FILED PURSUANT TO RULE 424(b)(2)
FILE NO. 333-48388
PROSPECTUS SUPPLEMENT
(To prospectus dated October 27, 2000)
[Logo of Georgia-Pacific]
$1,500,000,000
Georgia-Pacific Corporation
$500,000,000 7 1/2% Notes due 2006
$600,000,000 8 1/8% Notes due 2011
$400,000,000 8 7/8% Notes due 2031
----------------
Georgia-Pacific will pay interest on the notes on May 15 and November 15 of
each year. The first such payment will be made on November 15, 2001. Georgia-
Pacific may, at any time, redeem the notes at the redemption prices calculated
as described herein.
----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
----------------
Underwriting Proceeds to
Price to Public Discount Georgia-Pacific
--------------- ------------ ---------------
Per Note due 2006.................. 99.796% 0.600% 99.196%
Total for Notes due 2006........... $498,980,000 $3,000,000 $495,980,000
Per Note due 2011.................. 99.444% 0.650% 98.794%
Total for Notes due 2011........... $596,664,000 $3,900,000 $592,764,000
Per Note due 2031.................. 98.993% 0.875% 98.118%
Total for Notes due 2031........... $395,972,000 $3,500,000 $392,472,000
It is expected that delivery of the notes will be made on or about May 8,
2001, through the facilities of The Depository Trust Company against payment
therefor in immediately available funds.
----------------
Joint Bookrunners
Banc of America Securities LLC Merrill Lynch & Co. Morgan Stanley Dean Witter
----------------
Banc One Capital Markets, Inc.
Deutsche Banc Alex. Brown
JPMorgan
Salomon Smith Barney
UBS Warburg
----------------
May 3, 2001
TABLE OF CONTENTS
Page
----
Prospectus Supplement
Use of Proceeds............................................................ S-3
Ratio of Earnings to Fixed Charges......................................... S-3
Description of Notes....................................................... S-3
Underwriters............................................................... S-6
Validity of Notes.......................................................... S-7
Prospectus
About This Prospectus...................................................... 1
Where You Can Find More Information........................................ 1
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 3
Use of Proceeds............................................................ 3
Ratio of Earnings to Fixed Charges......................................... 4
Description of Debt Securities............................................. 5
Description of Preferred Stock............................................. 16
Description of Common Stock................................................ 18
Description of Warrants.................................................... 32
Description of Stock Purchase Contracts and Stock Purchase Units........... 32
Book-Entry Issuance........................................................ 33
Plan of Distribution....................................................... 34
Legal Matters.............................................................. 35
Experts.................................................................... 35
----------------
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus in
making your investment decision. We have not authorized anyone to provide you
with any other information. If you receive any unauthorized information, you
must not rely on it.
We are offering to sell the notes and seeking offers to buy the notes only
in jurisdictions where offers and sales are permitted.
The information contained in this prospectus supplement and the attached
prospectus is accurate only as of the date of this prospectus supplement and
the attached prospectus regardless of the time of delivery of this prospectus
supplement and the attached prospectus or any sale of the notes.
S-2
USE OF PROCEEDS
The net proceeds from the sale of the notes offered hereby are estimated to
be approximately $1,481,066,000 after deduction of underwriting discounts and
commissions and payment of expenses of the offering estimated to be $150,000.
We will apply the net proceeds from the sale of the notes offered hereby to
repay amounts outstanding under our Capital Markets Bridge Facility, dated as
of November 3, 2000, as amended as of March 15, 2001, among Georgia-Pacific
Corporation, the lenders named therein, Bank of America, N.A., as Agent, and
Merrill Lynch Capital Corporation and Morgan Stanley Senior Funding Inc., as
Co-Syndication Agents.
The proceeds of our borrowings under the Bridge Facility were applied to
partially finance the acquisition of Fort James Corporation and to pay fees and
expenses related thereto. The weighted average interest rate on the outstanding
balance under the Bridge Facility was 5.96125% as of April 30, 2001, and the
outstanding balance under the Bridge Facility matures on May 28, 2002. Bank of
America, N.A., an affiliate of Banc of America Securities LLC, Merrill Lynch
Capital Corporation, an affiliate of Merrill Lynch, Pierce, Fenner & Smith
Incorporated, and Morgan Stanley Senior Funding Inc., an affiliate of Morgan
Stanley & Co. Incorporated, are lenders under the Bridge Facility.
RATIO OF EARNINGS TO FIXED CHARGES
Our ratio of earnings to fixed charges for each of the periods indicated is
as follows:
Three
Months
Fiscal Year Ended Ended
------------------------ March 31,
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ---------
Ratio of earnings to fixed charges
(unaudited)............................... 1.55 1.48 2.05 4.39 2.15 --
The ratio of earnings to fixed charges is computed by dividing "earnings",
which consist of (1) income before income taxes, extraordinary items and
accounting changes, (2) interest expense (excluding interest capitalized during
the period and including amortization of previously capitalized interest) and
(3) one-third of rental expenses (the portion deemed representative of
interest), by "fixed charges", which consist of (1) total interest costs
(including interest capitalized during the period) and (2) one-third of rental
expense. For the three months ended March 31, 2001, fixed charges exceeded
earnings by $143 million.
On or about April 22, 1999, we determined to change our fiscal year from
December 31 to end on the Saturday closest to December 31. Additionally, we
report our quarterly periods on a 13-week basis ending on a Saturday. The
impact of one additional day on the year ended January 1, 2000 was not
material.
We do not have, and have not had, any preferred stock outstanding during the
periods indicated. Accordingly, we cannot show you the ratio of combined fixed
charges and preferred stock dividends to earnings.
DESCRIPTION OF NOTES
The following description of the notes supplements, and to the extent
inconsistent therewith replaces, the description of the general terms and
provisions of the Debt Securities set forth in the accompanying prospectus, to
which we refer you.
General
Each of the notes due 2006, the notes due 2011 and the notes due 2031 are a
separate issue of Debt Securities described in the accompanying prospectus and
will be issued under the Indenture, dated as of March 1, 1983, as amended,
between us and The Bank of New York, as successor trustee.
The notes due 2006 are limited to $500,000,000 aggregate principal amount
and will mature on May 15, 2006, the notes due 2011 are limited to $600,000,000
aggregate principal amount and will mature on May 15, 2011 and the notes due
2031 are limited to $400,000,000 aggregate principal amount and will mature on
May 15, 2031.
S-3
The notes due 2006 will bear interest at a rate of 7 1/2% per annum, the
notes due 2011 will bear interest at a rate of 8 1/8% per annum and the notes
due 2031 will bear interest at a rate of 8 7/8% per annum, in each case from
May 8, 2001 or from the most recent interest payment date to which interest has
been paid or provided for with respect to that issue of notes, payable semi-
annually in arrears on May 15 and November 15 of each year, beginning on
November 15, 2001 to the person in whose name the note (or any predecessor
note) is registered at the close of business on the May 1 or November 1, as the
case may be, next preceding such interest payment date.
Principal of and interest on the notes of each issue will be payable, and
the transfer of the notes of each issue will be registrable, at the corporate
trust office of The Bank of New York in the Borough of Manhattan, The City of
New York. In addition, payment of interest may, at our option, be made by check
mailed to the address of the person receiving interest as it appears in the
security register for the notes of the applicable issue.
The notes will be issued only in fully registered form without coupons and
in denominations of $1,000 and any integral multiple thereof.
The notes will not be entitled to the benefit of any sinking fund.
The notes will be unsecured senior debt securities of Georgia-Pacific.
The notes do not have any events of default other than those specifically
summarized under "Description of Debt Securities--Events of Default" in the
accompanying prospectus.
Settlement for the notes will be made in immediately available funds. The
notes will be in the Same-Day Funds Settlement System of The Depository Trust
Company, the depositary for the notes, and to the extent that secondary market
trading in the notes is effected through the facilities of that depositary,
such trades will be settled in immediately available funds.
Redemption at the Option of Georgia-Pacific
The notes of each issue will be redeemable, in whole or from time to time in
part, at our option on any date, at a redemption price equal to the greater of:
(1) 100% of the principal amount of the notes of such issue to be
redeemed; and
(2) the sum of the present values of the remaining scheduled payments of
principal and interest thereon (exclusive of interest accrued to such
redemption date) discounted to such redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate (as defined below) for such issue plus 30 basis points for
the notes due 2006, 40 basis points for the notes due 2011 or 50 basis
points for the notes due 2031,
plus, in each case, accrued and unpaid interest on the principal amount
being redeemed to such redemption date; provided that installments of
interest on the notes of such issue which are due and payable on an
interest payment date falling on or prior to the relevant redemption date
shall be payable to the holders of the notes of such issue, registered as
such at the close of business on the relevant record date according to
their terms and the provisions of the Indenture.
"Treasury Rate" means, with respect to any redemption date for the notes of
any issue:
(1) the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published
statistical release designated "H.15(519)" or any successor publication
which is published weekly by the Board of Governors of the Federal Reserve
System and which establishes yields on actively traded United States
Treasury securities adjusted to constant maturity under the caption
"Treasury Constant Maturities," for the maturity corresponding to the
Comparable Treasury Issue for the applicable issue (if no maturity is
within three months before or after the Maturity Date, yields for the two
published maturities most closely corresponding to the Comparable Treasury
Issue
S-4
for such issue shall be determined and the Treasury Rate for such issue
shall be interpolated or extrapolated from such yields on a straight line
basis, rounding to the nearest month); or
(2) if such release (or any successor release) is not published during
the week preceding the calculation date or does not contain such yields,
the rate per annum equal to the semi-annual equivalent yield to maturity of
the Comparable Treasury Issue for such issue, calculated using a price for
the Comparable Treasury Issue for such issue (expressed as a percentage of
its principal amount) equal to the Comparable Treasury Price for such issue
for such redemption date.
The Treasury Rate shall be calculated on the third business day preceding
the redemption date.
"Comparable Treasury Issue" means, for any issue of notes, the United States
Treasury security selected by the Independent Investment Banker as having a
maturity comparable to the remaining term of the notes ("Maturity Date") of the
applicable issue to be redeemed that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining
term of the notes of such issue.
"Independent Investment Banker" means either (a) Banc of America Securities
LLC, (b) Merrill Lynch, Pierce, Fenner & Smith Incorporated or (c) Morgan
Stanley & Co. Incorporated, or, if each such firm is unwilling or unable to
select the Comparable Treasury Issue, an independent investment banking
institution of national standing appointed by the Trustee upon our direction
after consultation with us.
"Comparable Treasury Price" means with respect to any redemption date for
the notes of any issue:
(1) the average of four Reference Treasury Dealer Quotations for such
redemption date for such issue, after excluding the highest and lowest such
Reference Treasury Dealer Quotations; or
(2) if the Trustee obtains fewer than four such Reference Treasury
Dealer Quotations for such issue, the average of all such quotations.
"Reference Treasury Dealer" means (a) each of Banc of America Securities
LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated or Morgan Stanley & Co.
Incorporated and their respective successors; provided, however, that if any of
the foregoing shall cease to be a primary U.S. Government securities dealer in
New York City (a "Primary Treasury Dealer"), we will substitute therefor
another Primary Treasury Dealer and (b) any two other Primary Treasury Dealers
selected by us.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date of an issue of notes, the average, as
determined by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue for such issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Trustee by such Reference Treasury
Dealer at 5:00 p.m., New York City time, on the third business day preceding
such redemption date.
We will mail notice of any redemption at least 30 days but not more than 60
days before any redemption date to each holder of the notes of the applicable
issue to be redeemed. If less than all the notes of an issue are to be redeemed
at our option, the Trustee shall select, in such manner as it shall deem fair
and appropriate, the notes of such issue to be redeemed in whole or in part.
Unless we default in payment of the redemption price, on and after any
redemption date interest will cease to accrue on the notes of the applicable
issue or portions thereof called for redemption.
BOOK-ENTRY ISSUANCE
The notes will be issued as one or more global securities registered in the
name of The Depository Trust Company or its nominee. The Depository Trust
Company will be the depositary for the notes. The notes will be issued in
accordance with the procedures specified in the accompanying prospectus under
"Description of the Debt Securities--Book-Entry Securities" and "Book-Entry
Issuance."
S-5
UNDERWRITERS
Subject to the terms and conditions set forth in the terms agreement dated
May 3, 2001, which incorporates by reference an underwriting agreement dated
October 22, 1991, relating to the notes, we have agreed to sell to each of the
underwriters named below, and each of the underwriters has severally agreed to
purchase, the principal amount of notes of each issue set forth opposite its
name below:
Principal Amount Principal Amount Principal Amount
of Notes due of Notes due of Notes due
Name 2006 2011 2031
---- ---------------- ---------------- ----------------
Banc of America Securities
LLC........................ $135,000,000 $162,000,000 $108,000,000
Merrill Lynch, Pierce,
Fenner & Smith
Incorporated....... 135,000,000 162,000,000 108,000,000
Morgan Stanley & Co.
Incorporated............... 135,000,000 162,000,000 108,000,000
Banc One Capital Markets,
Inc........................ 20,000,000 24,000,000 16,000,000
J.P. Morgan Securities
Inc. ...................... 20,000,000 24,000,000 16,000,000
Salomon Smith Barney Inc.... 20,000,000 24,000,000 16,000,000
UBS Warburg LLC............. 20,000,000 24,000,000 16,000,000
Deutsche Banc Alex. Brown
Inc........................ 15,000,000 18,000,000 12,000,000
------------ ------------ ------------
Total..................... $500,000,000 $600,000,000 $400,000,000
============ ============ ============
The terms agreement provides that the obligations of the several
underwriters to pay for and accept delivery of the notes are subject to, among
other things, the approval of certain legal matters by their counsel and to
certain other conditions. The underwriters are committed to take and pay for
all of the notes offered hereby if any are taken.
The underwriters propose to offer part of the notes of each issue to the
public at the public offering price set forth on the cover page of this
prospectus supplement with respect to the applicable issue of notes and in part
to certain dealers at a price that represents a concession not in excess of
.350% of the principal amount of the notes due 2006, not in excess of .400% of
the principal amount of the notes due 2011 and not in excess of .500% of the
principal amount of the notes due 2031. Any underwriter may allow, and such
dealers may reallow, a concession not in excess of .250% of the principal
amount of the notes of each issue to certain other dealers. After the initial
offering of the notes, the offering price and other selling terms may from time
to time be varied by the underwriters.
We have agreed to indemnify the several underwriters against certain
liabilities including liabilities under the Securities Act of 1933, as amended.
We do not intend to apply for listing of the notes on a national securities
exchange, but we have been advised by the underwriters that they presently
intend to make a market in the notes, as permitted by applicable laws and
regulations. The underwriters are not obligated, however, to make a market in
the notes and any such market making may be discontinued at the sole discretion
of any underwriter. Accordingly, no assurance can be given as to the liquidity
of, or trading markets for, the notes.
In order to facilitate the offering of the notes, the underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price
of the notes. Specifically, the underwriters may overallot in connection with
the offering, creating a short position in the notes for their own account. In
addition, to cover overallotments or to stabilize the price of the notes, the
underwriters may bid for, and purchase, notes in the open market. Finally, the
underwriters may reclaim selling concessions allowed to an underwriter or
dealer for distributing the notes in the offering, if the underwriters
repurchase previously distributed notes in transactions to cover syndicate
short positions, in stabilization transactions or otherwise. Any of these
activities may stabilize or maintain the market price of the notes above
independent market levels. The underwriters are not required to engage in these
activities, and may end any of these activities at any time.
S-6
In the ordinary course of business, the underwriters and their affiliates
have in the past provided, and in the future may provide, financial advisory,
investment banking and commercial banking services to us and our affiliates,
for which they have received and are expected to receive customary fees and
expenses. Bank of America, N.A., an affiliate of Banc of America Securities
LLC, Merrill Lynch Capital Corporation, an affiliate of Merrill Lynch, Pierce,
Fenner & Smith Incorporated, and Morgan Stanley Senior Funding Inc., an
affiliate of Morgan Stanley & Co. Incorporated, are lenders under the Bridge
Facility. We intend to use the net proceeds from the offering to repay
indebtedness under the Bridge Facility.
Because more than ten percent of the net proceeds of the offering may be
paid to members or affiliates of members of the National Association of
Securities Dealers, Inc. participating in the offering, the offering will be
conducted in accordance with NASD Conduct Rule 2710(c)(8).
VALIDITY OF NOTES
The validity of the notes offered hereby will be passed upon for Georgia-
Pacific by Kenneth F. Khoury, Esq., Vice President, Deputy General Counsel and
Secretary of Georgia-Pacific, and for the underwriters by Simpson Thacher &
Bartlett, 425 Lexington Avenue, New York, New York 10017. Mr. Khoury and
Simpson Thacher & Bartlett will rely on local counsel (who may include members
of our legal staff) as to matters of Georgia law. Mr. Khoury is a full-time
employee of Georgia-Pacific and participates in employee benefit plans under
which he may receive shares of common stock of Georgia-Pacific.
S-7
PROSPECTUS $3,000,000,000
[Logo of Georgia-Pacific] Georgia-Pacific Corporation
Georgia-Pacific Corporation may offer and sell--
. Debt Securities
. Preferred Stock
. Georgia-Pacific Corporation--Georgia-Pacific Group
Common Stock and Georgia-Pacific Group Rights to
Purchase Series B Junior Preferred Stock
. Georgia-Pacific Corporation--Timber Group Common Stock
and Timber Group Rights to Purchase Series C Junior
Preferred Stock
. Warrants
. Stock Purchase Contracts
. Stock Purchase Units
We will provide specific terms of these securities in supplements to this
prospectus. You should read this prospectus and any supplements carefully
before you invest.
This prospectus may be used to offer and sell securities only if accompanied
by the prospectus supplement for those securities.
Neither the Securities and Exchange Commission nor any state securities
commission has approved these securities or determined that this prospectus
supplement or the prospectus is accurate or complete. Any representation to the
contrary is a criminal offense.
October 27, 2000
TABLE OF CONTENTS
Page
----
ABOUT THIS PROSPECTUS..................................................... 1
WHERE YOU CAN FIND MORE INFORMATION....................................... 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... 2
THE COMPANY............................................................... 3
USE OF PROCEEDS........................................................... 3
RATIO OF EARNINGS TO FIXED CHARGES........................................ 4
DESCRIPTION OF DEBT SECURITIES............................................ 5
General................................................................. 5
Subordination of Subordinated Debt Securities........................... 7
Certain Covenants....................................................... 8
Certain Definitions..................................................... 10
Merger, Sale and Lease.................................................. 10
Conversion Rights....................................................... 11
Events of Default....................................................... 11
Modification and Waiver................................................. 12
Discharge, Defeasance and Covenant Defeasance........................... 13
Book-Entry Securities................................................... 14
Concerning the Trustees................................................. 15
DESCRIPTION OF PREFERRED STOCK............................................ 16
General................................................................. 16
Rank.................................................................... 16
Dividend Rights......................................................... 17
Voting Rights........................................................... 17
Liquidation Rights...................................................... 18
Redemption.............................................................. 18
Conversion.............................................................. 18
DESCRIPTION OF COMMON STOCK............................................... 18
Authorized and Outstanding Shares....................................... 18
Dividends............................................................... 18
Voting Rights........................................................... 19
Conversion and Redemption............................................... 20
Liquidation............................................................. 25
Determinations by Our Board of Directors................................ 26
Preemptive Rights....................................................... 26
Restated Rights Agreement............................................... 26
Certain Anti-Takeover Provisions of Georgia Law, Our Restated Articles
of Incorporation and Bylaws and Our Restated Rights Agreement.......... 28
DESCRIPTION OF WARRANTS................................................... 32
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS.......... 32
BOOK-ENTRY ISSUANCE....................................................... 33
PLAN OF DISTRIBUTION...................................................... 34
LEGAL MATTERS............................................................. 35
EXPERTS................................................................... 35
i
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission, the "Commission", utilizing a "shelf"
registration process. Under this shelf process, we may from time to time sell
any combination of the securities described in this prospectus in one or more
offerings up to a total dollar amount of $3,000,000,000.
We provide information to you about the securities in two separate
documents that progressively provide more detail:
. this prospectus, which contains general information, some of which may
not apply to your securities; and
. the accompanying prospectus supplement, which describes the terms of
your securities and may also add, update or change information contained
in this prospectus.
If the terms of your securities vary between the accompanying prospectus
supplement and this prospectus, you should rely on the different information
in the prospectus supplement.
You should read both this prospectus and any prospectus supplement together
with the additional information described under the heading "Where You Can
Find More Information" to learn more about us and the securities we are
offering.
Unless otherwise indicated or unless the context requires otherwise, all
references in this prospectus to "Georgia-Pacific", "we", "us", "our" or
similar references mean Georgia-Pacific Corporation and its consolidated
subsidiaries.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the Commission. You may read and copy any document that we
file at the Public Reference Room of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Information on the operation of the Public Reference
Room may be obtained by calling the Commission at 1-800-SEC-0330. You may also
inspect our filings at the regional offices of the Commission located at
Citicorp, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7
World Trade Center, New York, New York 10048 or over the Internet at the
Commission's home page at http://www.sec.gov. You may also inspect reports and
other information we file at the offices of the New York Stock Exchange, Inc.,
20 Broad Street, New York, New York 10005, on which exchange our Georgia-
Pacific Corporation--Georgia-Pacific Group Common Stock, par value $.80 per
share, "Georgia-Pacific Group Stock", and our Georgia-Pacific Corporation--
Timber Group Common Stock, par value $.80 per share, "Timber Stock", are
traded. We refer to the Georgia-Pacific Group Stock and the Timber Stock as
the "Common Stock".
This prospectus constitutes part of Registration Statements on Form S-3
filed with the Commission under the Securities Act of 1933. It omits some of
the information contained in the Registration Statements, and you should refer
to the Registration Statements for further information about us and the
securities offered by this prospectus. Any statement contained in this
prospectus concerning the provisions of any document filed as an exhibit to
the Registration Statement or otherwise filed with the Commission is not
necessarily complete, and in each instance you should refer to the copy of the
document filed.
1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Commission allows us to disclose important information to you by
referring you to documents we have filed or will file with them. The
information "incorporated by reference" is an important part of this
prospectus, and information that we file later with the Commission will
automatically update and supersede previously filed information. We incorporate
by reference the documents listed below and any future filings made with the
Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934 until the offering of all of the securities is completed:
. Our Annual Report on Form 10-K for the year ended January 1, 2000;
. Our Quarterly Reports on Form 10-Q for the quarters ended April 1, 2000
and July 1, 2000; and
. Our Current Reports on Form 8-K dated March 23, 2000, April 19, 2000,
July 18, 2000, July 20, 2000 and October 19, 2000.
You may request a copy of these filings, at no cost, by directing your
written or oral request to James F. Kelley, Executive Vice President and
General Counsel, Georgia-Pacific Corporation, 133 Peachtree Street, N.E.,
Atlanta, Georgia 30303, (404) 652-4000.
2
THE COMPANY
Georgia Pacific, founded in 1927 as a wholesaler of hardwood lumber in
Augusta, Georgia, has grown through expansion and acquisitions to become one of
the world's leading manufacturers and distributors of building products and one
of the world's leading producers of pulp and paper. Our principal offices are
located at 133 Peachtree Street, N.E., Atlanta, GA 30303 and our telephone
number is (404) 652-4000.
Georgia-Pacific consists of two separate operating groups: the Georgia-
Pacific Group and The Timber Company. The performance of the two distinct
operating groups is reflected separately by two classes of common stock,
Georgia-Pacific Group Stock and Timber Stock.
The Georgia-Pacific Group is one of the nation's largest producers of
structural and other wood panels, lumber, communications papers, containerboard
and market pulp. It also is the second largest gypsum wallboard producer in
North America and operates the world's largest building products distribution
system. In addition, it operates a rapidly growing tissue products business.
On July 16, 2000, we entered into a definitive merger agreement with Fort
James Corporation, a leading international consumer products company, serving
consumers both at home and away-from-home with bathroom and facial tissue,
paper towels, napkins, cups, plates, cutlery and food wrap products. Fort
James' fiscal 1999 revenues were $6,827 million. Pursuant to the merger
agreement, we will acquire all of the outstanding shares of Fort James for
$29.60 per share in cash and 0.2644 shares of Georgia-Pacific Group Stock. The
transaction is valued at approximately $11 billion, which includes our
assumption of approximately $3.5 billion of net debt. The transaction is
subject to receipt of applicable governmental approvals and the satisfaction of
customary closing conditions.
The Timber Company consists of approximately 4.8 million acres of
timberlands owned or leased by Georgia-Pacific, together with related
facilities and equipment. In 1999, these timberlands supplied approximately 19%
of the overall timber requirements of Georgia-Pacific's manufacturing
facilities.
On July 18, 2000, we signed a definitive merger agreement with Plum Creek
Timber Company pursuant to which Plum Creek would acquire The Timber Company.
Under the terms of the agreement, prior to the merger with Plum Creek, we will
redeem each outstanding share of Timber Stock in exchange for one unit
consisting of one share of common stock of each subsidiary comprising The
Timber Company. Following the redemption of the Timber Stock, all of such
subsidiaries will be merged into Plum Creek, and holders of Timber Stock will
receive 1.37 shares of Plum Creek common stock for each unit held by them. We
expect to complete the Plum Creek merger by the end of the first quarter of
2001. This merger is subject to significant conditions, including the approval
of holders of Timber Stock and shareholders of Plum Creek, and the receipt by
us of a ruling from the United States Internal Revenue Service indicating that
such merger will be tax-free to us, Plum Creek and the holders of Timber Stock.
Accordingly, no assurances can be given that the merger of The Timber Group and
Plum Creek will be completed.
If the merger with Plum Creek is completed, all shares of Timber Stock will
be converted into shares of Plum Creek common stock and, as a result, shares of
Georgia-Pacific Group Stock will be the only shares of common stock of Georgia-
Pacific outstanding. We will rename the Georgia-Pacific Group Stock Georgia-
Pacific common stock.
USE OF PROCEEDS
Unless we otherwise indicate in the applicable prospectus supplement, we
will use net proceeds from the sale of the securities offered by this
prospectus and the applicable prospectus supplement for general corporate
purposes. General corporate purposes may include the refinancing of existing
debt, the reduction of debt, possible acquisitions, and investments in, or
extension of credit to, our subsidiaries.
3
RATIO OF EARNINGS TO FIXED CHARGES
Our ratio of earnings to fixed charges for each of the periods indicated is
as follows:
Six
Months
Ended
Fiscal Year Ended July
------------------------ 1,
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ------
Ratio of earnings to fixed charges
(unaudited).................................. 4.41 1.55 1.48 2.05 4.39 3.36
The ratio of earnings to fixed charges is computed by dividing "earnings",
which consist of (1) income before income taxes, extraordinary items and
accounting changes, (2) interest expense (excluding interest capitalized during
the period and including amortization of previously capitalized interest) and
(3) one-third of rental expense (the portion deemed representative of
interest), by "fixed charges", which consist of (1) total interest costs
(including interest capitalized during the period) and (2) one-third of rental
expense.
On or about April 22, 1999, we determined to change our fiscal year from
December 31 to end on the Saturday closest to December 31. Additionally, we
report our quarterly periods on a 13-week basis ending on a Saturday. The
impact of one additional day on the year ended January 1, 2000 was not
material.
We do not have, and have not had, any Preferred Stock outstanding during the
periods indicated. Accordingly, we cannot show you the ratio of combined fixed
charges and Preferred Stock dividends to earnings.
4
DESCRIPTION OF DEBT SECURITIES
We may from time to time offer and sell debt securities, consisting of
debentures, notes and/or other unsecured evidences of indebtedness, the "Debt
Securities". The Debt Securities will be either our unsecured senior debt
securities, the "Senior Debt Securities", or our unsecured subordinated debt
securities, the "Subordinated Debt Securities". The Senior Debt Securities will
be issued under an indenture, the "senior indenture", between us and The Bank
of New York, as Trustee, the "senior trustee". The Subordinated Debt Securities
are to be issued under a second indenture, the "subordinated indenture", which
will be entered into between us and The Bank of New York, as Trustee, the
"subordinated trustee". The senior indenture and the subordinated indenture are
together called the "indentures" and the senior trustee and the subordinated
trustee are together called the "trustees".
The following summary of certain provisions of the Indentures is not
complete. You should refer to the indentures. We have filed or incorporated by
reference copies of the indentures as exhibits to the registration statement of
which this prospectus is a part, Registration Statement File No. 333-48388, the
"Registration Statement". Section references below are to the section in the
applicable indenture. Capitalized terms have the meanings assigned to them in
the applicable indenture. The referenced sections of the indentures and the
definitions of capitalized terms are incorporated by reference.
We have summarized below the general terms and provisions of the Debt
Securities. We will describe the particular terms of the Debt Securities
offered by any prospectus supplement in the prospectus supplement relating to
the offered Debt Securities.
We have substantial operations at the subsidiary level. Claims of creditors
of our subsidiaries, including general creditors, generally will have priority
as to the assets of subsidiaries over our claims and the claims of holders of
our indebtedness, including holders of the Debt Securities. We will rely on
cash generated from operations, including the operations of our subsidiaries,
and our available financing sources in order to meet our debt service
obligations.
General
The indentures do not limit the amount of Debt Securities that we may issue.
(section 301) Each indenture provides that Debt Securities may be issued from
time to time in one or more series. The Debt Securities will be our unsecured
obligations.
The indentures and the Debt Securities do not contain any provisions that
would:
. limit our ability or the ability of our subsidiaries to incur debt;
. require us or an acquiror to repurchase Debt Securities in the event of
a "change in control"; or
. afford holders of Debt Securities protection in the event of a highly
leveraged or similar transaction involving us or our subsidiaries.
You should read the applicable prospectus supplement for information with
respect to any deletions from, modifications of or additions to the events of
default or covenants described below that are applicable to the offered Debt
Securities.
Unless otherwise indicated in the applicable prospectus supplement,
principal of, premium, if any, and interest on the Debt Securities will be
payable at the corporate trust office of the trustees in the Borough of
5
Manhattan, The City of New York, provided that, at our option, interest may be
paid by mailing a check to the address of the person receiving interest as it
appears on the security register for the Debt Securities. Transfers of Debt
Securities, other than book-entry securities, may be made at the same location.
The Debt Securities will be issued only in fully registered form without
coupons and, unless otherwise indicated in the applicable prospectus
supplement, in denominations of $1,000 or integral multiples thereof. (section
302) We will not charge for any registration of transfer or exchange of the
Debt Securities, but we may require payment of an amount sufficient to cover
any tax or other governmental charge imposed in connection with the transfer or
exchange. (section 305)
The prospectus supplement relating to the particular series of Debt
Securities being offered will specify the particular terms of those Debt
Securities. The terms may include:
. the title and type of the particular series of Debt Securities;
. any limit on the aggregate principal amount of the particular series of
Debt Securities;
. the date or dates on which the principal of the particular series of
Debt Securities will mature;
. the rate or rates, which may be fixed or variable, per year or the
method by which such rate or rates will be determined, at which the
particular series of Debt Securities will bear interest, if any;
. the date or dates from which interest, if any, will accrue, or the
method by which such date or dates will be determined, the date or dates
on which interest will be payable and the record dates for interest
payment dates;
. the place or places where the principal of, and premium, if any, and any
interest on the particular series of Debt Securities will be payable;
. the period or periods within which, the price or prices at which, and
the terms and conditions upon which, the particular series of Debt
Securities may be redeemed, in whole or in part, at our option;
. our obligation, if any, to redeem, repay or purchase the particular
series of Debt Securities pursuant to any sinking fund or analogous
provision or at the option of the holders and the period or periods
within which, the price or prices at which and the terms and conditions
upon which the particular series of Debt Securities will be redeemed,
repaid or purchased, in whole or in part, pursuant to such obligation;
. the currency or currencies of payment of principal of, premium, if any,
and interest on the particular series of Debt Securities;
. the index, if any, used to determine the amount of payment of principal
of, premium, if any, and interest on the particular series of Debt
Securities;
. in the case of a particular series of Subordinated Debt Securities, the
portion of the principal amount of the Subordinated Debt Securities
which will be payable upon the declaration of acceleration of the
maturity thereof;
. any additional restrictive covenants included for the benefit of the
holders of the particular series of Debt Securities;
. any additional events of default with respect to the particular series
of Debt Securities;
. in the case of a particular series of Subordinated Debt Securities,
whether that series will be convertible into shares of any class of
Common Stock and if so, the terms and conditions, which may be in
addition to or in lieu of the provisions contained in the subordinated
indenture, upon which the series will be convertible, including the
conversion price and conversion period;
. in the case of a particular series of Subordinated Debt Securities,
information with respect to book-entry procedures, if any; and
6
. any other terms of the particular series of Debt Securities not
inconsistent with the provisions of the indentures. (section 301)
Some of the Debt Securities may be issued as original issue discount Debt
Securities. Original issue discount Debt Securities are securities sold by us
for substantially less than their stated principal amount. Federal income tax
consequences and other special considerations applicable to any original issue
discount Debt Securities will be described in the applicable prospectus
supplement. (section 101)
Subordination of Subordinated Debt Securities
Our obligations to make any payment of the principal of and premium, if any,
and interest on the Subordinated Debt Securities will be subordinate and junior
in right of payment to all senior indebtedness and, in certain circumstances
relating to our liquidation, dissolution, termination or reorganization, to all
"additional senior obligations". (Article Thirteen of the subordinated
indenture) We cannot make any payment of the principal of and premium, if any,
or interest on the Subordinated Debt Securities if there is a default in
payment with respect to senior indebtedness or an event of default with respect
to any senior indebtedness that results in the acceleration of its maturity and
that default or event of default continues.
The subordinated indenture defines "senior indebtedness" as:
. all "indebtedness of Georgia-Pacific for money borrowed", whether now
outstanding or later created, assumed or incurred, other than:
. the Subordinated Debt Securities;
. any obligation "ranking on a parity with the Subordinated Debt
Securities"; or
. any obligation "ranking junior to the Subordinated Debt Securities";
and
. any deferrals, renewals or extensions of any such senior indebtedness.
The term "indebtedness of Georgia-Pacific for money borrowed" means any
obligation of, or any obligation guaranteed by, Georgia-Pacific for repayment
of borrowed money, whether or not evidenced by bonds, debentures, notes or
other written instruments, and any deferred obligations for payment of the
purchase price of property or assets acquired other than in the ordinary course
of business.
The subordinated indenture defines "additional senior obligations" as all
our indebtedness, whether now outstanding or later created, assumed or
incurred, for claims in respect of derivative products such as interest and
foreign exchange rate contracts, commodity contracts and similar arrangements.
However, additional senior obligations do not include:
. any claims in respect of senior indebtedness; or
. any obligations:
. ranking on a parity with the Subordinated Debt Securities or
. ranking junior to the Subordinated Debt Securities.
For purposes of this definition, "claim" has the meaning assigned to it in
Section 101(4) of the United States Bankruptcy Code of 1978. The subordinated
indenture does not limit or prohibit the incurrence of senior indebtedness or
additional senior obligations.
The subordinated indenture defines "ranking on a parity with the
Subordinated Debt Securities" as any obligation of Georgia-Pacific that:
. ranks equally with and not prior to the Subordinated Debt Securities in
right of payment upon the happening of any insolvency, receivership,
conservatorship, reorganization, readjustment of debt,
7
marshalling of assets and liabilities or similar proceedings or any
liquidation, dissolution or termination of or relating to Georgia-
Pacific as a whole, whether voluntary or involuntary; and
. is specifically designated as ranking on a parity with the Subordinated
Debt Securities by express provision in the instrument creating or
evidencing such obligation. (section 101 of the subordinated indenture)
The subordinated indenture defines "ranking junior to the Subordinated Debt
Securities" as any obligation of Georgia-Pacific that:
. ranks junior to and not equally with or prior to the Subordinated Debt
Securities in right of payment upon the happening of any insolvency,
receivership, conservatorship, reorganization, readjustment of debt,
marshalling of assets and liabilities or similar proceedings or any
liquidation, dissolution or termination of or relating to Georgia-
Pacific as a whole, whether voluntary or involuntary; and
. is specifically designated as ranking junior to the Subordinated Debt
Securities by express provisions in the instrument creating or
evidencing that obligation. (section 101 of the subordinated indenture)
Upon any payment or distribution of assets to creditors upon any insolvency,
receivership, conservatorship, reorganization, readjustment of debt,
marshalling of assets and liabilities or similar proceedings or any
liquidation, dissolution or termination of or relating to Georgia-Pacific as a
whole, whether voluntary or involuntary, the holders of all senior indebtedness
will first be entitled to receive payment in full before the holders of the
Subordinated Debt Securities will be entitled to receive any payment of the
principal of and premium, if any, or interest on the Subordinated Debt
Securities. If, after paying the holders of senior indebtedness, any cash,
property or securities remain, those excess proceeds will first be applied to
pay in full all the additional senior obligations; then we can make payments on
the Subordinated Debt Securities.
If the holders of Subordinated Debt Securities receive payment and are aware
at the time of receiving payment that all senior indebtedness and additional
senior obligations have not been paid in full, then that payment will be held
in trust for the benefit of the holders of senior indebtedness or additional
senior obligations, as the case may be. (section 1301 of the subordinated
indenture) Because of this subordination, in the event of insolvency, holders
of the Subordinated Debt Securities may recover less, proportionately, than
holders of senior indebtedness and holders of additional senior obligations and
our general unsecured creditors.
Certain Covenants
Limitation on Liens
We may not, nor may we permit any restricted subsidiary, as defined below,
to, create or assume any mortgage, security interest, pledge or lien,
collectively, a "lien", upon any principal property, as defined below, or upon
the shares of stock or indebtedness of any restricted subsidiary, without
equally and ratably securing the Debt Securities. However, this restriction
does not apply to:
(1) liens on any principal property existing at the time of its
acquisition and liens created contemporaneously with or within 120 days
after (or created pursuant to firm commitment financing arrangements
obtained within that period) the completion of the acquisition, improvement
or construction of such property to secure payment of the purchase price of
such property or the cost of such construction or improvements;
(2) liens on property or shares of stock or indebtedness of a
corporation existing at the time it is merged into or its assets are
acquired by us or a restricted subsidiary;
(3) liens on property or shares of stock or indebtedness of a
corporation existing at the time it becomes a restricted subsidiary;
(4) liens securing debts of a restricted subsidiary to us and/or one or
more of our subsidiaries;
8
(5) liens in favor of a governmental unit to secure payments under any
contract or statute, or to secure debts incurred in financing the
acquisition of or improvements to property subject thereto;
(6) liens on timberlands in connection with an arrangement under which
we and/or one or more restricted subsidiaries are obligated to cut or pay
for timber in order to provide the lienholder with a specified amount of
money, however determined;
(7) liens created or assumed in the ordinary course of the business of
exploring for, developing or producing oil, gas or other minerals
(including borrowings in connection therewith) on, or on any interest in,
or on any proceeds from the sale of, property acquired for such purposes,
production therefrom (including the proceeds thereof), or material or
equipment located thereon;
(8) liens in favor of any customer arising in respect of and not
exceeding the amount of performance deposits and partial, progress, advance
or other payments by that customer for goods produced or services rendered
to that customer in the ordinary course of business;
(9) liens to extend, renew or replace any liens referred to in clauses
(1) through (8) or this clause (9) or any lien existing on the date of the
applicable Indenture;
(10) mechanics' and similar liens;
(11) liens arising out of litigation or judgments being contested; and
(12) liens for taxes not yet due, or being contested, landlords' liens,
tenants' rights under leases, easements, and similar liens not impairing
the use or value of the property involved. (section 1004)
See "Exemption from Limitations on Liens and Sale and Lease-Back".
Limitation on Sale and Lease-Back
Transactions involving sale and lease-back by us or one or more restricted
subsidiaries of any principal property, except for leases not exceeding three
years, are prohibited unless:
(1) we and/or such restricted subsidiary or subsidiaries would be
entitled to incur indebtedness secured by a lien on that property without
securing the Debt Securities;
(2) an amount equal to the value of the sale and lease-back is applied
within 120 days to:
. the voluntary retirement of indebtedness for borrowed money of
Georgia-Pacific or any restricted subsidiary maturing more than
one year after the date incurred and which is senior to or equal
with the Debt Securities in right of payment ("funded debt"); or
. the purchase of other property that will constitute principal
property having a value at least equal to the net proceeds of the
sale; or
(3) we and/or a restricted subsidiary shall deliver to the applicable
Trustee for cancellation funded debt (including the Debt Securities) in an
aggregate principal amount at least equal to the net proceeds of the sale.
(section 1005)
See "Exemption from Limitations on Liens and Sale and Lease-Back".
Exemption from Limitations on Liens and Sale and Lease-Back
We and/or one or more restricted subsidiaries are permitted to create or
assume liens or enter into sale and lease-back transactions that would not
otherwise be permitted under the limitations described under "Limitation on
Liens" and "Limitation on Sale and Lease-Back", provided that the sum of the
aggregate amount of all indebtedness secured by these liens (not including
indebtedness otherwise permitted under the exceptions described in clauses (1)
through (12) under "Limitation on Liens") and the value of all of these sale
and lease-back transactions (not including those that are for less than three
years or in respect of which indebtedness is retired or property is purchased
or Debt Securities are delivered, as described under "Limitation on Sale and
Lease-Back") will not exceed 5% of the net tangible assets, as defined below,
of us and our restricted subsidiaries. (section 1006)
9
Applicability of Covenants
Any series of Debt Securities may provide that any one or more of the
covenants described above, as well as certain provisions of the "Merger, Sale
and Lease" covenant described below, shall not be applicable to the Debt
Securities of such series. (section 1009)
Certain Definitions
The following terms are defined in more detail in section 101 of the
applicable indenture.
"Net tangible assets" means, at any date, the aggregate amount of assets
(less applicable reserves and other properly deductible items) after
deducting therefrom (1) all current liabilities, (2) any item representing
Investments in Unrestricted Subsidiaries, as defined in the applicable
indenture, and (3) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles, all of
the foregoing as set forth on the most recent consolidated balance sheet of
Georgia-Pacific and computed in accordance with generally accepted
accounting principles.
"Principal property" means any mill, manufacturing plant or facility or
timberlands owned by us or one or more restricted subsidiaries and located
within the continental United States, but does not include any such mill,
plant, facility or timberlands which are acquired after the date of the
applicable Indenture for the disposal of solid waste or control or
abatement of atmospheric pollutants or contaminants, or water, noise or
other pollutants, or which in the opinion of our board of directors is not
of material importance to our total business and our restricted
subsidiaries as an entirety, and does not include timberlands designated by
our board of directors as being held primarily for development or sale, or
minerals or mineral rights.
"Restricted subsidiary" means a subsidiary substantially all of the
property of which is located within the continental United States and which
itself, or with us or one or more other restricted subsidiaries, owns a
principal property.
"Subsidiary" means any corporation a majority of the outstanding voting
stock of which is owned or controlled by us or one or more subsidiaries and
which is consolidated in our accounts.
Merger, Sale and Lease
Under the senior indenture, we may consolidate with or merge into any other
corporation or sell, convey or lease all or substantially all of our properties
and assets to any person, without the consent of the holders of any of the
outstanding Senior Debt Securities, provided that:
. any successor or purchaser will expressly assume the due and punctual
payment of the principal of and interest on all the Senior Debt
Securities and the due and punctual performance and observance of all of
the covenants and conditions of the senior indenture to be performed by
us under a supplemental indenture; and
. we have delivered to the senior trustee an opinion of counsel stating
compliance with these provisions. (sections 801 and 804 of the senior
indenture)
Under the subordinated indenture, we may not consolidate with or merge into
any other corporation or sell, convey, exchange, transfer or lease all or
substantially all of our properties and assets to any person, unless:
. any successor or purchaser is a corporation organized under the laws of
any domestic jurisdiction;
. any such successor or purchaser expressly assumes our obligations on the
Subordinated Debt Securities and under the subordinated indenture;
10
. immediately after the transaction, no event of default, and no event
that, after notice or lapse of time or both, would become an event of
default, occurs and continues; and
. certain other conditions are met. (section 801 of the subordinated
indenture)
Under both indentures, if upon any merger of us with or into any other
corporation, or upon any sale or lease of all or substantially all of our
properties, any principal property of Georgia-Pacific or a restricted
subsidiary or any shares of stock or indebtedness of a restricted subsidiary
owned immediately prior to such merger, sale or lease would, thereupon, become
subject to any lien other than liens permitted, without securing the Debt
Securities under sections 1004 and 1006 of the applicable indenture summarized
above, prior to such event, we will secure the Debt Securities, equally with
all of our other obligations so secured, by a lien on such principal property,
shares or indebtedness prior to all liens other than any liens existing up to
that time thereon and liens so permitted by those sections of the indenture.
(section 802)
Conversion Rights
The terms and conditions, if any, upon which Subordinated Debt Securities
are convertible into shares of any class of Common Stock will be set forth in
the prospectus supplement relating to such series of Subordinated Debt
Securities. Such terms will include:
. the conversion price;
. the conversion period;
. provisions as to whether conversion will be at the option of the holder
or us;
. the events requiring an adjustment of the conversion price; and
. provisions affecting conversion in the event of the redemption of such
series of Subordinated Debt Securities.
Events of Default
Unless otherwise provided in the applicable prospectus supplement, the
indentures provide that the following events constitute events of default:
. failure to pay any interest upon any Debt Security when due, and that
failure continues for 30 days (in the case of the subordinated
indenture, whether or not payment is prohibited by the subordination
provisions);
. failure to pay the principal of, or premium, if any, on, any Debt
Security when due at its maturity or upon acceleration (in the case of
the subordinated indenture, whether or not payment is prohibited by the
subordination provisions);
. failure to deposit any sinking fund payment, when due, in respect of any
Debt Security of that series (in the case of the subordinated indenture,
whether or not payment is prohibited by the subordination provisions);
. failure to perform any other covenants or warranties in the applicable
Indenture, other than a covenant or warranty included in the applicable
indenture solely for the benefit of a series of Debt Securities under
the applicable Indenture other than that series, and that failure
continues for 90 days, in the case of the senior indenture, and 60 days,
in the case of the subordinated indenture, after written notice as
provided in the applicable Indenture;
. certain events of bankruptcy, insolvency or reorganization of Georgia-
Pacific; and
. any other event of default provided with respect to Debt Securities of
that series. (section 501)
Acceleration of Debt Securities. If an event of default with respect to
Debt Securities of any series at the time outstanding occurs and is
continuing, either the applicable trustee or the holders of at least 25% in
11
aggregate principal amount of outstanding Debt Securities of that series may
declare the principal amount (or, if those Debt Securities are original issue
discount Debt Securities, the portion of the principal amount specified in
their terms) of all Debt Securities of that series due and payable immediately.
At any time after a declaration of acceleration with respect to Debt Securities
of any series has been made but, before a judgment or decree based on
acceleration has been obtained, the holders of a majority in aggregate
principal amount of the outstanding Debt Securities of that series may, under
certain circumstances, rescind and annul that acceleration if all events of
default, other than the non-payment of accelerated principal (or specified
portion thereof) with respect to Debt Securities of that series, have been
cured or waived as provided in the applicable indenture. (section 502)
General. If there is a default in the payment of principal, premium, if any,
or interest, if any, or the performance of any covenant or agreement in the
Debt Securities or the indentures, the applicable trustee, subject to certain
limitations and conditions, may institute judicial proceedings to enforce
payment of that principal, premium, if any, or interest, if any, or to obtain
the performance of that covenant or agreement or any other proper remedy.
(section 503) Under certain circumstances, the applicable trustee may withhold
notice of a default to the holders of the securities if the applicable trustee
in good faith determines that the withholding of that notice is in the best
interest of the holders, and the applicable trustee will withhold the notice
for certain defaults for a period of 30 days. (section 602) You should review
the prospectus supplement relating to any series of Debt Securities that are
original issue discount Debt Securities for particular provisions relating to
acceleration of the stated maturity of a portion of the principal amount of
that series of original issue discount Debt Securities if an event of default
occurs and is continuing.
The indentures provide that, subject to the duty of the applicable trustee
during default to act with the required standard of care, the applicable
trustee does not have to exercise any of its rights or powers under the
applicable indenture at the request or direction of any of the holders, unless
those holders have offered to the applicable trustee reasonable security or
indemnity. (section 603) Subject to the foregoing sentence and to certain other
conditions, the holders of a majority in aggregate principal amount of the
outstanding Debt Securities of any series will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the applicable trustee, or exercising any trust or power conferred on the
applicable trustee, with respect to the Debt Securities of that series.
(section 512)
No holders of any Debt Securities of any series may institute any proceeding
with respect to the applicable Indenture, or for the appointment of a receiver
or trustee or for any remedy relating to that appointment:
. unless those holders have already given to the applicable trustee
written notice of a continuing event of default;
. unless the holders of at least 25% in aggregate principal amount of the
outstanding Debt Securities of that series have made written request,
and offered reasonable indemnity, to the applicable trustee to institute
such a proceeding as trustee;
. if the trustee has received from the holders of a majority in aggregate
principal amount of the outstanding Debt Securities of that series a
direction inconsistent with the written request; and
. unless the trustee has failed to institute the proceeding within 60
days. (section 507)
The above limitations do not apply to a suit instituted by holder of a Debt
Security for enforcement of payment of the principal of and premium, if any, or
interest on the Debt Security on or after the respective due dates described in
the Debt Security. (section 508)
We are required to furnish to each trustee annually a statement as to the
performance by us of certain of our obligations under the applicable indenture
and as to any default in such performance. (section 1007)
Modification and Waiver
We and the applicable trustee may modify and amend the indentures with the
consent of the holders of at least 66 2/3% in aggregate principal amount of the
outstanding Debt Securities of each series issued under the applicable
indenture and affected by the modification or amendment, but no such
modification or amendment
12
may, without the consent of the holders of each outstanding Debt Security of
the series affected by the modification or amendment:
. change the stated maturity of the principal of, or any installment of
principal of or interest on, any Debt Security of that series;
. reduce the principal amount of or premium, if any, or interest on, any
Debt Security of any series (including, in the case of an original issue
discount Debt Security, the amount payable upon acceleration of
maturity);
. change the place or currency of payment of principal of or the premium,
if any, or interest on any Debt Security of that series;
. impair the right of any holder to institute suit for the enforcement of
any payment on any Debt Security of such series;
. in the case of the Subordinated Debt Securities, modify the
subordination provisions in a manner adverse to the holders of the
Subordinated Debt Securities of that series; or
. reduce the percentage in principal amount of outstanding Debt Securities
of any series, the consent of whose holders is required for modification
or amendment of the applicable indenture or for waiver of compliance
with certain provisions of the applicable indenture or for waiver of
certain defaults. (section 902)
The holders of at least 66 2/3% in aggregate principal amount of the
outstanding Debt Securities of any series may, on behalf of all holders of that
series, waive compliance by us with certain restrictive provisions of the
applicable indenture. (section 1008) The holders of a majority in aggregate
principal amount of the outstanding Debt Securities of any series may, on
behalf of all holders of that series, waive any past default under the
applicable indenture, except a default in the payment of principal, premium, if
any, or interest and regarding certain covenants. (section 513)
Discharge, Defeasance and Covenant Defeasance
The applicable indenture with respect to Debt Securities of any series may
be discharged, subject to certain terms and conditions, when:
. either (1) all Debt Securities of such series have been delivered to the
applicable trustee for cancellation or (2) all Debt Securities of such
series not theretofore delivered to the applicable trustee for
cancellation (a) have become due and payable, (b) will become due and
payable at their stated maturity within one year, or (c) are to be
called for redemption within one year under arrangements satisfactory to
the applicable trustee for the giving of notice by the applicable
trustee, and we, in the case of (a), (b) or (c) of subclause (2), have
irrevocably deposited or caused to be deposited with the applicable
trustee as trust funds in trust for such purpose an amount in the
currency in which such Debt Securities are denominated sufficient to pay
and discharge the entire indebtedness on such Debt Securities for
principal and premium, if any, and interest to the date of such deposit
in the case of Debt Securities which have become due and payable or to
the stated maturity or redemption date, as the case may be;
. paid or caused to be paid all other sums payable under the applicable
indenture by us; and
. we have delivered to the applicable trustee an officers' certificate and
an opinion of counsel each stating that all conditions precedent therein
provided relating to the satisfaction and discharge of the applicable
indenture with respect to such series have been complied with. (section
401)
If so specified when the Subordinated Debt Securities of a particular series
are created, after we have deposited with the subordinated trustee, cash or
government securities, in trust for the benefit of the holders
13
sufficient to pay the principal of, premium, if any, and interest on the
Subordinated Debt Securities of such series when due, then we, at our option:
. will be deemed to have paid and satisfied our obligations on all
outstanding Subordinated Debt Securities of that series, which is known
as "defeasance and discharge"; or
. will cease to be under any obligation, other than to pay when due the
principal of, premium, if any, and interest on these Subordinated Debt
Securities, relating to the Subordinated Debt Securities of that series,
which is known as "covenant defeasance".
Under the subordinated indenture, we must also deliver to the subordinated
trustee an opinion of counsel to the effect that the holders of the
Subordinated Debt Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit and defeasance and
discharge or covenant defeasance and that federal income tax would be imposed
on the holders in the same manner as if such defeasance and discharge had not
occurred. In the case of a defeasance and discharge, such opinion must be based
upon a ruling or administrative pronouncement of the Internal Revenue Service.
When there is a defeasance and discharge, (1) the subordinated indenture
will no longer govern the Subordinated Debt Securities of that series, (2) we
will no longer be liable for payment and (3) the holders of that series of
Subordinated Debt Securities will be entitled only to the deposited funds. When
there is a covenant defeasance, however, we will continue to be obligated to
make payments when due if the deposited funds are not sufficient.
The obligations and rights under the subordinated indenture regarding
compensation, reimbursement and indemnification of the subordinated trustee,
optional redemption, mandatory and optional scheduled installment payments, if
any, registration of transfer and exchange of the Subordinated Debt Securities
of such series, replacement of mutilated, destroyed, lost or stolen
Subordinated Debt Securities and certain other administrative provisions will
continue even if we exercise our defeasance and discharge or covenant
defeasance options. (sections 403 and 404 of the subordinated indenture)
Under current federal income tax law, a covenant defeasance would not be
treated as a taxable exchange of Subordinated Debt Securities. Prospective
investors are urged to consult their own tax advisors as to the specific
consequences of a defeasance and discharge, including the applicability and
effect of tax laws other than the federal income tax law.
Book-Entry Securities
The Debt Securities of a series may be issued in the form of one or more
book-entry securities that will be deposited with a Depositary or its nominee
identified in the applicable prospectus supplement. In this case, book-entry
securities will be issued in aggregate denominations equal to the aggregate
principal amount of Debt Securities represented by such book-entry securities.
Unless and until it is exchanged in whole or in part for Debt Securities in
definitive registered form, a book-entry security may not be transferred except
as a whole by the applicable Depositary to a nominee of such Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor of the
Depositary or a nominee of such successor.
The specific terms of the depositary arrangement with respect to any Debt
Securities to be represented by a book-entry security will be described in the
applicable prospectus supplement. We anticipate that the following provisions
will apply to all depositary arrangements.
Upon the issuance of a book-entry security, the Depositary for such book-
entry security or its nominee will credit, on its book-entry registration and
transfer system, the respective principal amounts of the Debt Securities
represented by such book-entry security to the accounts of persons that have
accounts with such Depositary, "participants". We or the underwriters or agents
will designate such accounts. Participants include securities brokers and
dealers, banks and trust companies, clearing corporations and certain other
organizations.
14
Access to the Depositary's system is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly, "indirect
participants". Persons who are not participants may beneficially own book-entry
securities held by the Depositary only through participants or indirect
participants.
Ownership of beneficial interests in any book-entry security will be shown
on, and the transfer of that ownership will be effected only through, records
maintained by the Depositary or its nominee (with respect to interests of
participants) and on the records of participants (with respect to interests of
indirect participants). The laws of some states require that certain purchasers
of securities take physical delivery of such securities in definitive form.
These laws, as well as the limits on participation in the Depositary's book-
entry system, may impair the ability to transfer beneficial interests in a
book-entry security.
So long as the Depositary or its nominee is the registered owner of a book-
entry security, such Depositary or such nominee will be considered the sole
owner or holder of the Debt Securities represented by such book-entry security
for all purposes under the applicable indenture. Except as provided below,
owners of beneficial interests in securities represented by book-entry
securities will not be entitled to have such Debt Securities registered in
their names, will not be entitled to receive physical delivery of such Debt
Securities in definitive form and will not be considered the owners or holders
of such Debt Securities under the applicable indenture.
Payments of principal of and any premium and interest on Debt Securities
registered in the name of the Depositary or its nominee will be made to the
Depositary or its nominee, as the case may be, as the registered owner of the
book-entry securities representing such Debt Securities. We expect that the
Depositary for a series of Debt Securities or its nominee, upon receipt of any
payment of principal, premium or interest, will credit immediately
participants' accounts with payments in amounts proportionate to their
beneficial interests in the book-entry security, as shown on the records of
such Depositary or its nominee. We also expect that payments by participants
and indirect participants to owners of beneficial interests in such book-entry
security held through such persons will be governed by standing instructions
and customary practices, as is now the case with securities registered in
"street name", and will be the responsibility of such participants and indirect
participants. Neither we, the applicable trustee, any authenticating agent, any
paying agent nor the security registrar for such Debt Securities will have any
responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests in any book-entry
security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests. (section 311)
If the Depositary for Debt Securities of a series notifies us that it is
unwilling or unable to continue as Depositary or if at any time the Depositary
ceases to be a clearing agency registered under the Exchange Act, we have
agreed to appoint a successor depositary. If such a successor is not appointed
by us within 90 days, we will issue Debt Securities of such series in
definitive registered form in exchange for the book-entry security. In
addition, we may at any time and in our sole discretion determine that the Debt
Securities of any series will no longer be represented by book-entry
securities. In that event, we will issue Debt Securities of such series in
definitive registered form in exchange for such book-entry securities. Further,
if we so specify with respect to the Debt Securities of a series, or if an
event of default, or an event which with notice, lapse of time or both would be
an event of default with respect to the Debt Securities of such series has
occurred and is continuing, an owner of a beneficial interest in a book-entry
security representing Debt Securities of such series may receive Debt
Securities of such series in definitive registered form. In any such case, an
owner of a beneficial interest in a book-entry security will be entitled to
physical delivery in definitive registered form of Debt Securities of the
series represented by such book-entry security equal in principal amount to
such beneficial interest and to have such Debt Securities registered in such
owner's name. (section 305) Debt Securities so issued in definitive form will
be issued in denominations of $1,000 and integral multiples of $1,000 and will
be issued in registered form only, without coupons.
Concerning the Trustees
We maintain customary banking relationships with The Bank of New York, and
The Bank of New York is a lender under our senior unsecured credit facilities.
15
DESCRIPTION OF PREFERRED STOCK
We have summarized below the general terms of the Preferred Stock, without
par value per share, "Preferred Stock", to which any prospectus supplement may
relate, and the Junior Preferred Stock, without par value per share, "Junior
Preferred Stock". The summary is not complete. We will describe some of the
terms of any series of the Preferred Stock or the Junior Preferred Stock, as
the case may be, offered by any prospectus supplement in the prospectus
supplement for that series of Preferred Stock or Junior Preferred Stock, as
applicable. If we indicate the terms of any such series in the prospectus
supplement, those terms may differ from the terms described below. We encourage
you to read our restated articles of incorporation which have been filed with
the Commission and the articles supplementary to our restated articles of
incorporation which will be filed with the Commission in connection with the
offering of the series of Preferred Stock or Junior Preferred Stock.
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
provide for the issuance of 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.
The Preferred Stock and the Junior Preferred Stock have the terms described
below, unless otherwise provided in the prospectus supplement relating to a
particular series of the Preferred Stock or Junior Preferred Stock, as the case
may be. You should read the prospectus supplement relating to the particular
series of the Preferred Stock or Junior Preferred Stock offered thereby for
specific terms, including:
. the designation of the series and the number of shares offered;
. the amount per share payable in the event of liquidation;
. the price at which the particular series of Preferred Stock or the
Junior Preferred Stock, as the case may be, will be issued;
. the dividend rate, the dates on which dividends will be payable and the
date from which dividends will commence to cumulate;
. any redemption, retirement or sinking fund provisions;
. whether the shares have voting rights, and the extent of any such voting
rights, including, without limitation, the right to elect directors;
. the terms and conditions, if any, on which shares may be converted;
. any other preferences, rights, restrictions and qualifications of shares
of such series permitted by law and the restated articles of
incorporation.
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;
16
. 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
other 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 to 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 one
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 to receipt of dividends or a
liquidation distribution, as the case may be.
Dividend Rights
Dividends on the Preferred Stock and the Junior Preferred Stock are
cumulative.
Each series of Preferred Stock and Junior Preferred Stock will be entitled
to dividends as described in the prospectus supplement. Different series of
Preferred Stock and Junior Preferred Stock may be entitled to dividends at
different rates. The rate may be fixed or variable or both.
Holders of the Preferred Stock and Junior Preferred Stock of each series
will be entitled to receive, when, as and if declared by our board of
directors, cash dividends at the rates and on the dates described in the
prospectus supplement. Each dividend will be payable to the holders of record
as they appear on our stock record books on 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 we indicate in the prospectus supplement, or 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.
17
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 in the amount described in
the prospectus supplement 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
The prospectus supplement will state the terms, if any, on which shares of a
series of Preferred Stock or Junior Preferred Stock, as the case may be, may be
redeemable, in whole or in part, or subject to mandatory redemption pursuant to
a sinking fund.
Conversion
The prospectus supplement will state the terms, if any, on which shares of a
series of Preferred Stock or Junior Preferred Stock, as the case may be, are
convertible into other securities of ours.
DESCRIPTION OF COMMON STOCK
We have summarized below the material terms of the Georgia-Pacific Group
Stock and the Timber 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.
Authorized and Outstanding Shares
We are authorized to issue up to 400,000,000 shares of Georgia-Pacific Group
Stock, par value $.80 per share. At October 4, 2000, we had outstanding
170,755,028 shares of Georgia-Pacific Group Stock. We also are authorized to
issue up to 250,000,000 shares of Timber Stock, par value $.80 per share. At
October 4, 2000, we had outstanding 80,118,496 shares of Timber Stock.
Dividends
Our ability to pay dividends on the Georgia-Pacific Group Stock and the
Timber 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.
18
Our ability to pay dividends on the Georgia-Pacific Group Stock and the
Timber 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 the group were 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 Stock, Timber Stock, any Preferred Stock or any Junior
Preferred Stock, and any repurchases of Georgia-Pacific Group Stock or Timber
Stock or Preferred Stock or Junior Preferred Stock. Dividend payments on the
Georgia-Pacific Group Stock and the Timber 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 Stock, exclusively on the Timber 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 Stock and Timber
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 Stock and Timber 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 Stock has one vote; and
. each share of Timber Stock has a number of votes equal to the quotient
of the time-weighted average market value of one share of Timber Stock
over the 20-trading day period ending on the 10th trading day prior to
the record date for determining the Common Stock holders entitled to
vote, divided by the time-weighted average market value of one share of
Georgia-Pacific Group 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 the Georgia-Pacific
Group Stock and the Timber 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 Stock has a substantial majority
of the voting power because the aggregate market value of the outstanding
shares of Georgia-Pacific Group Stock is substantially greater than the
aggregate market value of the outstanding shares of Timber Stock.
19
If shares of only one class of Common Stock are outstanding, each share of
that class has 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.
Fluctuations in the relative voting rights of the Georgia-Pacific Group
Stock and the Timber Stock could influence an investor interested in acquiring
and maintaining a fixed percentage of the voting power of our stock to acquire
such percentage of both classes of Common Stock, and would limit the ability of
investors in one class to acquire for the same consideration relatively more or
less votes per share than investors in the other class.
The holders of Georgia-Pacific Group Stock and Timber Stock do not have any
right to vote separately as a voting group on any matter coming before our
shareholders, except for the limited voting group voting rights provided under
Georgia law described below, by New York Stock Exchange 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 Stock or Timber 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 Stock or Timber 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 Timber Stock would be entitled on all matters on which
holders of Georgia-Pacific Group Stock and Timber Stock vote together as a
single voting group. If:
. the time-weighted average market value of Timber Stock during the 20-
trading day valuation period was $30 per share; and
. the time-weighted average market value of Georgia-Pacific Group Stock
during the 20-trading day valuation period was $50 per share,
then each share of Georgia-Pacific Group Stock would have one vote and each
share of Timber Stock would have 0.6 votes based on the following calculation:
$30 per share
------------- = 0.6 votes
$50 per share
Assuming 200 million shares of Georgia-Pacific Group Stock and 100 million
shares of Timber Stock were outstanding, the shares of Georgia-Pacific Group
Stock would represent 76.9% of our total voting power and the shares of Timber
Stock would represent 23.1% of our total voting power.
Conversion and Redemption
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 that group's Common Stock.
That action could take the form of a cash dividend, a redemption of shares or a
conversion into the other group's Common Stock.
Accordingly, if we sell all or substantially all of one group's assets in a
transaction other than one described below under "Exceptions to the Dividend,
Redemption or Conversion Requirement if a Disposition Occurs", we will:
20
. 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
. (1) 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
. (2) 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.
21
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 Stock and 100 million shares
of Timber 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 Timber Stock during the 10-trading day
valuation period was $30 per share; and
. the average market value of Georgia-Pacific Group 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 Timber Stock equal to:
net proceeds = $2 billion
---------------- ------------------
number of 100 million shares
outstanding
shares of Timber
Stock
(2) redeem for $30 per share a number of shares of Timber Stock equal
to:
net proceeds = $2 billion
----------------- -----------------
average market $30 per share
value of
Timber Stock
= 66,666,667 shares
(3) convert each outstanding share of Timber Stock into a number of
Georgia-Pacific Group Stock equal to:
average market
value of
1.10 X Timber Stock = 1.10 X $30 per share
--------------------------- -------------
average market value of $50 per share
Georgia-Pacific Group Stock
= 0.66 shares
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 Stock and 100 million shares
of Timber Stock were outstanding immediately prior to a conversion;
. the time-weighted average market value of Timber Stock during the 20-
trading day valuation period was $10 per share; and
22
. the time-weighted average market value of Georgia-Pacific Group Stock
during the same valuation period was $50 per share,
then each share of Timber Stock could be converted into 0.22 shares of Georgia-
Pacific Group Stock based on the following calculation:
1.10 X $10.00 per share = 0.22 shares
----------------
$50 per share
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.
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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.
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 Stock into a number of shares of Timber Stock; or
. Timber Stock into a number of shares of Georgia-Pacific Group 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 the Georgia-
Pacific Group Stock and the Timber Stock. Many factors could affect the market
values of the Georgia-Pacific Group Stock or the Timber Stock, including:
. our results of operations and those of each of the groups;
. trading volumes; and
. general economic and market conditions.
Market values could also be affected by decisions by our board of directors or
our management that investors perceive to affect differently one class of
Common Stock compared to the other. These decisions could include:
. changes to our management and allocation policies;
. transfers of assets between the groups;
. allocations of corporate opportunities and financing resources between
the groups; and
. changes in dividend policies.
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 Stock and 100 million shares
of Timber Stock were outstanding immediately prior to a conversion;
. the time-weighted average market value of Timber Stock during the 20-
trading day valuation period was $30 per share; and
. the time-weighted average market value of Georgia-Pacific Group Stock
during the same valuation period was $50 per share,
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then each share of Timber Stock could be converted into 0.69 shares of
Georgia-Pacific Group Stock based on the following calculation:
1.15 X $30 per share = 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 Stock or Timber 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 Stock
and Timber 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.
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.
Transfer Taxes
We will pay all documentary, stamp or similar issue or transfer taxes that
may be payable in respect of the issue or delivery of any shares of capital
stock and/or other securities on conversion or redemption of shares. We will
not, however, be required to pay any tax that may be payable in respect of any
transfer involved in the issue or delivery of any shares of capital stock
and/or other securities in a name other than that in which the shares of such
Common Stock so converted or redeemed were registered, and no such issue or
delivery will be made unless the person requesting such issue has paid to us
the amount of any such tax, or has established to our satisfaction that such
tax had been paid.
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 Stock and Timber 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 Stock is entitled to one liquidation
unit. Each share of Timber Stock is entitled to .804 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.
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No holders of Georgia-Pacific Group Stock will have any special right to
receive specific assets of the Georgia-Pacific Group and no holder of Timber
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 Stock nor the holders of Timber
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 Stock rights to purchase Series B Junior Preferred Stock
if a "distribution date" occurs and to all holders of Timber 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 tenth 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
. the tenth 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 Stock
and Timber 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.
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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 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 tenth 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.
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
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. 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.
Certain Anti-Takeover Provisions of Georgia Law, Our Restated Articles of
Incorporation and Bylaws and Our Restated Rights Agreement
The following discussion concerns certain provisions of Georgia law, our
restated articles of incorporation, our bylaws and our restated rights
agreement that could be viewed as having the effect of discouraging an attempt
to obtain control of Georgia-Pacific.
Georgia Law
Under Georgia law, unless otherwise provided by a corporation's articles of
incorporation or bylaws, a merger or share exchange or sale of all or
substantially all of the corporation's assets must be approved by a majority of
all the votes entitled to be cast, voting as a single voting group.
Shareholders of the corporation surviving a merger or share exchange need not
approve the merger or share exchange if certain conditions are met. Neither our
restated articles of incorporation nor our bylaws contain a provision which
alters the requirements with respect to mergers or share exchanges or a sale of
all or substantially all of our assets under Georgia law.
We have elected in our bylaws to be covered by two provisions of Georgia law
that restrict business combinations with interested shareholders: the Business
Combinations Provision and the Fair Price Provision. Under Georgia law, once
adopted, these provisions may be repealed only by the affirmative vote of at
least 66 2/3% of the "continuing directors" and a majority of the votes
entitled to be cast by the voting shares, other than the voting shares
beneficially owned by an "interested shareholder" and, with respect to the Fair
Price Provision, his, her or its associates and affiliates. An "interested
shareholder" is defined as a holder of 10% or more of the outstanding voting
stock. "Continuing directors" are directors who served prior to the time the
interested shareholder acquired an ownership of 10% or more of the outstanding
voting stock and who are unaffiliated with the interested shareholder.
Interested Shareholder Transactions
The Business Combinations Provision generally prohibits us from entering
into certain business combination transactions with any interested shareholder
for a five-year period following the time that such shareholder became an
interested shareholder.
An interested shareholder may engage in a business combination transaction
with us within the five-year period only if:
. our board of directors approved the transaction before the shareholder
became an interested shareholder or approved the transaction in which
the shareholder became an interested shareholder;
. the interested shareholder acquired at least 90% of the voting stock
outstanding in the transaction in which it became an interested
shareholder; or
. after becoming an interested shareholder, the interested shareholder
acquired additional shares resulting in the interested shareholder being
the beneficial owner of at least 90% of the outstanding voting shares,
excluding Insider Shares, and the transaction was approved at an annual
or special meeting of shareholders by the holders of a majority of the
voting stock entitled to vote, excluding from the vote, Insider Shares
and voting stock beneficially owned by the interested shareholder.
"Insider Shares" refer to shares owned by:
. persons who are directors or officers of Georgia-Pacific, their
affiliates or associates;
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. our subsidiaries; and
. our employee stock plans under which participants do not have the right
to determine confidentially the extent to which shares held under such
plans will be tendered in a tender or exchange offer.
Fair Price Requirements
The Fair Price Provision imposes requirements on "business combinations" of
Georgia-Pacific with any interested shareholder. In addition to any vote
required by law or by our restated articles of incorporation, under the Fair
Price Provision, business combinations with an interested shareholder must meet
one of the following criteria:
. the transaction must be unanimously approved by our continuing
directors, provided that the continuing directors constitute at least
three members of our board of directors at the time the transaction is
approved;
. the transaction must be recommended by at least 66 2/3% of the
continuing directors and approved by a majority of the votes entitled to
be cast by the voting shares, other than the voting shares beneficially
owned by the interested shareholder who is, or whose affiliate is, a
party to the business combination; or
. the terms of the transaction must meet specified fair pricing criteria
and other tests.
These criteria are designed to protect our minority shareholders.
Our Restated Articles of Incorporation and Bylaws
Authorized Shares of Preferred Stock
Our restated articles of incorporation provide that we may from time to time
issue shares of Preferred Stock and Junior Preferred Stock in one or more
series, the terms of which will be determined by our board of directors. Our
restated articles of incorporation authorize 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 of 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. We will not solicit
approval of our shareholders unless our board of directors believes that
approval is advisable or is required by New York Stock Exchange rules or
Georgia law.
The existence of authorized, unissued and unreserved Preferred Stock and
Junior Preferred Stock could enable our board of directors to issue shares to
persons friendly to current management which could render more difficult, or
discourage, an attempt to obtain control of Georgia-Pacific by means of a
merger, tender offer, proxy contest or otherwise, and protect the continuity of
our management. These additional shares also could be used to dilute the share
ownership of persons seeking to obtain control of Georgia-Pacific.
Shareholder Nominations and Proposals
Our bylaws provide that any shareholder may present a nomination for a
directorship at an annual meeting of shareholders only if advance notice of
such nomination has been delivered to Georgia-Pacific not less than 60 days or
more than 75 days prior to the meeting. If less than 70 days' notice or public
disclosure of the date of the meeting is given or made to shareholders, notice
by the shareholder must be received not later than 10 days after the notice was
mailed or the disclosure made.
Similarly, any shareholder may present a proposal at an annual meeting only
if advance notice of the proposal has been delivered to Georgia-Pacific not
less than 120 calendar days before the date Georgia-Pacific's proxy statement
released to shareholders in connection with the previous year's annual meeting.
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The foregoing notices must describe:
. the proposal to be brought at the meeting or the nominee for director,
as applicable;
. personal information regarding the shareholder giving the notice;
. the number of shares owned by the shareholder; and
. his or her interest in the proposal.
These procedural requirements could have the effect of delaying or
preventing the submission of matters proposed by any shareholder to a vote of
the shareholders.
Staggered Board
Our board of directors is divided into three classes of directors serving
staggered three-year terms. Each class consists of, as nearly as possible, one-
third of the total number of directors.
The classification of directors makes it more difficult for shareholders to
change the composition of our board of directors. At least two annual meetings
of shareholders, instead of one, generally will be required to change the
majority of our board of directors. The classification provisions of our bylaws
and restated articles of incorporation could discourage a third party from
initiating a proxy contest, making a tender offer or otherwise attempting to
obtain control of Georgia-Pacific.
Increase in the Number of Directors
Our bylaws provide that the number of directors may be increased or
decreased by amendment of the bylaws either by:
. our board of directors; or
. the affirmative vote of at least 75% of the voting power of the
outstanding capital stock entitled to vote generally in the election of
directors, voting as a separate voting group.
Filling Vacancies
Our bylaws provide that any vacancy on our board of directors may be filled:
. by a majority of the remaining members of the board though less than a
quorum or by the sole remaining director, as the case may be; or
. if no director remains, by the holders of the shares of capital stock
who are entitled to vote for the director with respect to which the
vacancy is being filled.
However, if a vacancy occurs with respect to a director elected by a particular
class or series of shares voting as a separate voting group, our bylaws provide
that that vacancy may be filled:
. by the remaining director or directors elected by that class or series;
or
. if no director remains, by the holders of that class or series.
Any vacancy arising by reason of an increase in the number of directors may
only be filled by our board of directors.
Accordingly, our board of directors could temporarily prevent any
shareholder from enlarging our board and filling the new directorships with
such shareholder's own nominees.
Special Meetings of Shareholders
Under Georgia law and our bylaws, we must call a special meeting of the
shareholders if called by:
. the chairman or vice chairman of our board of directors;
. our chief executive officer;
. our president;
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. our board of directors; or
. 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.
In addition, a special meeting must be called upon the termination of the
exclusive right of one or more classes or series of capital stock, voting as a
separate voting group, to vote for directors, when requested by the holders of
10% of the aggregate voting power of the outstanding capital stock then
entitled to vote generally in the election of directors.
Restrictions on Amendments of Our Restated Articles of Incorporation
Amendments to our restated articles of incorporation must be recommended to
the shareholders by our board of directors and approved at a properly called
meeting of shareholders by a majority of the voting power of the outstanding
capital stock entitled to vote generally in the election of directors, voting
together as a single voting group. However, the affirmative vote of the holders
of at least 75% of the voting power of the outstanding capital stock entitled
to vote generally in the election of directors, voting together as a single
voting group, is required to amend, change, repeal or add any provision of our
restated articles of incorporation relating to:
. the Series A Junior Preferred Stock; or
. the provisions establishing the required votes for amending our restated
articles of incorporation or our bylaws.
Restrictions on Amendments of Our Bylaws
Amendments to our bylaws may be approved by our board of directors or by the
affirmative vote of the holders of a majority of the voting power of the
outstanding capital stock entitled to vote generally in the election of
directors, voting together as a single voting group. However, the affirmative
vote of the holders of at least 75% of the voting power of the outstanding
capital stock entitled to vote generally in the election of directors, voting
together as a single voting group, is required to amend, change, repeal or add
any provision of our bylaws relating to:
. the number of members of our board of directors;
. the classification of our board of directors;
. the procedure for nominating directors;
. calling special meetings of the shareholders;
. calling special meetings of our board of directors; or
. establishing a quorum at a meeting of our board of directors.
Social Responsibility Provision
Our restated articles of incorporation permit our board of directors to
consider any pertinent factors, including general, social and economic effects,
in discharging its duties and in determining what is in the best interests of
Georgia-Pacific. Consequently, our board of directors is authorized to consider
factors other than the interests of the shareholders when considering an
acquisition offer.
Our Restated Rights Agreement
As described under "--Restated Rights Agreement", our restated rights
agreement will permit disinterested shareholders to acquire additional shares
of Georgia-Pacific or of an acquiring company at a substantial discount in the
event of certain described changes in control. Our restated rights agreement is
intended to discourage anyone from buying shares of Common Stock having more
than 15% of the total voting power of Georgia-Pacific without approval of our
board of directors.
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DESCRIPTION OF WARRANTS
We may issue warrants, the "Warrants", to purchase Debt Securities,
Preferred Stock or Common Stock, collectively, the "Securities". Warrants may
be issued independently or together with Debt Securities, Preferred Stock or
Common Stock and may be attached to or separate from any offered securities.
Each series of Warrants will be issued under a separate warrant agreement, each
a "Warrant Agreement", to be entered into between us and a warrant agent, the
"Warrant Agent". The Warrant Agent will act solely as our agent in connection
with the Warrants and will not assume any obligation or relationship of agency
or trust for or with holders or beneficial owners of Warrants.
We have summarized below the general terms and provisions of the Warrants
that we may offer. We will describe further terms of the Warrants and the
applicable Warrant Agreement in the prospectus supplement.
The prospectus supplement will describe the following terms, where
applicable, of the Warrants in respect of which this prospectus is being
delivered:
. the title of the Warrants;
. the aggregate number of the Warrants;
. the price or prices at which the Warrants will be issued;
. the designation, aggregate principal amount and terms of the securities
purchasable upon exercise of the Warrants;
. the designation and terms of the securities with which the Warrants are
issued and the number of the Warrants issued with each such security;
. if applicable, the date on and after which the Warrants and the related
securities will be separately transferable;
. the price at which the securities purchasable upon exercise of the
Warrants may be purchased;
. the date on which the right to exercise the Warrants will commence and
the date on which the right will expire;
. the minimum or maximum amount of the Warrants which may be exercised at
any one time;
. information with respect to book-entry procedures, if any;
. a discussion of certain federal income tax considerations; and
. any other terms of the Warrants, including terms, procedures and
limitations relating to the exchange and exercise of the Warrants.
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
We may issue stock purchase contracts, "Stock Purchase Contracts",
representing contracts obligating holders to purchase from us, and us to sell
to the holders, a specified number of shares of either class or both classes of
Common Stock at a future date or dates. The price per share of Common Stock and
number of shares of Common Stock may be fixed at the time the Stock Purchase
Contracts are issued or may be determined by reference to a specific formula
set forth in the Stock Purchase Contracts. The Stock Purchase Contracts may be
issued separately or as a part of stock purchase units, "Stock Purchase Units",
consisting of a Stock Purchase Contract and Debt Securities or debt obligations
of third parties, including U.S. Treasury securities, securing the holders'
obligations to purchase the Common Stock under the Stock Purchase Contracts.
The Stock Purchase Contracts may require us to make periodic payments to the
holders of the Stock Purchase Units or vice-versa. These payments may be
unsecured or prefunded on some basis. The Stock Purchase Contracts may require
holders to secure their obligations thereunder in a specified manner.
The prospectus supplement will describe the terms of any Stock Purchase
Contracts or Stock Purchase Units.
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BOOK-ENTRY ISSUANCE
Unless otherwise specified in the applicable prospectus supplement, the
securities, including the Debt Securities, the Preferred Stock, the Stock
Purchase Contracts and the Stock Purchase Units may be issued in whole or in
part in global form ("global securities"). Such global securities may be issued
only in fully registered form and in either temporary or permanent form.
Specific terms for each security described in this prospectus will be set forth
in the applicable prospectus supplement relating to that security.
Unless otherwise specified in the applicable prospectus supplement, the
depositary for the global securities will be The Depository Trust Company
("DTC").
The global securities will be issued as fully registered securities
registered in the name of Cede & Co. (DTC's partnership nominee). One or more
fully registered global securities will be issued for each issue of securities,
each in the aggregate principal or stated amount of such issue, and will be
deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("participants") deposit with DTC. DTC
also facilitates the settlement among participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
of DTC ("direct participants") include securities brokers and dealers, banks
trust companies, clearing corporations and certain other organizations. DTC is
owned by a number of its direct participants and by the NYSE, the American
Stock Exchange, Inc. and the National Association of Securities Dealers, Inc.
Access to DTC's system is also available to others such as securities brokers
and dealers, banks and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either directly or indirectly
("indirect participants"). The rules applicable to DTC and its participants are
on file with the Commission.
Purchases of securities under DTC's system must be made by or through direct
participants, which will receive a credit for such securities on DTC's records.
The ownership interest of each actual purchaser of each security ("beneficial
owner") is in turn to be recorded on the records of direct participants and
indirect participants. Beneficial owners will not receive written confirmation
from DTC of their purchases, but beneficial owners are expected to receive
written confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the direct participants or indirect
participants through which such beneficial owners entered into the
transactions. Transfers of ownership interests in the securities are to be
accomplished by entries made on the books of participants acting on behalf of
beneficial owners. Beneficial owners will not receive certificates representing
their securities, except in the event that use of the book-entry system for the
securities is discontinued.
To facilitate subsequent transfers, all global securities that are deposited
with, or on behalf of, DTC are registered in the name of DTC's nominee, Cede &
Co. The deposit of global securities with, or on behalf of, DTC and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual beneficial owners of the
securities; DTC's records reflect only the identity of the direct participants
to whose accounts such securities are credited, which may or may not be the
beneficial owners. The participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants and by direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
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Neither DTC nor Cede & Co. will consent to vote with respect to the global
securities. Under its usual procedures, DTC will mail an omnibus proxy to us as
soon as possible after the applicable record date. The omnibus proxy assigns
Cede & Co.'s consenting or voting rights to those direct participants to whose
accounts the securities are credited on the applicable record date (identified
in a listing attached to the omnibus proxy).
Redemption proceeds, distributions, principal payments and any premium,
interest or other payments on the global securities will be made to Cede & Co.,
as nominee of DTC. DTC's practice is to credit direct participants' accounts on
the applicable payment date in accordance with their respective holdings shown
on DTC's records unless DTC has reason to believe that it will not receive
payment on such date. Payments by participants to beneficial owners will be
governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such participant and not of
DTC, Georgia-Pacific, the applicable Trustee or the purchase contract agent,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of redemption payments, principal and any premium,
interest or other payments to DTC is the responsibility of us, the purchase
contract agent, the applicable paying agent, disbursement of such payments to
direct participants will be the responsibility of DTC, and disbursement of such
payments to the beneficial owners will be the responsibility of direct
participants and indirect participants.
If applicable, redemption notices will be sent to Cede & Co. If less than
all of the securities of like tenor and terms are being redeemed, DTC's
practice is to determine by lot the amount of the interest of each direct
participant in such issue to be redeemed. Any Preferred Stock to be redeemed
will be selected by DTC on a pro rata basis in accordance with DTC's customary
procedures.
A beneficial owner will give notice of any option to elect to have its
interest in a global security repaid by us, through its participant, to the
senior trustee, and will effect delivery of such interest by causing the direct
participant to transfer the participant's interest in the global security or
securities on DTC's records, to the senior trustee. The requirement for
physical delivery in connection with a demand for repayment will be deemed
satisfied when the ownership rights in the global security or securities are
transferred by direct participants on DTC's records.
The foregoing information with respect to DTC has been provided to its
participants and other members of the financial community for information
purposes only and is not intended to serve as a representation, warranty, or
contract modification of any kind.
DTC may discontinue providing its services as securities depositary with
respect to the global securities at any time by giving reasonable notice to the
applicable issuer or the applicable trustee. Under such circumstances, in the
event that a successor securities depositary is not obtained, certificates for
the securities are required to be printed and delivered.
We may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor securities depository). In that event, certificates
for the securities will be printed and delivered.
The information in this section concerning DTC and DTC's system has been
obtained from sources that we believe to be reliable, but we take no
responsibility for the accuracy thereof.
PLAN OF DISTRIBUTION
We may sell securities to or through underwriters or dealers, directly to
other purchasers or through agents. Each prospectus supplement will describe
the method of distribution of the securities that are being offered.
The distribution of the securities may take place from time to time in one
or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
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In connection with the sale of securities, underwriters may receive
compensation from us or from purchasers of securities for whom they may act as
agents in the form of discounts, concessions or commissions. Underwriters may
sell securities to or through dealers, and the dealers may receive compensation
in the form of discounts, concessions or commissions from the underwriters
and/or commissions from the purchasers for whom they may act as agents.
Underwriters, dealers and agents that participate in the distribution of
securities may be deemed to be underwriters, and any discounts or commissions
received by them from us and any profit on the resale of securities by them may
be deemed to be underwriting discounts and commissions, under the Securities
Act. Any underwriter or agent will be identified, and any compensation received
from us will be described, in the prospectus supplement.
If so indicated in the applicable prospectus supplement and subject to
existing market conditions, we will authorize underwriters or other persons
acting as our agents to solicit offers by certain institutions to purchase
offered Debt Securities from us pursuant to contracts providing for payment and
delivery on a future date. Institutions with which such contracts may be made
include but are not limited to commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases such institutions must be approved by
us. The obligations of any purchaser under any such contract will be subject to
the condition that the purchase of the offered Debt Securities will not at the
time of delivery be prohibited under the laws of the jurisdiction to which the
purchaser is subject. The underwriters and the other agents will not have any
responsibility in respect of the validity or performance of the contracts.
Underwriters and agents who participate in the distribution of securities
may be entitled under agreements which may be entered into by us to
indemnification by us against certain liabilities, including liabilities under
the Securities Act.
Except as indicated in the applicable prospectus supplement, the securities
are not expected to be listed on a securities exchange, except for the Georgia-
Pacific Group Stock and Timber Stock, which are listed on the New York Stock
Exchange, and any underwriters or dealers will not be obligated to make a
market in securities. We cannot predict the activity or liquidity of any
trading in the securities.
LEGAL MATTERS
The validity of the Georgia-Pacific Group Stock, the Timber Stock and the
Preferred Stock will be passed upon for us by Troutman Sanders LLP, Atlanta,
Georgia. The validity of any other Securities will be passed upon for us by
Simpson Thacher & Bartlett, New York, New York. Simpson Thacher & Bartlett will
rely on Troutman Sanders LLP as to matters of Georgia law.
EXPERTS
The consolidated and combined financial statements and schedules of Georgia-
Pacific Corporation and subsidiaries, Georgia-Pacific Corporation--Georgia-
Pacific Group and Georgia-Pacific Corporation--The Timber Company incorporated
by reference in this prospectus and elsewhere in the registration statement
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are incorporated by
reference in this prospectus in reliance upon the authority of said firm as
experts in giving said reports.
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[LOGO OF GEORGIA PACIFIC]