (x)
30 days following receipt by Parent of written notice from the Company
of such breach or failure to perform and (y) the Termination Date and
(B) has not been waived by the Company;
(ii) if at any time prior to the Acceptance Date a Superior Proposal
is received by the Company and the Board of Directors of the Company
reasonably determines in good faith (after receiving the advice of
outside legal counsel) that it is necessary to terminate this Agreement
and enter into an agreement to effect the Superior Proposal to comply
with its fiduciary duties under applicable law; provided that the
Company may not terminate this Agreement pursuant to this Section
9.01(c)(ii) unless and until (A) six Business Days have elapsed
following delivery to Parent of a written notice of such determination
by the Board of Directors of the Company and during such six Business
Day period the Company has fully cooperated with Parent, including,
without limitation, informing Parent of the terms and conditions of
such Superior Proposal, and the identity of the Person making such
Superior Proposal, with the intent of enabling the parties hereto to
agree to a modification of the terms and conditions of this Agreement
so that the transactions contemplated hereby may be effected; (B) at
the end of such six Business Day period the Takeover Proposal continues
in the judgment of the Board of Directors of the Company to constitute
a Superior Proposal and the Board of Directors of the Company confirms
its determination (after receiving the advice of outside legal counsel)
that it is necessary to terminate this Agreement and enter into an
agreement to effect the Superior Proposal to comply with its fiduciary
duties under applicable law; and (C) (x) at or prior to such
termination, Parent has received all amounts due under Section 9.03
hereof by wire transfer in same day funds and (y) immediately following
such termination the Company enters into a definitive acquisition,
merger or similar agreement to effect the Superior Proposal;
(d) by either Parent or the Company:
(i) if the Offer has not been consummated on or before February 28,
2001 (the "Termination Date"); provided that the right to terminate
this Agreement pursuant to this clause shall not be available to any
party whose failure to fulfill any material obligation of this
Agreement or other material breach of this Agreement has been the cause
of, or resulted in, the failure of the Offer to have been consummated
on or prior to the aforesaid date; or
(ii) if any court of competent jurisdiction or any Governmental
Authority shall have issued an Order or taken any other action
permanently restricting, enjoining, restraining or otherwise
prohibiting acceptance for payment of, and payment for, shares of
Company Common Stock pursuant to the Offer or consummation of the
Merger and such Order or other action shall have become final and
nonappealable.
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Section 9.02. Effect of Termination. In the event of termination of this
Agreement by Parent or the Company, as provided in Section 9.01, this
Agreement shall forthwith become void and there shall be no liability
hereunder on the part of the Company, Parent or Merger Sub or their respective
officers or directors (except that Section 7.02, Section 7.19, this Section
9.02 and Sections 9.03, 10.03, 10.04, 10.05, 10.11 and 10.13 shall survive the
termination); provided, however, that nothing contained in this Section 9.02
or in Section 9.03 (except the proviso to Section 9.03(c)) shall relieve any
party hereto from any liability for any breach of this Agreement.
Section 9.03. Payment of Certain Fees. (a) If this Agreement is terminated
by Parent in accordance with Section 9.01(b)(ii)(A)(1), Section
9.01(b)(ii)(A)(2), or Section 9.01(b)(ii)(A)(3), or by the Company in
accordance with Section 9.01(c)(ii), then the Company shall pay to Parent in
immediately available funds, a termination fee in an amount equal to $125
million (the "Termination Fee").
(b) If this Agreement is terminated by Parent or the Company pursuant to
Section 9.01(b)(ii)(B), Section 9.01(b)(iii) or Section 9.01(d)(i) hereof and
a Takeover Proposal has been made and publicly announced or communicated to
the Company's shareholders after the date of this Agreement and prior to the
Termination Date, and concurrently with or within twelve months of the date of
such termination a Third Party Acquisition Event occurs, then the Company
shall within 15 Business Days of the occurrence of such Third Party
Acquisition Event pay to Parent the Termination Fee.
"Third Party Acquisition Event" shall mean earlier of (i) the consummation
of a Takeover Proposal involving the purchase of a majority of either the
equity securities of the Company or of the consolidated assets of the Company
and its Subsidiaries, taken as a whole, or any such transaction that, if it
had been proposed prior to the termination of this Agreement would have
constituted a Takeover Proposal or (ii) the entering into by the Company or
any of its Subsidiaries of a definitive agreement with respect to any such
transaction.
(c) The Company and Parent agree that, if (1) this Agreement is terminated
by Parent or the Company pursuant to Section 9.01(d)(i) or 9.01(d)(ii) and (2)
at the time of such termination, (I) any of the events or circumstances under
clauses (ii), (iii)(a) or (iii)(b) of Annex I occur or exist and continue and
(II) no events or circumstances under clauses (iii)(c), (iii)(e), (iii)(f), or
(iii)(h) of Annex I shall occur or exist, then Parent shall pay to the Company
a fee of $125 million (the "Reverse Termination Fee"). The Reverse Termination
Fee shall be the exclusive remedy of the Company with respect to such
termination; provided, however, that nothing herein shall relieve any party
from liability for the willful breach of any of its representations and
warranties or the breach of any of its covenants or agreements set forth in
this Agreement.
(d) Any payment of fees pursuant to this Section 9.03 shall be made within
five Business Days after termination of this Agreement (or as otherwise
expressly set forth in this Agreement) by wire transfer of immediately
available funds. If either party fails to pay or reimburse the other party for
any fees due hereunder, such party shall pay the costs and expenses (including
legal fees and expenses) in connection with any action, including the filing
of any lawsuits or other legal action, taken to collect payment, together with
interest on the amount of any unpaid and unreimbursed fees at the publicly
announced prime rate of Citibank, N.A. from the date such payment or
reimbursement was required to be made to the date that it is made.
ARTICLE X
Miscellaneous
Section 10.01. Representations and Warranties. The respective
representations and warranties of the Company, on the one hand, and Parent, on
the other hand, contained herein or in any certificates or other documents
delivered prior to or at the Closing, shall not be deemed waived or otherwise
affected by any investigation made by any party. Each and every such
representation and warranty shall expire on, and be terminated and
extinguished at, the Effective Time and thereafter neither the Company nor
Parent shall be under any liability whatsoever with respect to any such
representation or warranty. This Section 10.01 shall have no
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effect upon any other obligation, covenant or agreement of the parties hereto,
which shall survive in accordance with their terms.
Section 10.02. Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken by or on behalf of the respective Boards
of Directors of the Company or Parent, may (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein by any other applicable party or in any document, certificate
or writing delivered pursuant hereto by any other applicable party or (iii)
waive compliance with any of the agreements or conditions contained herein.
Any agreement on the part of any party to any such extension or waiver shall
be valid only if set forth in an instrument in writing signed on behalf of
such party.
Section 10.03. Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered in person
or mailed, certified or registered mail with postage prepaid, or sent by
telex, telegram or telecopier, as follows:
(a)if to the Company, to it at:
Fort James Corporation
1650 Lake Cook Road
Deerfield, IL 60015
Telecopy: (847) 317-5481
Attention: Clifford A. Cutchins, Esq.
with a copy (which shall not constitute notice) to:
Watchell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopy: 212-403-2000
Attention: Patricia A. Vlahakis, Esq.
(b)if to Parent, to it at:
Georgia-Pacific Corporation
133 Peachtree Street, N.E.
Atlanta, GA 30303
Telecopy: (404) 230-7543
Attention: James F. Kelley, Esq.
with a copy (which shall not constitute notice) to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telecopy: 212-848-7179
Attention: Creighton O. Condon, Esq.
or to such other Person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the date
of delivery unless if mailed, in which case on the third Business Day after
the mailing thereof except for a notice of a change of address, which shall be
effective only upon receipt thereof.
Section 10.04. Entire Agreement. This Agreement and the schedules and other
documents referred to herein or delivered pursuant hereto or simultaneously
herewith and the Confidentiality Agreement, collectively contain the entire
understanding of the parties hereto with respect to the subject matter
contained herein and supersede all prior agreements and understandings, oral
and written, with respect thereto.
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Section 10.05. Binding Effect; Benefit; Assignment. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and, with
respect to the provisions of Sections 7.10 and 7.15 hereof, shall inure to the
benefit of the Persons or entities benefiting from the provisions thereof
pursuant to Sections 7.10 and 7.15, who are intended to be third-party
beneficiaries thereof, and their respective successors and permitted assigns,
but neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto without the prior
written consent of the other parties, except that Merger Sub may assign and
transfer its right and obligations hereunder to any of its Affiliates. Except
as provided in the immediately preceding sentence, nothing in this Agreement,
expressed or implied, is intended to confer on any Person other than the
parties hereto or their respective successors and permitted assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
Section 10.06. Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented in writing by the parties
hereto in any and all respects before the Acceptance Date (notwithstanding the
Company Shareholder Approval), by action taken by the respective Boards of
Directors of Parent and the Company or by the respective officers authorized
by such Boards of Directors or otherwise, as the case may be; provided,
however, that after the Company Shareholder Approval, no amendment shall be
made which by law requires further approval by the shareholders of the Company
without such further approval.
Section 10.07. Further Actions. Each of the parties hereto agrees that,
except as otherwise provided in this Agreement and subject to its legal
obligations, it will use its reasonable best efforts to fulfill all conditions
precedent specified herein, to the extent that such conditions are within its
control, and to do all things reasonably necessary to consummate the
transactions contemplated hereby.
Section 10.08. Headings. The descriptive headings of the several Articles
and Sections of this Agreement are inserted for convenience only, do not
constitute a part of this Agreement and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 10.09. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed
that the parties shall be entitled to specific performance of the terms
hereof, this being in addition to any other remedy to which they are entitled
at law or in equity.
Section 10.10. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all of
which together shall be deemed to be one and the same instrument.
Section 10.11. Applicable Law. Except as mandatorily required under the laws
of the State of Georgia or the Commonwealth of Virginia, this Agreement and
the legal relations between the parties hereto shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the conflict of laws rules thereof.
Section 10.12. Severability. If any term, provision, covenant or restriction
contained in this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
contained in this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
Section 10.13. WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of Parent, Merger Sub and the Company has caused
this Agreement to be executed by its officers thereunto duly authorized, all
as of the date first above written.
Georgia-Pacific Corporation
/s/ A. D. Correll
By: _________________________________
Name: A.D. Correll
Title: Chairman, CEO & President
Fenres Acquisition Corp.
/s/ A. D. Correll
By: _________________________________
Name: A.D. Correll
Title: Chairman, CEO and
President
Fort James Corporation
/s/ Miles L. Marsh
By: _________________________________
Name: Miles L. Marsh
Title: Chairman & CEO
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ANNEX I
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, but subject to compliance
with Section 2.01(a) of the Agreement and Plan of Merger dated as of July 16,
2000 among Parent, Merger Sub and the Company (the "Merger Agreement") (each
defined term used herein shall have the meaning assigned to such term in the
Merger Agreement), Merger Sub shall not be required to accept for payment or
pay for any shares of Company Common Stock tendered pursuant to the Offer, and
may extend or amend the Offer in accordance with the Merger Agreement, if (i)
the Minimum Condition shall not have been satisfied; (ii) the applicable
waiting period under the HSR Act or any material European antitrust filing
shall not have expired or been terminated; or (iii) on or after the date of
the Merger Agreement and at or prior to the Acceptance Date, any of the
following events or circumstances occurs or exists and is continuing:
(a) there shall have been instituted or pending any litigation, suit,
claim, action or proceeding before any federal or state court of the United
States of America (other than (i) any such action in which a motion for a
temporary restraining order, a preliminary injunction or a permanent
injunction shall have been denied or shall have expired, or a judicial
order granting any such temporary restraining order, preliminary injunction
or permanent injunction shall have been reversed on appeal and not
reinstated, (ii) any such action or proceeding in which the United States
Department of Justice, or the Federal Trade Commission or any applicable
state authority does not file within 10 Business Days after commencement of
such action a motion seeking injunctive relief of the type referred to in
clauses (1) through (3) of this paragraph (a), or (iii) an action filed
with consent of Merger Sub) by any United States federal government or
governmental authority or agency or any of the several states of the United
States or any attorney general thereof (1) challenging or seeking to make
illegal, materially delay, or otherwise, directly or indirectly, restrain
or prohibit or make materially more costly (in each case, under Antitrust
Laws) , the making of the Offer, the acceptance for payment of any shares
of Company Common Stock by Parent, Merger Sub or any other Affiliate of
Parent, or the consummation of any other transaction contemplated by the
Merger Agreement; (2) seeking an order of divestiture that, if complied
with, would, in Parent's reasonable judgment, be expected to have a
material adverse effect on the business, results of operations or financial
condition of Parent, the Company and their Subsidiaries, taken as a whole,
after giving effect to the Offer and the Merger; or (3) seeking (under
Antitrust Laws) to impose or confirm any limitation on the ability of
Parent, Merger Sub or any other Subsidiary of Parent to exercise
effectively full rights of ownership of any shares of Company Common Stock
on all matters properly presented to the Company's shareholders, including,
without limitation, the approval and adoption of the Merger Agreement and
the transactions contemplated by the Merger Agreement; provided, however,
that no such litigation or proceeding shall constitute a condition to
Merger Sub's obligations under the Offer to the extent that Parent or
Merger Sub is in breach of its obligations under Section 7.09 thereof;
(b) there shall have been (i) any Law enacted, promulgated, amended,
issued or deemed applicable to (1) Parent, the Company or any of their
respective Subsidiaries or (2) any transaction contemplated by the Merger
Agreement or (ii) entered, promulgated or enforced by any court or
Governmental Authority, any Order of any kind which prohibits, restrains,
restricts or enjoins the consummation of the Offer or has effect of making
the Offer illegal, in each case, by any legislative body or Governmental
Authority that would result, directly or indirectly, in any of the
consequences referred to in clauses (1) through (3) of paragraph (a) above;
provided, however, that no such Law or Order shall constitute a condition
to Merger Sub's obligations under the Offer to the extent Parent or Merger
Sub is in breach of its obligations under Section 7.09 thereof;
(c) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the NYSE (other than a
shortening of trading hours or any coordinated trading halt triggered
solely as a result of a specified increase or decrease in a market index),
(ii) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) any material
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<PAGE>
limitation (whether or not mandatory) by any government or Governmental
Authority, on the extension of credit by banks or other lending
institutions, (iv) a commencement of a war or armed hostilities or other
national or international calamity directly or indirectly involving the
United States or (v) in the case of any of the foregoing existing on the
date hereof, a material acceleration or worsening thereof;
(d) Parent Common Stock to be issued in the Offer shall not have been
authorized for listing on the NYSE, subject to official notice of issuance;
(e) other than with respect to any Order that is the subject of paragraph
(a) or (b) above, there shall have been enacted, entered, promulgated or
enforced by any court or Governmental Authority any Order which prohibits,
restrains, restricts or enjoins the consummation of the Offer or has the
effect of making the Offer illegal;
(f) the Company shall have breached or failed to perform in any material
respect (i) its obligations under the Merger Agreement, (ii) the
representations and warranties of the Company contained in the Merger
Agreement that are qualified by reference to a Company Material Adverse
Effect shall not have been true when made or at any time prior to the
consummation of the Offer as if made at or at and as of such time (other
than representations and warranties which by their terms address matters
only as of another specified date, which shall be true and correct only as
of such date), or (iii) the representations and warranties of the Company
contained in the Merger Agreement that are not so qualified shall not have
been true when made or at any time prior to the consummation of the offer
as if made at and as of such time (other than representations and
warranties which by their terms address matters only as of another
specified date, which shall be true and correct only as of such date),
except, in the case of clause (iii) only, for such inaccuracies as are not
reasonably likely to, individually or in the aggregate, result in a Company
Material Adverse Effect; and
(g) the Merger Agreement shall have been terminated in accordance with
its terms;
(h) a stop order suspending the effectiveness of the Offer Registration
Statement shall have been issued by the SEC or any proceedings for that
purpose shall have been initiated by the SEC and not concluded or
withdrawn;
which, in the reasonable judgment of Parent in any such case, and regardless
of the circumstances giving rise to any such condition, makes it inadvisable
to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Merger Sub and Parent
and may be asserted by Merger Sub or Parent regardless of the circumstances
giving rise to any such condition or may be waived by Merger Sub or Parent in
whole or in part at any time and from time to time in their sole discretion.
The failure by Parent or Merger Sub at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right; the waiver of
any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
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<PAGE>
ANNEX B
July 16, 2000
[LETTERHEAD OF MORGAN STANLEY & CO. INCORPORATED]
Board of Directors
Fort James Corporation
1650 Lake Cook Road
Deerfield, Illinois 60015-4753
Members of the Board:
We understand that Fort James Corporation (the "Company"), Georgia-Pacific
Corporation (the "Buyer") and Fenres Acquisition Corp., a wholly owned
subsidiary of the Buyer ("Acquisition Sub"), propose to enter into an
Agreement and Plan of Merger, dated July 16, 2000 (the "Merger Agreement"),
which provides, among other things, for (i) the commencement by Acquisition
Sub of an exchange offer (the "Exchange Offer") to purchase all outstanding
shares of common stock, par value $.10 per share, including the associated
Company Rights as defined in the Merger Agreement, of the Company (the "Common
Stock") for $29.60 per share of Common Stock, net to the seller in cash, and
.2644 shares, subject to adjustment in certain circumstances as provided for
in the Merger Agreement, of common stock, par value $.80 per share, including
the associated Parent Rights as defined in the Merger Agreement, of the Buyer
(the "Buyer Common Stock") per share of Common Stock (collectively, the
"Consideration"); and (ii) the subsequent merger (the "Merger") of Acquisition
Sub with and into the Company. Pursuant to the Merger, the Company will become
a wholly owned subsidiary of the Buyer and each outstanding share of Common
Stock of the Company, other than shares held in treasury or held by the Buyer
or any affiliate of the Company or the Buyer, will be converted into the right
to receive the Consideration. The terms and conditions of the Exchange Offer
and the Merger are more fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the Consideration to be
received by the holders of shares of Common Stock pursuant to the Merger
Agreement is fair from a financial point of view to such holders.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of the Company and the Buyer;
(ii) reviewed certain internal financial statements and other financial and
operating data concerning the Company prepared by the management of
the Company;
(iii) reviewed certain internal financial statements and other financial
and operating data concerning the Buyer prepared by the management of
the Buyer;
(iv) reviewed certain financial projections prepared by the management of
the Company;
(v) reviewed certain financial projections prepared by the management of
the Buyer;
(vi) discussed the past and current operations and financial condition and
the prospects of the Company, including information relating to
certain strategic, financial and operational benefits anticipated from
the Exchange Offer and the Merger, with senior executives of the
Company;
(vii) discussed the past and current operations and financial condition
and the prospects of the Buyer, including information relating to
certain strategic, financial and operational benefits anticipated
from the Exchange Offer and the Merger, with senior executives of
the Buyer;
(viii) reviewed the pro forma impact of the Exchange Offer and the Merger
on the Buyer's earnings per share, cash flow, consolidated
capitalization and financial ratios;
(ix) reviewed the reported prices and trading activity for the Common
Stock and the Buyer Common Stock;
(x) compared the financial performance of the Company and the prices and
trading activity of the Common Stock with that of certain other
comparable publicly-traded companies and their securities;
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<PAGE>
(xi) compared the financial performance of the Buyer and the prices and
trading activity of the Buyer Common Stock with that of certain other
comparable publicly-traded companies and their securities;
(xii) reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
(xiii) participated in discussions and negotiations among representatives
of the Company, the Buyer and their financial and legal advisors;
(xiv) reviewed the Merger Agreement, and certain related documents; and
(xv) performed such other analyses and considered such other factors as we
have deemed appropriate.
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for the purposes
of this opinion. With respect to the financial projections, including
information relating to certain strategic, financial and operational benefits
anticipated from the Exchange Offer and the Merger, we have assumed that they
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the future financial performance of the Company and
the Buyer. In addition, we have assumed that the Exchange Offer and the Merger
will be consummated in accordance with the terms set forth in the Merger
Agreement. We have assumed that, in connection with the receipt of all the
necessary regulatory approvals for the Exchange Offer and the Merger, no
restrictions will be imposed that would have a material adverse effect on the
contemplated benefits expected to be derived in the Exchange Offer and the
Merger. We have not made any independent valuation or appraisal of the assets
or liabilities of the Company, nor have we been furnished with any such
appraisals. Our opinion is necessarily based on financial, economic, market
and other conditions as in effect on, and the information made available to us
as of, the date hereof.
In arriving at our opinion, we were not authorized to solicit, and did not
solicit, interest from any party with respect to the acquisition of the
Company or any of its assets, nor did we negotiate with any of the parties,
other than the Buyer, which expressed interest to us in the possible
acquisition of the Company or certain of its constituent businesses.
We have acted as financial advisor to the Board of Directors of the Company
in connection with this transaction and will receive a fee for our services.
In the past, Morgan Stanley & Co. Incorporated ("Morgan Stanley") and its
affiliates have provided financial advisory and financing services for the
Company and the Buyer and have received fees for the rendering of these
services. In connection with the Exchange Offer and the Merger, Morgan Stanley
may provide certain financing services for the Buyer. In addition, an officer
of the Company serves on the Board of Directors of the parent of Morgan
Stanley.
It is understood that this letter is for the information of the Board of
Directors of the Company and may not be used for any other purpose without our
prior written consent, except that this opinion may be included in its
entirety in any filing made by the Company with the Securities and Exchange
Commission in connection with the Exchange Offer or the Merger. In addition,
this opinion does not in any manner address the prices at which the Buyer
Common Stock will trade at any time or after the consummation of the Exchange
Offer or the Merger, and we express no opinion or recommendation as to whether
holders of Common Stock should tender their shares in the Exchange Offer or as
to how holders of Common Stock should vote at any shareholders' meeting held
in connection with the Merger.
Based on and subject to the foregoing, we are of the opinion on the date
hereof that the Consideration to be received by the holders of shares of
Common Stock pursuant to the Merger Agreement is fair from a financial point
of view to such holders.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ William H. Strong
-------------------------------
William H. Strong
Vice Chairman and Managing
Director
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<PAGE>
Facsimile copies of letters of transmittal, properly completed and duly
executed, will be accepted. The appropriate letter of transmittal,
certificates for shares of Fort James common stock and any other required
documents should be sent delivered by each Fort James stockholder or his
broker, dealer, commercial bank, trust company or other nominee to the
exchange agent at one of its addresses set forth below.
The Exchange Agent for the offer is:
<TABLE>
<CAPTION>
By Mail: By Facsimile Transmission: By Hand:
<S> <C> <C>
EquiServe Trust Company, N.A. (For Eligible Institutions Only) EquiServe
P.O. Box 842010 1-201-222-4291 c/o Securities Transfer and
Boston, MA 02284-2010 Report Services Inc.
For Confirmation Telephone: Attn: Corporate Actions
1-201-222-2542 100 William Street, Galleria
New York, New York 10038
</TABLE>
----------------
Overnight Courier:
EquiServe Trust Company, N.A.
40 Campanelli Drive
Braintree, MA 02184
Attn: Fort James Corporation
Any questions or requests for assistance or additional copies of the
prospectus, the letter of transmittal and the notice of guaranteed delivery
and related exchange offer materials may be directed to the information agent
at the telephone numbers and location listed below. You may also contact your
local broker, commercial bank, trust company or nominee for assistance
concerning the offer.
The Information Agent for the offer and the merger is:
LOGO
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Call Collect: 1-212-269-5550
Call Toll Free: 1-888-460-7637
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. Indemnification of Directors and Officers.
Section 14-2-851 of the Georgia Business Corporation Code (the "GBCC")
provides that a corporation may indemnify a director against liability
incurred (a) in a civil proceeding (i) if, in the case of conduct in such
director's capacity as a director, the conduct of such director was in good
faith and reasonably believed by such director to be in the best interests of
the corporation and (ii) if, in all other cases, such director's conduct was
at least not opposed to the best interests of the corporation and (b) in a
criminal proceeding, if the director had no reasonable cause to believe that
such conduct was unlawful. Section 14-2-851 of the GBCC provides that a
corporation may not indemnify a director (1) in connection with a proceeding
by or in the right of the corporation, except for reasonable expenses if it is
determined that the director has met the relevant standard of conduct under
Section 14-2-851, or (2) in connection with any proceeding with respect to
conduct for which such director was adjudged liable on the basis that personal
benefit was improperly received by such director, whether or not involving
action in such director's capacity as a director. Notwithstanding the
foregoing, pursuant to Section 14-2-854 of the GBCC, an appropriate court may
order a corporation to indemnify a director under certain circumstances if
such court determines that it is fair and reasonable to indemnify such
director.
Section 14-2-852 of the GBCC provides that, a corporation shall indemnify a
director who was wholly successful, on the merits or otherwise, in the defense
of any proceeding to which such director was a party because such director was
a director of the corporation against reasonable expenses incurred by the
director in connection with such proceeding.
Section 14-2-857 of the GBCC provides that a corporation may indemnify and
advance expenses to an officer of the corporation who is a party to a
proceeding because such person is an officer of the corporation to the same
extent as a director and, if the officer is not a director (or if the officer
is also a director but the sole basis on which he or she is made a party to
the proceeding is an act or omission solely as an officer), to such further
extent as may be provided by the articles of incorporation, the bylaws, a
resolution of the board of directors, or contractually, except for liability
arising out of conduct that constitutes (1) appropriation of any business
opportunity of the corporation, (2) acts or omissions which involve
intentional misconduct or a knowing violation of law or (3) receipt of an
improper personal benefit. An officer of a corporation who is not a director
is entitled to mandatory indemnification under Section 14-2-852 of the GBCC
and may apply to a court under Section 14-2-854 of the GBCC for
indemnification or advances for expenses, in each case to the same extent to
which a director may be entitled to indemnification or advances for expenses
under those provisions. A corporation may also indemnify and advance expenses
to an employee or agent who is not a director to the extent, consistent with
public policy, that may be provided by its articles of incorporation, bylaws,
general or specific action of its board of directors, or contractually.
In accordance with Georgia-Pacific's restated articles of incorporation, as
amended, a director of Georgia-Pacific is not liable to Georgia-Pacific or its
shareholders for monetary damages for any action taken, or any failure to take
any action, as a director, except for liability related to (1) any
appropriation of any business opportunity of Georgia-Pacific, (2) acts or
omissions that involve intentional misconduct or a willful violation of law or
(3) any transaction from which the director received an improper personal
benefit.
In accordance with Georgia-Pacific's restated bylaws, every person who is or
was a director, officer, employee or agent of Georgia-Pacific, or of any
enterprise in which he served as such at the request of Georgia-Pacific, will
be indemnified by Georgia-Pacific against any and all liability and expenses
actually and reasonably incurred by him in connection with or resulting from
any threatened, pending or completed proceeding, whether civil, criminal,
administrative or investigative, in which such person may become involved, as
a party or otherwise, or with which such person may be threatened, by reason
of being or having been a director, officer, employee or agent of Georgia-
Pacific or such other enterprise, or by reason of any action taken or omitted
by such person in such person's capacity as such director, officer, employee
or agent whether or not such person continues to be such at the time such
liability or expense have been incurred.
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<PAGE>
Every person, to the extent that such person has been successful on the
merits or otherwise with respect to any proceeding is entitled to
indemnification as of right for expenses actually and reasonably incurred by
such person in connection therewith. Except as provided in the preceding
sentence, upon receipt of a claim for indemnification under Georgia-Pacific's
restated bylaws, the board of directors of Georgia-Pacific will, if the claim
is made by a director or officer of Georgia-Pacific, determine whether the
claimant met the applicable standard of conduct as set forth in paragraphs (A)
and (B) below. If such determination has not been made within 90 days after
the claim is asserted, the claimant has the right to require that the
determination be submitted to the shareholders at the next regular meeting of
shareholders. If a claim is made by a person who is not a director or officer
of Georgia-Pacific, the appropriate officers of Georgia-Pacific will
determine, subject to applicable law, the manner in which there will be made
the determination as to whether the claimant met the applicable standard of
conduct as set forth in paragraphs (A) and (B) below. In the case of each
claim for indemnification, Georgia-Pacific will pay the claim to the extent
the determination is favorable to the person making the claim.
(A) In the case of a proceeding other than by or in the right of Georgia-
Pacific to procure a judgment in its favor, the director, officer,
employee or agent must have acted in a manner reasonably believed to be
in or not opposed to the best interests of Georgia-Pacific, and, in
addition, in any criminal action or proceeding, had no reasonable cause
to believe that the conduct was unlawful. In addition, any director
seeking indemnification must not have been adjudged liable on the basis
that any personal benefit was received by such person.
(B) In the case of a proceeding by or in the right of Georgia-Pacific to
procure a judgment in its favor, the director, officer, employee or
agent must have acted in good faith in a manner reasonably believed to
be in or not opposed to the best interests of Georgia-Pacific;
provided, however, that no indemnification will be made (1) with regard
to any claim, issue or matter as to which such director, officer,
employee or agent has been adjudged to be liable to Georgia-Pacific
unless and only to the extent that the court in which such action or
suit was brought determines that, despite the adjudication of liability
but in view of all the circumstances of the case, such director,
officer, employee or agent is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper, or (2)
for amounts paid, or expenses incurred, in connection with the defense
or settlement of any such claim, action, suit or proceeding, unless a
court of competent jurisdiction has approved indemnification with
regard to such amounts or expenses.
Pursuant to Georgia-Pacific's restated bylaws, expenses incurred by any
person who is or was a director, officer, employee or agent of Georgia-Pacific
with respect to any proceeding of the character described in the first
sentence of the preceding paragraph will be advanced by Georgia-Pacific prior
to the final disposition thereof upon receipt of an undertaking by or on
behalf of the recipient to repay such amount if it has been ultimately
determined that he is not entitled to indemnification. Indemnification and
advancement of expenses pursuant to Georgia-Pacific's restated bylaws is not
exclusive of any rights to which any such director, officer, employee or other
person may otherwise be entitled by contract or by law.
Georgia-Pacific carries insurance policies insuring its liability to
officers and directors under the foregoing indemnity and insuring its officers
and directors against liability incurred in their capacity as such.
The merger agreement provides that the articles of incorporation and the by-
laws of the surviving corporation will contain the provisions with respect to
indemnification and exculpation from liability substantially as set forth in
Fort James' articles of incorporation and by-laws, which provisions will not
be modified for a period of six years from the effective time of the merger in
any manner that would adversely affect the rights thereunder of individuals
who on or prior to the effective time were directors, officers, employees or
agents of Fort James, unless such modification is required by law.
For a period of six years from the effective time, the surviving corporation
will either (i) maintain in effect Fort James' current directors' and
officers' liability insurance; provided, however, that in no event will
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<PAGE>
Georgia-Pacific be required to expend in any one year an amount in excess of
200% of the annual premiums currently paid by Fort James for such insurance;
provided further that if the annual premiums of such insurance coverage exceed
such amount, the surviving corporation will be obligated to obtain a policy
with the greatest coverage available for a cost not exceeding such amount;
provided further that the surviving corporation may substitute for Fort James
policy policies with at least the same coverage containing terms and
conditions which are no less advantageous and provided that said substitution
does not result in any gaps or lapses in coverage with respect to matters
occurring prior to the effective time or (ii) if such insurance coverage is
not otherwise available, cause Georgia-Pacific's directors' and officers'
liability insurance then in effect to cover Fort James' directors and officers
with respect to those matters covered by Fort James' policy.
The merger agreement also provides that the surviving corporation will
indemnify its directors and officers to the fullest extent permitted by
applicable law with respect to all acts and omissions arising out of such
individuals' services as officers, directors, employees or agents of Fort
James or any of its subsidiaries or as trustees or fiduciaries of any plan for
the benefit of employees of Fort James or any of its subsidiaries occurring
prior to the effective time of the merger, and will, from and after the
effective time, pay, as incurred, such persons' reasonable legal and other
expenses incurred in connection therewith.
ITEM 21. Exhibits and Financial Statement Schedules
(a) List of Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
2 Agreement and Plan of Merger, dated as of July 16, 2000, among
Georgia-Pacific Corporation, Fenres Acquisition Corp. and Fort James
Corporation (included as Annex A to this Prospectus).
3.1 Restated Articles of Incorporation of Georgia-Pacific Corporation
(incorporated by reference to Exhibit 4.1 of Georgia-Pacific
Corporation's Registration Statement on Form S-8, dated December 18,
1997).
3.2 Amendment to the Restated Articles of Incorporation of Georgia-Pacific
Corporation, dated March 26, 1998 (incorporated by reference to
Exhibit 3.1 of Georgia-Pacific Corporation's Quarterly Report for the
second quarter of 1998 on Form 10-Q filed on August 13, 1998).
3.3 Restated Bylaws of Georgia-Pacific Corporation (incorporated by
reference to Exhibit 3.2 of Georgia-Pacific Corporation's Annual
Report for the fiscal year of 1999 on Form 10-K filed on March 31,
2000).
5 Opinion of James F. Kelley, Executive Vice President and General
Counsel of Georgia-Pacific Corporation, as to the validity of the
securities being registered (to be filed by amendment).
23.1 Consent of Arthur Andersen LLP (for Georgia-Pacific Corporation).
23.2 Consent of PricewaterhouseCoopers (for Fort James Corporation).
23.3 Consent of James F. Kelley, Executive Vice President and General
Counsel of Georgia-Pacific
Corporation (included in the opinion filed as Exhibit 5 to this
Registration Statement).
24 Power of Attorney (included on the signature page of this Registration
Statement).
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Brokers, Dealers, etc.
99.4 Form of Letter to Clients.
99.5 Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
99.6 Consent of Morgan Stanley & Co. Incorporated (included as Annex B to
this Prospectus).
</TABLE>
(b) Not applicable.
(c) Not applicable.
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<PAGE>
ITEM 22. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price represent
no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering; and
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing
of any employee benefit plan's annual report pursuant to Section 15(d)
of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this registration statement, by
a person or party who is deemed to be an underwriter within the meaning
of Rule 145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable registration
form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other
items of the applicable form.
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<PAGE>
(d) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (c) immediately preceding or (ii) that purports
to meet the requirements of Section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415 will, be
filed as a part of an amendment to the registration statement and will
not be used until such amendment is effective, and that, for purposes
of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(e) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
(f) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus
pursuant to Item 4, 10(b), 11 or 13 of this Form, within one business
day of receipt of such request, and to send the incorporated documents
by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective
date of the registration statement through the date of responding to
the request.
(g) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and
the company being acquired involved therein, that was not the subject of
and included in the registration statement when it became effective.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Atlanta on August 18,
2000.
GEORGIA-PACIFIC CORPORATION
(Registrant)
By: /s/ A.D. Correll
Name: A.D. Correll
Title: Chairman, Chief Executive
Officer and President
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints A.
D. Correll, Danny W. Huff and James F. Kelley his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) and supplements to this Registration Statement, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, and hereby grants to such
attorneys-in-fact and agents, full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his or her substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ A. D. Correll Director, Chairman, Chief August 18, 2000
______________________________________ Executive Officer and
A. D. Correll President (Principal
Executive Officer)
/s/ Danny W. Huff Executive Vice President-- August 18, 2000
______________________________________ Finance and Chief
Danny W. Huff Financial Officer
(Principal Financial
Officer)
/s/ James E. Terrell Vice President and August 18, 2000
______________________________________ Controller
James E. Terrell (Principal Accounting
Officer)
/s/ James S. Balloun Director August 18, 2000
______________________________________
James S. Balloun
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert Carswell Director August 18, 2000
______________________________________
Robert Carswell
/s/ Jane Evans Director August 18, 2000
______________________________________
Jane Evans
Director
______________________________________
Donald V. Fites
Director
______________________________________
Harvey C. Fruehauf, Jr.
Director
______________________________________
Richard V. Giordano
/s/ David R. Goode Director August 18, 2000
______________________________________
David R. Goode
Director
______________________________________
M. Douglas Ivester
/s/ James P. Kelly Director August 18, 2000
______________________________________
James P. Kelly
/s/ Louis W. Sullivan, M.D. Director August 18, 2000
______________________________________
Louis W. Sullivan, M.D.
/s/ James B. Williams Director August 18, 2000
______________________________________
James B. Williams
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
2 Agreement and Plan of Merger, dated as of July 16, 2000, among
Georgia-Pacific Corporation, Fenres Acquisition Corp. and Fort James
Corporation (included as Annex A to the Prospectus).
3.1 Restated Articles of Incorporation of Georgia-Pacific Corporation
(incorporated by reference to Exhibit 4.1 of Georgia-Pacific
Corporation's Registration Statement on Form S-8, dated December 18,
1997).
3.2 Amendment to the Restated Articles of Incorporation of Georgia-Pacific
Corporation, dated March 26, 1998 (incorporated by reference to
Exhibit 3.1 of Georgia-Pacific Corporation's Quarterly Report for the
second quarter of 1998 on Form 10-Q filed on August 13, 1998).
3.3 Restated Bylaws of Georgia-Pacific Corporation (incorporated by
reference to Exhibit 3.2 of Georgia-Pacific Corporation's Annual
Report for the fiscal year of 1999 on Form 10-K filed on March 31,
2000).
5 Opinion of James F. Kelley, Executive Vice President and General
Counsel of Georgia-Pacific Corporation, as to the validity of the
securities being registered (to be filed by amendment).
23.1 Consent of Arthur Andersen LLP (for Georgia-Pacific Corporation).
23.2 Consent of PricewaterhouseCoopers (for Fort James Corporation).
23.3 Consent of James F. Kelley, Executive Vice President and General
Counsel of Georgia-Pacific Corporation (included in the opinion filed
as Exhibit 5 to this Registration Statement).
24 Power of Attorney (included on the signature page of this Registration
Statement).
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Brokers, Dealers, etc.
99.4 Form of Letter to Clients.
99.5 Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
99.6 Consent of Morgan Stanley & Co. Incorporated (included as Annex B to
the Prospectus).
</TABLE>
