GEORGIA-PACIFIC CORPORATION
(the "Corporation")
TERMS AGREEMENT
May 28, 1998
Georgia-Pacific Corporation
133 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attention: John F. McGovern
Executive Vice President - Finance
and Chief Financial Officer
Ladies and Gentlemen:
We offer to purchase, on and subject to the terms and conditions of the
form of Underwriting Agreement filed as an exhibit to each of the
Corporation's registration statements on Form S-3 (File Nos. 33-64673 and 333-
01785) (the "Underwriting Agreement"), the following securities (the
"Securities") on the following terms:
Title: 7 1/4% Debentures Due June 1, 2028.
Principal Amount: $300,000,000.
Interest: 7 1/4% per annum, from June 2, 1998, payable semiannually in
arrears on June 1 and December 1, commencing December 1, 1998, to holders of
record on the immediately preceding May 15 or November 15, as the case may be.
Maturity: June 1, 2028.
Make Whole Redemption: The Debentures will be redeemable, in whole or
from time to time in part, at the option of the Corporation on any date (a
"Redemption Date"), at a redemption price equal to the greater of (i) 100% of
the principal amount of the Debentures to be redeemed and (ii) 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) plus 25 basis
points, plus, in either case, accrued and unpaid interest on the principal
amount being redeemed to such Redemption Date; provided that installments of
interest on the Debentures 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 Debentures, 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
Debentures, (i) 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
(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 shall be determined and the Treasury Rate shall be
interpolated or extrapolated from such yields on a straight line basis,
rounding to the nearest month) or (ii) 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, calculated
using a price for the Comparable Treasury Issue (expressed as a percentage of
its principal amount) equal to the Comparable Treasury Price for such
Redemption Date. The Treasury Rate shall be calculated on the third Business
Day preceding the Redemption Date.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Independent Investment Banker as having a maturity comparable
to the remaining term of the Debentures 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 Debentures.
"Independent Investment Banker" means Morgan Stanley & Co. Incorporated
or, if such firm is unwilling or unable to select the Comparable Treasury
Issue, an independent investment banking institution of national standing
appointed by the Corporation.
"Comparable Treasury Price" means with respect to any Redemption Date
for the Debentures (i) the average of five Reference Treasury Dealer
Quotations for such Redemption Date, after excluding the highest and lowest
such Reference Treasury Dealer Quotations, or (ii) if the Trustee obtains
fewer than five such Reference Treasury Dealer Quotations, the average of all
such quotations.
"Reference Treasury Dealer" means each of Morgan Stanley & Co.
Incorporated; Goldman, Sachs & Co.; SBC Warburg Dillon Read Inc.; BancAmerica
Robertson Stephens; and Citicorp Securities Inc. 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"), the Corporation will substitute therefor another Primary
Treasury Dealer.
"Reference Treasury Dealer Quotations' means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined
by the Trustee, of the bid and asked prices for the Comparable Treasury 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.
Notice of any redemption by the Corporation will be mailed at least 30
days but not more than 60 days before any Redemption Date to each holder of
the Debentures to be redeemed. If less than all the Debentures are to be
redeemed at the option of the Corporation, the Trustee shall select, in such
manner as it shall deem fair and appropriate, the Debentures to be redeemed in
whole or in part.
Unless the Corporation defaults in payment of the redemption price, on
and after any Redemption Date interest will cease to accrue on the Debentures
or portions thereof called for redemption.
Sinking Fund: None.
Delayed Delivery Contracts: None.
Purchase Price: 98.628% of principal amount, plus accrued interest from
June 2, 1998, if any.
Expected Reoffering Price: 99.503% of principal amount, plus accrued
interest from June 2, 1998, if any.
Closing: 9:00 a.m., New York City time, on June 2, 1998, at the offices
of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York with
payment to be made in immediately available funds.
Names and Addresses of Underwriters:
Morgan Stanley & Co. Incorporated
1585 Broadway
2nd Floor
New York, New York 10036
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
SBC Warburg Dillon Read Inc.
Swiss Bank Tower
677 Washington Boulevard
Stamford, Connecticut 06901
BancAmerica Robertson Stephens
231 South La Salle Street
Chicago, Illinois 60697
Citicorp Securities, Inc.
399 Park Avenue
New York, New York 10043
The respective principal amounts of the Securities to be purchased by
each of the Underwriters are set forth opposite their names in Schedule A
hereto.
The provisions of the Underwriting Agreement are incorporated herein by
reference.
The specified percentage of the principal amount of the Securities for
the purposes of Section 10 of the Underwriting Agreement shall be 10%.
The Securities will be made available for checking and packaging at the
office of The Bank of New York at least 24 hours prior to the Closing Date.
This Terms Agreement, including your acceptance hereof, may be executed
by any one or more of the parties hereto and thereto in any number of
counterparts, each of which shall be deemed to be an original, but all such
respective counterparts shall together constitute one and the same instrument.
(Signatures on following page)
(Signature page to Terms Agreement)
Please signify your acceptance of our offer by signing the enclosed
response to us in the space provided and returning it to us.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
GOLDMAN, SACHS & CO.
SBC WARBURG DILLON READ INC.
BANCAMERICA ROBERTSON STEPHENS
CITICORP SECURITIES, INC.
By: MORGAN STANLEY & CO. INCORPORATED
Name: /s/ Harold J. Hendershot, III
Title: Vice President
SCHEDULE A
Principal
Underwriter Amount
Morgan Stanley & Co. Incorporated $150,000,000
Goldman, Sachs & Co. 45,000,000
SBC Warburg Dillon Read Inc. 45,000,000
BancAmerica Robertson Stephens 30,000,000
Citicorp Securities, Inc. 30,000,000
Total:...................... $300,000,000
To: Morgan Stanley & Co. Incorporated
1585 Broadway
2nd Floor
New York, New York 10036
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
SBC Warburg Dillon Read Inc.
Swiss Bank Tower
677 Washington Boulevard
Stamford, Connecticut 06901
BancAmerica Robertson Stephens
231 South La Salle Street
Chicago, Illinois 60697
Citicorp Securities, Inc.
399 Park Avenue
New York, New York 10043
We accept the offer contained in your letter, dated May 28, 1998,
relating to $300,000,000 principal amount of our 7 1/4% Debentures Due June 1,
2028. We also confirm that, to the best of our knowledge after reasonable
investigation, the representations and warranties of the undersigned in the
Underwriting Agreement filed as an exhibit to the undersigned's registration
statement on Form S-3 (No. 33-43453) (the "Underwriting Agreement") are true and
correct and no stop order suspending the effectiveness of the Registration
Statement (as defined in the Underwriting Agreement) or any part thereof has
been issued and no proceedings for that purpose have been instituted or, to the
knowledge of the undersigned, are contemplated by the Securities and Exchange
Commission.
Dated: May 28, 1998 Very truly yours,
GEORGIA-PACIFIC CORPORATION
By: /s/ John F. McGovern
Name: John F. McGovern
Title: Executive Vice President -
Finance and Chief Financial