EXHIBIT (a)(7)
[LETTERHEAD OF FORT JAMES CORPORATION APPEARS HERE]
October 16, 2000
TO HOLDERS OF FORT JAMES CORPORATION STOCK APPRECIATION RIGHTS:
Fort James Corporation has agreed to be acquired by Georgia-Pacific
Corporation. Georgia-Pacific is making an exchange offer for the Fort James
shares, which will be followed by a merger to complete the acquisition. In the
offer and the merger, each share of Fort James common stock will be converted
into $29.60 in cash and a fraction of a share of Georgia-Pacific Group common
stock equal to .2644, subject to adjustment in certain circumstances.
Under the terms of our agreement with Georgia-Pacific, you have the
right to elect whether some or all of your stock appreciation rights ("SAR"),
the value of which is measured based on Fort James common stock, will be
converted into SARs, the value of which will be measured based on
Georgia-Pacific Group common stock, or cash. This letter describes these two
alternatives with respect to your Fort James SARs. IF YOU FAIL TO MAKE AN
ELECTION PRIOR TO 5:00 P.M., CENTRAL TIME, ON NOVEMBER 2, 2000 (THE "ELECTION
DEADLINE"), YOUR FORT JAMES SARS WILL AUTOMATICALLY BE CASHED OUT WHEN
GEORGIA-PACIFIC COMPLETES ITS OFFER FOR FORT JAMES SHARES.
With respect to each of your SAR grants, you have the right to elect
between the following two alternatives:
- If you elect to receive Georgia-Pacific Group SARs, at the effective
--------------------------------------------------
time of the merger, your Fort James SARs will be converted into SARs
to receive the "Appreciation Amount" (as defined in your Fort James
SAR grant letter) based on the value of Georgia-Pacific Group common
stock. We call these Georgia-Pacific Group SARs "Rollover SARs" and
-------------
describe them below under the heading "If You Elect to Rollover Your
Fort James SARs Into SARs in respect of Georgia-Pacific Group
Stock." Forms making this election must be received no later than
---------------------------------------------------------
November 2, 2000.
----------------
- If you elect to receive cash or do not make an election by the
--------------------------------------------------------------
election deadline, your Fort James SARs will be cashed out in
-----------------
connection with the offer. The amount of cash will be equal to the
difference between the "Per Share Amount" - which we describe in
Appendix A to this letter and depends on the price of the
Georgia-Pacific Group common stock - and the "value" of your Fort
James SAR on the date of grant as set forth in your Fort James SAR
grant letter (the "exercise price"). We describe this alternative
under "If You Elect to Cash Out Your SARs or Fail to Make an
Election by the Election Deadline."
<PAGE>
October 16, 2000
Page 2 of 4
If you elect to receive Rollover SARs, you will have a continuing
interest in the combined businesses of Georgia-Pacific and Fort James. The value
of your Rollover SARs will increase or decrease depending on the stock price of
Georgia-Pacific Group common stock following the completion of the offer.
If you elect to cash out your Fort James SARs or fail to make an
election by the election deadline, once the offer is completed:
- you will no longer have the right to exercise your existing Fort
James SARs;
- the value of the cash you will receive in respect of your Fort James
SARs will be fixed and, upon receipt of such cash, your Fort James
SARs will automatically be cancelled and cease to exist; and
- if the exercise price of your Fort James SARs exceeds the Per Share
Amount, you will receive no cash for such SARs and such SARs will
automatically be cancelled and cease to exist.
THE DECISION AS TO WHETHER TO ELECT TO CONVERT YOUR FORT JAMES SARS
INTO ROLLOVER SARS OR ELECT TO CASH OUT YOUR FORT JAMES SARS IS A PERSONAL ONE
AND WE URGE YOU TO DISCUSS YOUR SITUATION WITH YOUR OWN TAX OR FINANCIAL
ADVISERS.
IF YOU ELECT TO ROLLOVER YOUR FORT JAMES SARS INTO SARS IN RESPECT OF
GEORGIA-PACIFIC GROUP COMMON STOCK
If you elect to convert your Fort James SARs into SARs in respect of
--------------------------------------------------------------------
Georgia-Pacific Group common stock, you must return the attached election form
------------------------------------------------------------------------------
by the election deadline. If you do so, at the time the merger is completed,
------------------------
each Fort James SAR will cease to represent a right, the value of which is
measured based on Fort James common stock, and will be converted automatically
into a fully vested and exercisable SAR, the value of which is measured based on
Georgia-Pacific Group common stock (a "Rollover SAR"), in an amount and at an
exercise price determined in the following manner (and otherwise subject to the
terms of the plan and SAR grant letter under which it was granted):
- Number of Rollover SARs: the number of shares of Georgia-Pacific
-----------------------
Group common stock subject to the Rollover SARs will be equal to the
product of (1) the number of shares of Fort James common stock in
respect of the SAR immediately prior to the effective time of the
merger and (2) the quotient of the Per Share Amount divided by the
Georgia-Pacific Average Price, rounded up to the nearest whole
share; and
- SAR Exercise Price: the exercise price per Rollover SAR will be
------------------
equal to the quotient of (1) the exercise price per share of the
Fort James SAR immediately prior to the effective time of the
merger, divided by (2) the Per Share Amount divided by the
Georgia-Pacific Average Price, rounded down to the nearest whole
cent.
<PAGE>
October 16, 2000
Page 3 of 4
We define Per Share Amount and Georgia-Pacific Average Price on
Appendix A attached to this letter and include an example calculation in
Appendix B attached to this letter.
IF YOU ELECT TO CASH OUT YOUR FORT JAMES SARS OR FAIL TO MAKE AN ELECTION BY THE
ELECTION DEADLINE
If you elect to cash out your Fort James SARs or fail to make an
election by the election deadline, when the Georgia-Pacific exchange offer
expires, each such Fort James SARs will be cancelled automatically and you will
receive, upon the completion of the offer, an amount in cash equal to the
excess, if any, of the Per Share Amount over the per share exercise price of
such SAR, multiplied by the number of shares of Fort James common stock in
respect of such SAR. Any cash payment will be subject to any applicable tax
withholding requirements.
ILLUSTRATIVE EXAMPLES
By way of example, if at a Georgia-Pacific Average Price of $30, you
have an SAR in respect of 1,000 shares of Fort James common stock at $25 per
share and you elect to roll over that SAR, you would receive a Rollover SAR in
respect of 1,250 shares of Georgia-Pacific Group common stock at an exercise
price of $20.00 per share. If, instead, you elect to cash out your Fort James
SAR, you would receive $12,530 in cash less applicable taxes. The detailed
calculations for this are shown on Appendix B attached to this letter.
If, at a Georgia-Pacific Average Price of $30, you have an SAR in
respect of 1,000 shares of Fort James common stock, but your exercise price is
$39 per share, and you elect to roll over that SAR, you would receive a Rollover
SAR in respect of 1,250 shares of Georgia-Pacific Group common stock at $31.20
per share. If, instead, you elect to cash out that Fort James SAR or fail to
make an election by the election deadline, you would receive $0 in cash and the
SAR will be automatically cancelled.
As shown in the last example, if you elect to cash out a Fort James
SAR or fail to make an election by the election deadline and the exercise price
applicable to that SAR exceeds the Per Share Amount, you will receive no value
for that SAR. AS A RESULT, HOLDERS OF FORT JAMES SARS WITH RESPECT TO WHICH THE
EXERCISE PRICE OF THE SAR EXCEEDS THE PER SHARE AMOUNT (I.E., THE SARS ARE
-------
OUT-OF-THE-MONEY) SHOULD ELECT TO CONVERT THOSE FORT JAMES SARS INTO ROLLOVER
SARS.
You should also be aware that, in connection with the transaction,
the terms of your Fort James SARs were amended to provide for a minimum period
of time during which you may exercise your SARs if your employment is terminated
after the offer is completed. The amendment generally provides that if your
employment is terminated by your employer other than for "Cause" (as defined in
your SAR grant letter) or by you for "Good Reason" under an employment agreement
(to the extent you have an agreement), in either case during the three years
following a Change of Control of Fort James, each of your SARs may be exercised
until the earlier of (1) three years following the Change of Control and (2) the
expiration of the original term of the SAR. Former employees who have retired or
terminated prior to a Change of Control of Fort James will continue to be able
to exercise SARs per the original terms of the grant agreements.
<PAGE>
October 16, 2000
Page 4 of 4
PLEASE INDICATE ON THE ATTACHED SCHEDULE THE NUMBER OF FORT JAMES
SARS WITH RESPECT TO WHICH YOU ELECT TO RECEIVE ROLLOVER SARS AND THE NUMBER OF
FORT JAMES SARS WITH RESPECT TO WHICH YOU ELECT TO RECEIVE CASH AND RETURN OR
FAX ONE SIGNED COPY OF THIS LETTER BY NOVEMBER 2, 2000 TO BECKY RODGERS AT FORT
JAMES CORPORATION, 1650 LAKE COOK ROAD, DEERFIELD, ILLINOIS 60015 (OR IF BY FAX
TO (847) 317-5191). IF YOU DO NOT SEND IN AN ELECTION FORM BY THE ELECTION
-----------------------------------------------
DEADLINE, ALL OF YOUR SARS WILL BE CASHED OUT AND AUTOMATICALLY CANCELLED IN THE
-------------------------------------------------------------------------
MANNER DESCRIBED UNDER "IF YOU ELECT TO CASH OUT YOUR FORT JAMES SARS OR FAIL TO
MAKE AN ELECTION BY THE ELECTION DEADLINE." IF YOU BELIEVE THAT ANY INFORMATION
ON THE ELECTION FORM RELATING TO YOUR FORT JAMES SARS IS INCORRECT OR HAVE ANY
QUESTIONS, PLEASE DO NOT HESITATE TO CALL BECKY RODGERS AT (847) 317-5371 OR
MICHAEL KATZFEY AT (847) 317-5215.
Sincerely,
/s/ Daniel J. Girvan
Daniel J. Girvan
Attachments
<PAGE>
FORT JAMES SAR
ELECTION FORM *
NAME:
SSN:
ADDRESS:
--------------------------------------------------------------------------------
ELECT TO CONVERT ELECT TO
GRANT # OF SARS EXERCISE TO GEORGIA-PACIFIC CASH OUT
DATE PRICE ROLLOVER SARS (SPECIFY NUMBER)
(SPECIFY NUMBER)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
* The information shown is as of October 5, 2000. To the extent a Fort James
SAR is exercised, expires or is otherwise cancelled after this date, any
election made with respect to such SAR will not apply.
Signature:_______________________________ Date:________________________________
NOTE: IF YOU FAIL TO MAKE AN ELECTION PRIOR TO 5:00 P.M., CENTRAL TIME, ON
NOVEMBER 2, 2000 (THE "ELECTION DEADLINE"), YOUR SARS WILL AUTOMATICALLY BE
CASHED OUT WHEN GEORGIA-PACIFIC COMPLETES ITS OFFER FOR FORT JAMES SHARES.
RETURN OR FAX TO BECKY RODGERS AT FORT JAMES CORPORATION, 1650 LAKE COOK ROAD,
DEERFIELD, ILLINOIS 60015 (OR IF BY FAX TO (847) 317-5191).
<PAGE>
APPENDIX A
DEFINITIONS
Per Share Amount: The Per Share Amount is equal to the sum of (1)
$29.60 and (2) the product of the Exchange
Ratio and the Georgia-Pacific Average Price.
For example:
- if the Georgia-Pacific Average Price were
$30.00, the Per Share Amount would be
$37.53 ($29.60 plus the product of the
Exchange Ratio (.2644) and the
Georgia-Pacific Average Price ($30.00));
and
- if the Georgia-Pacific Average Price were
$40.00, the Per Share Amount would be
$40.00 ($29.60 plus the product of the
Exchange Ratio (.2600) and the
Georgia-Pacific Average Price ($40.00)).
Exchange Ratio: The Exchange Ratio is .2644. If, however, the
value of the Georgia-Pacific Group stock to be
received by Fort James stockholders in the
offer would exceed $10.40, which would occur
when the Georgia-Pacific Average Price is
greater than $39.33, the Exchange Ratio will be
adjusted to equal $10.40 divided by the
Georgia-Pacific Average Price. For example, if
the Georgia-Pacific Average Price was $40.00,
the Exchange Ratio would be .2600.
Georgia-Pacific Average The average (rounded to the nearest 1/10,000) of
Price: 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 ten consecutive
trading days ending on the third trading day
before the date that Georgia-Pacific accepts
shares that have been tendered in the offer. If
the offer expires as scheduled on November 9,
2000, the ten trading day period would begin on
October 24, 2000 and end on November 6, 2000.
The following table shows the Exchange Ratio and the Per Share Amount at various
Georgia-Pacific Average Prices:
GEORGIA-PACIFIC EXCHANGE PER SHARE
AVERAGE PRICE RATIO AMOUNT
------------- --------------------
$20.00........................ .2644 $34.89
25.00........................ .2644 36.21
30.00........................ .2644 37.53
35.00........................ .2644 38.85
40.00........................ .2600 40.00
45.00........................ .2311 40.00
<PAGE>
APPENDIX B
The following example illustrates how to calculate the number of Rollover
SARs or amount of cash you would receive in respect of your Fort James SARs.
Assume the following:
Georgia-Pacific Average Price: $30.00
Per Share Amount: $37.53
# of Fort James SARs: 1,000
Per Share Exercise Price: $25.00
IF YOU ELECT TO ROLL OVER YOUR FORT JAMES SARS, YOU WOULD RECEIVE:
# of Rollover SARs: 1,250
New Exercise Price: $20.00
The calculations are as follows:
# of Rollover SARs = # of Fort James SARs x Per Share Amount
----------------
Georgia-Pacific Average Price
1,000 x $37.53 = 1,250
-----
$30.00
New Exercise Price = Per Share Exercise Price
------------------------
Per Share Amount / Georgia-Pacific Average Price
$25.00 = $20.00
----------------------
$37.53 / $30.00
IF YOU ELECT TO CASH OUT YOUR FORT JAMES SARS OR FAIL TO MAKE AN ELECTION
BY THE ELECTION DEADLINE, YOU WOULD RECEIVE:
Amount of Cash: $12,530 less applicable taxes
The calculation is as follows:
Amount of Cash = (Per Share Amount - Per Share Exercise Price) x # of
Fort James
SARs
($37.53 - $25.00) x 1,000 = $12,530
